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Do you think $CBK (-1.73%) can now rise even further following the ECB's approval for Unikredit to further increase its shares?
I'm looking forward to your opinions!
I would like to give you a detailed insight into Commerzbank ($CBK (-1.73%)) from the analyst meeting at the Morgan Stanley European Financials Conference, where CEO Bettina Orlopp answered questions. It was an intensive discussion that shed light on many interesting aspects of the bank's current strategy and future direction.
The conference began with a polling questionin which the participants were asked to give their assessment of what will have the greatest impact on Commerzbank's share price in the next 12 months. The majority saw the the leading financial targets and guidance as the most important factor (44%), followed by the improved sentiment on the German macroeconomy (37%).
The introductory remarks focused directly on the new strategic plan and the target of a return on equity of 15%. One analyst noted that the last time such a level of profitability was achieved was in 2006, when leverage was significantly higher. Ms. Orlopp emphasized that Commerzbank had changed significantly since then. The strategy 2024 had already laid the foundation for the current "momentum" strategy byby implementing significant transformation and restructuring measures have been implemented.
The cost/income ratio of 59% last year is a very good starting point that allows the bank to invest in growth invest in growth initiatives. Future development will be a mixture of growth initiatives growth initiatives and efficiency measures efficiency measures, including a reduction of 3,900 positionsmainly in Germany. At the same time growth in all segments and across all sources of income especially in the net commission incomewhich had already shown growth of 7% in 2024. The first quarter of 2025 confirms this positive trend.
Another focus was on the German macro outlook. In view of the positive market reaction to the announcement of fiscal measures, one analyst asked about the specific upside potential for Commerzbank's targets . Ms. Orlopp explained that the planning includes very ambitious targets but realistic assumptions regarding interest rates and GDP growth (only 1% for the coming years, 0.5% for 2025). Any positive impetus will therefore help to achieve the targets more quickly. The first upward adjustments to the GDP forecasts have already been made. The expected formation of a government before Easter could also have a positive impact on sentiment. The planned investments in infrastructure and defense would support precisely those sectors in which Commerzbank is strong, which would benefit both corporate and private client business.
With regard to credit growth one analyst recalled the target of 8% per year in the corporate client business and asked about possible adjustments due to fiscal spending. Ms. Orlopp reaffirmed this target and explained that it was not possible due to the the necessary investments by companies in transformation and growth is realistic. Commerzbank sees itself as a core bank in Germany with a responsibility to make its balance sheet available for these investments.
An important point was the development of marginsespecially with regard to the deposit trends in Germany and the expected monetary easing. Ms. Orlopp acknowledged that competition had increased, particularly in the private customer business. However, she was confident that the bank's conservative assumptions regarding the passing on of interest rate changes to customers would remain valid.
The resilience of the net interest income (NII) was also discussed, with the focus on the structural hedge and the potential tailwinds from a steeper yield curve. curve. Ms. Orlopp explained that a steepening of the yield curve would lead to higher income, as reinvested tranches could generate higher returns. An increase of 10 basis points, for example, would mean additional income of around EUR 10 million per year. We also took a look at Poland and mBankwhere the NII development is currently a positive surprise. This is pleasing, as the Polish market continues to bear the burden of the FX provision from the FX provision. The aim is to close this chapter as far as possible by 2025.
Another major topic was the costs and the planned increase in efficiency. Ms. Orlopp was very confident about the restructuring costs. restructuring costsas the bank has a lot of experience in this area. The early involvement of the works council and the transparent communication of the plans had led to a very good and trusting cooperation, which which even received public support from the works council and the trade union. The implementation of the measures, including the part-time early retirement programshould be implemented quickly.
With regard to investments in technologyespecially AIMs. Orlopp emphasized its strategic importance. There are already numerous use cases being implemented and the organization is being actively familiarized with the new tools (e.g. through the "Sherlock" tool and the Commerzbank GBP tools). The shoring at locations such as Sofia is also an important part of the strategy.
One topic that concerned many analysts was the participation of UniCredit and the potential M&A options. Ms. Orlopp emphasized that Commerzbank is focusing on its stand-alone strategy but would examine all proposals proposals that came to the table. The ECB's approval for UniCredit to increase its stake to up to 29.9% came as no surprise. UniCredit is currently an important shareholder, but will be treated like all others. With regard to the outstanding approvals, particularly from the German supervisory authorities, Ms. Orlopp referred to public statements that the process could take until mid-April. She emphasized that the situation would change fundamentally if a participation of over 30% was achieved. When asked about a possible a possible longer-term decision by UniCredit regarding further options, Ms. Orlopp responded by focusing on the company's own value creation.
With regard to capital and capital allocation Ms. Orlopp reaffirmed the goal of using the surplus capital to the shareholders. For 2024, a distribution of 1.7 billion euros planned (1 billion euros in share buybacks, 700 million euros in dividends). A similar approach is planned for 2025, whereby the restructuring costs are not included in the calculation of the distribution. would be excluded.
