„We’re able to achieve our targets without making acquisitions“
Mr. Schmitt, this is your first interview since returning to Commerzbank. You were away for four years. How has the bank changed during that time?
Two things stand out to me in particular: There’s a much stronger sense of cohesion. Everyone takes pride in the bank and the brand. That’s a great feeling. The previous strategic programmes are now bearing fruit. Building on that, we’re driving growth further with our enhanced „Momentum“ strategy. That’s shifting the mindset within the bank. The outlook has become more entrepreneurial, and focused on revenues and results over the next few years. At the same time, we’ve become noticeably bolder and more self-confident.
But Commerzbank now also finds itself in a defensive battle against Unicredit. Dividend payouts and share buybacks have proven to be effective tools. But how sustainable is that?
That question implies the payouts are a reaction to the current situation.
Aren’t they? The share price has risen to a level where a takeover by Unicredit would likely be too expensive.
What matters for the size of our distributions – and I’m talking about both dividends and share buybacks – is solely what we can return to our shareholders in any given financial year in line with our strategy and business performance. At its core, it’s about delivering an adequate return on the capital entrusted to us by our shareholders. Thanks to the progress we’ve made over the past few years, we’re now able to do that again – without drawing on our reserves. We achieved record earnings in 2024 and intend to grow profits further this year. For 2025, we’re therefore planning a payout ratio of more than 100% of net profit – after restructuring costs of up to 700 million euros and after AT1 coupon payments. Ultimately, full profit distributions in the coming years also make sense as a way to steer our core capital ratio – from 15.1% recently – to our target of 13.5% by 2028. That would leave us appropriately capitalised.
Wouldn’t investments in future growth be a better option? You could make acquisitions instead.
We are, of course, investing and pushing forward with the bank’s transformation. „Momentum“ is a clear growth strategy: Across all segments, we’re targeting 4% annual growth – organically. In retail banking, we’re expanding our asset and wealth management business. In corporate banking, we aim to do more business with SMEs and are increasingly focusing on international growth. We’re not fundamentally ruling out acquisitions. But we’re also clear that any acquisition of product or distribution capabilities must not dilute our 2028 targets.
What does that mean in concrete terms?
We’ll only pursue inorganic growth if the acquired business contributes to reaching our targets of a 15% return on equity and a 50% cost-income ratio. Our business plan is ambitious but realistic. We’re able to achieve our targets without making acquisitions.
Thanks to the generous capital returns, the government’s remaining stake in Commerzbank has become more attractive. How much have you paid out to the Federal Agency for Market Stabilisation (FMSA) since the programme began?
The government has benefited from dividends from a reinvigorated Commerzbank – around 200 million euros for the 2022, 2023, and 2024 financial years in total. In addition, we’ve bought back around 1.72 billion euros worth of shares. That has contributed to our very positive share price development, which has significantly increased the value of the government’s stake.
Both Chancellor Friedrich Merz and Finance Minister Lars Klingbeil have publicly spoken out against a Unicredit takeover. Do you hope the government remains a core shareholder?
In general, a stable shareholder structure is desirable. It helps us focus on implementing our strategy.
Have you met Mr. Klingbeil yet?
No. I assume that other introductory meetings rank higher on his agenda. Besides, both the Finance Minister and the Chancellor have already taken a clear position on Commerzbank. The Economy Minister and many others have as well. We typically meet with government representatives quarterly – just like with other investors.
What are your expectations of the new government?
Above all, swift implementation of their announced plans. That applies not only to investment packages and cutting red tape, but also to the proposed tax rate changes and depreciation rules. The plans target the right areas, as these are the factors that can help stabilise our economy. If implementation happens quickly, I hope it will also have a stabilising effect on society. When people see that things are moving forward on these issues, their outlook on the future is likely to brighten.
With the investment package and the special defence fund, the new government has launched a major economic stimulus program. What is Commerzbank expecting from it?
The entire economy will benefit – and that’s always good for Commerzbank. However, it will take time before the effects are felt. For this year, we expect GDP growth of just 0.2% in Germany. But the momentum is there. For next year, we’re forecasting noticeable growth of 1.4%, driven in particular by more expansionary fiscal policy and increasing impulses from monetary policy. However, given that Germany’s structural economic issues haven’t been fully addressed and demand from China is likely to remain weak, a strong and sustainable upswing isn’t yet in sight. Growth is likely to strengthen further in subsequent years through second-round effects – but only if the funds are not just allocated but also accompanied by improvements to the regulatory framework, especially faster approval processes for construction and other investment projects. As Commerzbank, we stand ready to support the government’s investment drive as a financing partner.
The EU Commission also wants to reduce bureaucracy and launched its Omnibus package in February. Are you seeing any impact yet?
The political will to cut bureaucracy is clear, and that is welcome. Investing must become easier, and deployed capital must become effective faster. But we’re still at the very beginning of the process. And there’s still a large backlog of secondary regulation and legislation from the last legislative period – especially in the financial sector – that hasn’t yet been finalised. The challenge now is to push ahead with implementation.
