Company Reports

SpaceX has filed for one of the largest IPOs in history, with Anthropic and OpenAI expected to follow in the most significant fundraising cycle in years. No European bank holds a lead equity arranger role; that honor belongs to five US banks.

Commerzbank reported good first-quarter results, together with a set of ambitious targets until 2030 to fend off the takeover attempt by UniCredit.

Commerzbank generates most of its operating income in the highly competitive German market, where banks without profit-maximizing motives, such as savings and cooperative banks, dominate the retail space. Moreover, domestic and international competitors vie for the German corporate market.

UniCredit has launched an all-share tender offer for Commerzbank. Management was explicit that it does not seek control.

European banks have declined around 10% from their highs as rising oil and gas prices and the prospect of higher-for-longer interest rates fuel fears that loan defaults will rise.

Commerzbank reported fourth-quarter results in line with our expectations. Guidance for 2026 of at least EUR 3.2 billion in net profit is better than we had anticipated, however.

Commerzbank generates most of its operating income in the highly competitive German market, where banks without profit-maximizing motives, such as savings and cooperative banks, dominate the retail space. Moreover, domestic and international competitors vie for the German corporate market.

Commerzbank generates over most of its operating income in the highly competitive German market, where banks without profit-maximizing motives (savings and cooperative banks) dominate the retail space. Moreover, domestic as well as international competitors vie for the coveted German corporate market. In this competitive environment, Commerzbank has too long stuck to its large branch network strategy, failing to digitize processes sufficiently to compete in today’s changing banking landscape.

Commerzbank reported a third-quarter operating result of EUR 1,047 million, 18% ahead of the year-ago quarter. Net interest income guidance was lifted to about EUR 8.2 billion for 2025 from EUR 8 billion previously.

Commerzbank reported second-quarter operating profits of EUR 1,169 million versus EUR 1,116 million expected by consensus estimates collected by the bank prior to the release. Guidance was raised slightly for 2025, albeit already within our expectations.

Commerzbank generates over 70% of its operating income in the highly competitive German market, where banks without profit-maximizing motives (savings and cooperative banks) dominate the retail space. Moreover, domestic as well as international competitors vie for the coveted German corporate market. In this competitive environment, Commerzbank has too long stuck to its large branch network strategy, failing to digitize processes sufficiently to compete in today’s changing banking landscape.

Commerzbank posted a good set of results for its first quarter of 2025. Net revenue increased by 12% compared with the same period a year ago, primarily because of a strong performance in the German securities business. The bank saw good traction with its wealth management products.

UniCredit received the green light from the European Central Bank to bring its stake in Commerzbank to 29.9%, allowing the Italian lender to advance its efforts for a potential takeover. We maintain our EUR 19.60 and EUR 35 fair value estimates for Commerzbank and UniCredit, respectively. We had previously assigned a high likelihood of a positive ECB decision. UniCredit believes that a decision to extend its shareholding in Commerzbank beyond the now approved 29.9%, will likely be taken in 2026, citing discussions with antitrust and key shareholders to extend the timeline. We expect Commerzbank’s efforts to make its case to remain independent will accelerate even further.

Commerzbank announced its new strategic plan in tandem with full 2024 results. A reduced set of results was released on Jan. 31, which we previously discussed. The new strategy sets a target for return on tangible equity of 15% by 2028. For context, we currently model a ROTE of 9%. Consensus figures don’t go that far out yet reliably, but 2027 consensus ROTE sits at 11%. Reaching the target would lift Commerzbank’s profitability to levels not seen at the German lender since the global financial crisis in 2008. We are skeptical that the rosy picture of strong income growth across all segments and above-market rates is easily achievable. Moreover, targets are too back-end loaded to our taste, with profitability accelerating in 2027 and 2028.

Commerzbank generates over 70% of its operating income in the highly competitive German market, where banks without profit-maximizing motives (savings and cooperative banks) dominate the retail space and domestic as well as international competitors vie for the coveted German corporate market. In this competitive environment, Commerzbank has too long stuck to its large branch network strategy, failing to digitize processes sufficiently to compete in today’s changing banking landscape.

We raise our fair value estimate for Commerzbank to EUR 19.60 per share from EUR 15.80 after lifting our income growth and shareholder distribution assumptions. The German bank published its full-year 2024 results, albeit limited, ahead of its scheduled Feb. 13 earnings release and investor day. Results were ahead of consensus estimates collected by the bank itself as a result of better-than-expected net interest income (0.9% versus consensus) and net commission income performances (1.5% versus consensus). A cost/income ratio of 59%, below its 60% target for the year, was also positive. The announced EUR 0.65 dividend per share and share buyback worth EUR 400 million are below our estimates of what we believe Commerzbank can reasonably distribute to shareholders in 2025. Moreover, we believe an improving payout ratio and annual buybacks of around EUR 1 billion are feasible over the next five years. The bank has the potential to deliver further upside if it announces a new set of cost cuts at its investor day such as branch closures and employee reductions.

During its third-quarter 2024 results presentation, UniCredit outlined various measures around revenue/fee growth, cost efficiency, and profitability where its German operation, HVB, performs better than Commerzbank. UniCredit believes it can lift Commerzbank's performance to match that of HVB. One could also use the same measures to argue against a merger. UniCredit runs the risk of diluting its overall profitability and growth trajectory and HVB by combining with a rival that may suffer from company-specific structural constraints that could be challenging to overcome.

We maintain our EUR 15.80 per share fair value estimate and for Commerzbank. The no-moat bank reported a third-quarter return on tangible equity of 8.7% with net interest income declining to EUR 2,048 million versus EUR 2,078 million last quarter. The effect of lower European Central Bank rates was only partially offset by loan growth at mBank. Cost of risk did disappoint at EUR 255 million or 25 basis points, including a top-level adjustment release of EUR 94 million.

Under newly appointed CEO Bettina Orlopp, formerly CFO, Commerzbank updated its strategy, which could be seen as an attempt to push back against UniCredit’s potential takeover attempt. The new strategy targets a 12% return on tangible equity by 2027, up from 11.5% previously. Commerzbank primarily sees better income generation in its noninterest-related business, which improves operating efficiency and drives slightly better profitability. The bank also highlighted its intention to distribute about 90% of profits to shareholders in 2027. We maintain our EUR 15.80 per-share fair value estimate.

No-moat UniCredit announced that it acquired 9% of no-moat Commerzbank. We estimate that UniCredit paid around EUR 1.5 billion for the stake, about 2.5% of its own market value. It seems UniCredit intends to increase its stake in the future.