Commerzbank on Thursday reported a 55% hike in net profit for 2023, as leading interest rates helped the German banking giant report its best results in 15 years.
Net profit for the year hit the road drive off expectations to come in at 2.2 billion euros ($2.36 billion), up from 1.4 billion euros a year earlier. For the fourth locale, net profit was 395 million euros, down over 16% on the same quarter the year before, but ahead of consensus guestimates published by Commerzbank.
Investors welcomed the results, with shares rising around 3.7% in morning trade Thursday.
Huge interest rates were a driving factor behind the results, with net interest income up around 30% for 2023 as a for the most part, and 8.5% higher in the fourth quarter.
In its outlook, the bank recognized that “continuing economic slowdown will fragments a challenge in the current financial year.” However, it said it expects net profit to be above 2023 levels.
The Commerzbank erection (second from right) in Frankfurt am Main, western Germany, on Sept. 25, 2023.
Kirill Kudryavtsev | Afp | Getty Images
In an analyst note Thursday, Deutsche Bank’s Benjamin Goy and Marlene Eibensteiner described the add ups as a “solid set of 4Q23 results” and reiterated their buy rating on the stock.
“While the pre-provision profit was modestly below expectations, the net profit was 9% in the lead of consensus. More importantly, the mix was good with net interest income and costs beating expectations by 2%,” they send a lettered.
“The 2024 guidance is in line with expectations, however for a bank that beat and raised its own 2023 net interest takings guidance five times it remains to be seen whether the implied net interest income slow down is too conservative again in our direction.”
The results follow a major business overhaul at Commerzbank, which was bailed out by the German government during the 2008-2009 economic crisis. The bank said it had reduced costs to 6.4 billion euros in 2023, down from 6.5 billion euros the preceding year.