Commerzbank wants to return even more capital to shareholders
Following a record profit in the first half of the year, Commerzbank has raised its targets for 2025, and applied to the European Central Bank for approval on another share buyback. As the bank announced on 6 August, it now expects a net profit of 2.5 billion euros after deducting restructuring costs on a pro-rata basis. Until now, CEO Bettina Orlopp had only projected 2.4 billion euros. Thanks to the announced dividend strategy, shareholders – after deducting coupon payments for subordinated bonds classified as AT1 capital – will feel the full benefits of the results.
Commerzbank’s decision to distribute its entire profits, minus the AT1 coupon payments, to shareholders in the form of share buybacks and dividends has driven the share price sharply higher in recent months. When asked by an analyst about the possibility of payout ratios above 100 percent, Orlopp responded cautiously but not dismissively. She pointed out that this year, due to restructuring costs, some concessions would already have to be made. „We still do not want to promise more than we can deliver,“ she added, without ruling out the option.
Equity ratio beyond internal and external requirements
In light of the doubling of its market value, some observers interpreted Commerzbank’s payout policy as a defensive move against Unicredit. However, CFO Carsten Schmitt rejected this interpretation in an interview with Börsen–Zeitung, pointing out that Commerzbank plans to reduce its equity ratio to its internal target of 13.5% by 2028.
Although Unicredit’s stake has risen to 20% following the recent buyback, Commerzbank is sticking to this course. With a capital ratio of 14.6% at the end of June, the bank also argues that it maintains a comfortable buffer above the current regulatory minimum requirement of around 10.2%.
Situation with Unicredit „not ideal“
„Whether Unicredit takes part in the buyback is a decision I cannot influence,“ said Orlopp. If Unicredit’s stake in Commerzbank rises to 30% as a result of the capital measure, a mandatory public takeover offer and a new ownership control procedure would be required. The situation with Unicredit is „not ideal,“ the CEO admitted, not least because of the competition with its German unit HVB. She therefore remains available only for standard investor discussions.