The between share buybacks and dividends is regularly is regularly reviewed and depends on the current valuation of the share and the regulatory framework.
In the area of Wealth Management there is an active active funnel for potential bolt-on acquisitionsand transactions are also possible this year if the right opportunities arise. The acquisition of Aquila has proven to be very positive.
With regard to the risk costs Ms. Orlopp explained that for 2025 an increased increased level (850 million euros in risk provisions plus a top-level adjustment of around 230 million euros). This is a consequence of the continuing economic weakness in Germany. Although there are individual major cases, there are no problems in entire sectors. The effects of Basel IV have so far been less than originally expected. The potential impact of the planned fiscal expenditure on the risk-weighted assets (RWA) Ms. Orlopp is currently not critical, as the planning here is rather conservative.
The question of consolidation in the fragmented German banking market was answered rather skeptically by Ms. Orlopp for the short-term future. She sees consolidation within the three pillars (cooperative banks, savings banks, private banks) rather than cross-sector mergers. Progress at EU level with the savings and investment union and, in perspective, the banking union could, however, make cross-border M&A more attractive in the long term. Despite the high level of competition in the German market, Commerzbank is well positioned and is concentrating on offering attractive solutions for its customers.
The positive effects of the fiscal stimulus Ms. Orlopp expects rather from 2026as the implementation of the measures will take time. However, reforms by the new government could possibly provide positive impetus for sentiment as early as this year. The The start to 2025 has been very pleasingand good news is expected when the Q1 results are presented in mid-May. With regard to the concrete impact of the fiscal package on Commerzbank, Ms. Orlopp referred to the expected GDP effect of around 0.5 percentage points for next year.
Finally, the question of a potential takeover potential takeover by UniCredit was raised again. Ms. Orlopp confirmed the openness in principleto examine all offers, but emphasized the focus on its own strategy. She referred to the Ministry of Finance's rejection of UniCredit's previous approach and emphasized that a meaningful evaluation of a combination is only possible in direct talks. She again emphasized the strengths of Commerzbank and the potential of its own strategy. emphasized.
Commerzbank, under the leadership of Bettina Orlopp, is pursuing ambitious goals and is confident of achieving them. The focus is clearly on the implementation of the "Momentum" strategy, which is based on a combination of growth investments and efficiency improvements. The bank is benefiting from the positive trend in commission business and expects a tailwind from potential fiscal stimulus, albeit in the medium term. The capital allocation and plans for distributions to shareholders have been clearly communicated and are being implemented step by step.
The M&A speculation surrounding UniCredit remains, but is not currently seen by the bank as a primary strategic path.
At 53 billion euros, the 40 DAX companies are likely to pay out almost one billion euros more this year than a year ago - more than ever before.
The reason for the strong development is high consolidated profits and unexpectedly rising dividends at a good dozen companies, including $ALV (-0.71%) Allianz, $MUV2 (-0.39%) Munich Re and $RHM (+1.87%) Rheinmetall.
At 109 billion euros net profit, the DAX companies are likely to have earned as much in 2024 as in the previous year, according to Handelsblatt calculations. Slump in earnings for the three car manufacturers $BMW (-1.52%) BMW, $MBG (-1.21%) Mercedes and $VOW (+0.92%) VW will be offset by companies in other sectors, in particular the major insurers Allianz, Munich Re and $HNR1 (-1.43%) Hannover Re, but also $DTE (-3.77%) Deutsche Telekom, $HEN (-2.56%) Henkel and $EOAN (-1.17%) Eon.
More than a dozen DAX companies have announced higher dividends than the market had previously expected. For example $ALV (-0.71%) 15.40 euros per share after 13.80 euros in the previous year. Analysts had forecast just under 15 euros. The insurer is thus distributing just under six billion euros. This is a record in the German corporate landscape.
The biggest jump is at $MUV2 (-0.39%) Munich Re: The reinsurer is increasing its dividend by five euros per share to 20 euros.
The two healthcare specialists $FRE (-1.44%) Fresenius and $FME (-1.02%) Fresenius Medical Care, the brand manufacturer $HEN (-2.56%) Henkel, the automotive supplier $BTR Continental, the $CBK (-1.73%) Commerzbank, $RHM (+1.87%) Rheinmetall and $HNR1 (-1.43%) Hannover Re have raised their dividends, in some cases significantly more than expected. This is also due to rising profits, which justify a higher profit share for shareholders.
The largest dividend payers in the DAX are
Like the car manufacturers, a number of companies in the DAX remain below the usual international payout ratios, including the family-run groups $BEI (+0.3%) Beiersdorf and $MRK (-0.57%) Merck. They pass on less than 30 percent of their profits. This leaves enough of a buffer so that dividends do not have to be reduced immediately in more difficult times.