Where do you see the greatest need for action?
Reporting obligations remain an issue. I’m not someone who would say that regulation just needs to be reduced across the board. Many of the regulatory requirements introduced over the past 10 or 15 years have genuinely contributed to stabilising the financial system. But I do see the enormous additional burden created by sustainability reporting as problematic.
You’re referring to the CSRD – the Corporate Sustainability Reporting Directive?
Yes. It’s a complex challenge, especially because the reporting requirements are being phased in over time. First, large companies will be subject to reporting, followed by mid-sized ones. The EU has just postponed the latter step by two years. How these requirements will apply to other companies is currently under discussion in Brussels.
With the Omnibus package, the EU Commission has effectively paused the clock on this topic and extended the transition periods by at least a year. Isn’t that good news for banks, easing the time pressure?
Not necessarily. Supervisors still expect us to collect and report the relevant data. Any delays and simplifications should ideally consider the entire value chain, to prevent making it even harder for companies still subject to reporting to meet their obligations – because they’ll have to rely on even more fragmented data sources.
Smaller companies could be relieved by exempting them from reporting altogether.
That’s true. Especially for small and medium-sized enterprises, meeting the many reporting and disclosure obligations is a challenge. At the same time, there’s a risk that these companies will be confronted with alternative, less standardized data requests from business partners or others. The excessive bureaucratic burden in Germany doesn’t just frustrate the Mittelstand. It also hampers economic development. A genuine reduction and fundamental review of reporting requirements – focusing on truly essential data – would be desirable, so that our clients can access financing more quickly and invest in growth.
Sustainability is also a hot topic in light of developments in the US. Under President Donald Trump, the anti-ESG movement has effectively become government policy. Many European banks have said they will stick to their sustainability goals regardless. Will that be sustainable in the long run?
At its core, it’s about keeping long-term economic consequences in mind when financing decisions are made – and pricing them accordingly. We remain convinced that sustainability will continue to be an important topic for our customers.
Do you see any competitive disadvantages in the US because of that?
No – not in the long term. Even if the concept isn’t popular there at the moment, I believe that sustainable investments will gain traction there over time as well. Factoring in the risks associated with certain financing projects isn’t just an ethical issue, it’s an economic one too.
In the US, some issues now go beyond trends and involve real sanctions –for example, corporate diversity programs, which President Trump effectively banned by executive order in January.
We’re monitoring developments closely. Diversity is a clear value for us and one that also contributes to business success. Some companies are currently adjusting their diversity goals. I firmly believe this won’t make the issues themselves or the broader debate disappear. That’s why we remain committed to an open, respectful, and diverse society – and we take our corporate responsibility seriously.
When firms like BlackRock distance themselves from ESG goals, doesn’t that affect you too? Most of the ETFs and fund shares you offer customers could become less „green“ as a result.
Our business model is built on offering customers the widest possible range of products. We’re also continuously expanding our advisory services to ensure that clients have access to products that match their risk profile and investment preferences – including sustainable investments.
But the bigger question remains: What projects will investors’ money fund in the medium and long term, especially given Europe’s limited capital market depth to finance the transition to a sustainable economy?
Clearly, there’s still work to do before we have a full European Capital Markets Union. But momentum is stronger now than it’s been in a long time – also when I look at initiatives like the Savings and Investment Union. That makes me cautiously optimistic, especially when it comes to the securitization market, which we’ve long advocated for. Even though the biggest players are in the US, there are capable banks and investment houses in Europe too. The current reform of securitisation rules is an opportunity for them. By taking certain loans off our balance sheets, bundling them, and making them investable for clients, we can deploy our resources more effectively and free up capacity for new lending. And we’re addressing a buyer base that’s actively seeking sustainable assets.
Even before the EU Commission officially presented its long-awaited reform proposal, there was strong criticism from market participants. Do you share that?
As so often, the devil is in the details. We share concerns that some of the new proposals may add even more complexity. But of course, we welcome the goal of cutting bureaucracy and making regulatory requirements – including capital requirements – more risk-based. If successful, the harmonisation being sought could provide positive momentum for the market.
So that Commerzbank could in future offer securitised assets, for example, to Dutch or Portuguese pension funds?
We can already do that today – but only in customized formats because they have to be structured according to the respective national rules. If the reform delivers on its promise, we could offer the same product across all markets. That would allow us to approach securitisation on a broader scale with less effort.
The EU Commission’s goal is to create uniform or at least similar investment conditions across markets – contributing to the deeper European capital market you mentioned.
Meet the interviewee
Carsten Schmitt returned to Commerzbank in 2025 after nearly four years at Danske Bank, taking over as CFO from Bettina Orlopp, who had moved up to CEO. The 47-year-old has spent most of his career at Commerzbank, where he started as a trainee in his hometown of Hamburg. He later served as COO of the bank’s US operations and as Chief Risk Officer in London. At Danske Bank, where he was Head of Strategy, he was struck by Denmark’s consensus-driven management culture – something he now seeks to integrate into his daily leadership style at Commerzbank.