Germany's most valuable group, $SAP (-1.14%) SAP, with a payout ratio of 85%, is pushing the limit: net profit of 3.1 billion euros in the past year compares with a total dividend payout of 2.7 billion euros. However, the profit was burdened by a one-off effect.
So far, a total of 20 companies have increased their dividends, with only $BAS (+1.25%) BASF and the three car manufacturers. Four companies have yet to do so: $RWE (-0.48%) RWE, $SY1 (-1.69%) Symrise and $VNA (+0.25%) Vonovia are likely to increase their dividends, while analysts expect $PAH3 (-1.74%) analysts expect a reduction at Porsche Holding.
Source (excerpt) & chart: Handelsblatt, 15.03.25
Tesla warns of possible retaliatory tariffs
In the USA, Tesla $TSLA (-2.31%)the innovative electric car company led by Elon Musk, is causing a stir with an important warning. The company has made it clear that possible retaliatory tariffs against US manufacturers could have a significant negative impact on its business. In an urgent letter to US Trade Representative Jamieson Greer, Tesla appeals to the US Trade Representative to thoroughly reconsider existing trade policies. The importance of fair trade practices is emphasized, especially with regard to the potential impact on exports. Tesla points out that previous tariff increases have often led to immediate responses from affected countries, resulting in higher tariffs on imported electric vehicles. With this appeal, Tesla is responding to the current challenges posed by the threat of tariff increases and calling for a comprehensive investigation to avoid future problems. Despite these concerns, Tesla's share price has fallen by 3% recently and sales figures in Europe have dropped by an alarming 45%. The company employs more than 70,000 people in the US and operates numerous production facilities, underlining the urgency of this issue.
UniCredit increases stake in Commerzbank
In Europe, UniCredit has made a strategic decision in recent months and significantly increased its stake in Commerzbank. $CBK (-1.73%) significantly. This development follows the partial exit of the German government in September, which the Italian bank exercised. UniCredit now controls over 28 percent of the shares in Germany's second largest private bank. In this transaction, 9.5 percent was acquired directly via shares, while a further 18.5 percent was secured through the use of financial instruments. An exciting point in this story is that if the stake were to exceed the 30 percent mark, UniCredit would be obliged to submit a purchase offer to the other shareholders. The European Central Bank (ECB) plays an important role here by carefully vetting investors who wish to acquire 10 percent or more of a bank to ensure that they are suitable shareholders. These measures are designed to promote the stability of the banking sector in Europe and protect the interests of existing shareholders. With these steps, UniCredit is showing that it is willing to actively invest in the German banking sector.
Sources:
https://finance.yahoo.com/news/elon-musk-tesla-says-could-221333112.html
The nice Commerzbank $CBK (-1.73%) has sent me a letter announcing that they will start charging account management fees on the Basic current account in the 2nd quarter. 5 a month for no additional services.
I am currently still using 2 giro accounts (Commerzbank and C24) - but this will now change to 100% C24 in the course of March. There I get more services for 0€ and Commerzbank doesn't offer any services for which I would need a branch. 🤷🏻♂️
I wonder if this is really the move, and if they shouldn't have just made the fee-based accounts more expensive? (I'm sure if you're paying for Giro anyway it makes no difference whether it's €5, €9 or €15)
I'm sure I'm not the only one making the change now, I wonder if the exchange rate will react to it over the course of the year? the user numbers over the course of 2025 will definitely be interesting 🧐
Kiss,
Larry
Have you heard about the latest developments at Commerzbank? $CBK (-1.73%) heard? The bank is planning to cut several thousand jobs by 2028, mainly at its headquarters in Frankfurt. 😲 The background? Possible takeover plans by the major Italian bank Unicredit $NBLB-R-B.
Commerzbank is focusing on a socially responsible transformation process that aims to take advantage of natural fluctuation and demographic change. This means that they are trying to compensate for the jobs that will be lost through normal departures.
But the debate is heated! The head of the works council has already warned of a reduction of up to 15,000 jobs. The German government was also outraged by the situation, while Unicredit is increasing its stake in Commerzbank.
What do you think about these developments? Will Commerzbank actually be swallowed up by Unicredit or is there another solution?
We do not speak very often about the Italian lender $UCG (-1.27%)) here, but they published strong results yesterday. Very little details on $CBK (-1.73%) but more to come at the Q1'25 results as it seems.
Who has UniCredit in their portfolio, or thinks it is interesting for the future?
DAX reaches new all-time high again 🇩🇪📈💶👑. The left, trade unions and Wahra Sagenknecht would say that the stock market is a casino and a game of chance. Some people just always want to be wrong. Samsung Galaxy Watch 7 Which German shares do you have and how have they performed? #dax
#dax40
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