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Commerzbank AG - Stock Quote CBK

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Morningstar's Commerzbank AG Stock Analysis

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Commerzbank Reports Good First Quarter; Lifting Our Fair Value Estimate to EUR 9

Niklas Kammer, CFA Equity Analyst

Analyst Note

| Niklas Kammer, CFA |

No-moat Commerzbank reported a good first quarter. Pretax profits came in at EUR 529 million versus just EUR 73 million a quarter ago. Income generation and operating expenses are trending in the right direction, with total revenue up 12% versus the same period a year ago and operating expenses down 2%. We are raising our fair value estimate to EUR 9 per share after lifting our revenue assumptions for Commerzbank. With the prospect of higher interest rates to be set by the European Central Bank and market rates already reflecting such a shift, we expect Commerzbank to benefit. Negative interest rates had been one of the headwinds the bank faced over the last years. That said, we currently still only assume a return on tangible equity of 5% by 2024. While Commerzbank has started to turn things around and the shares look undervalued, we believe risks remain high, driven by macroeconomic risks in tandem with a still-low profitability outlook. As a result, we believe it is likely that investors in Commerzbank may experience greater earnings volatility relative to other banks in our coverage.

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Commerzbank AG's Company Profile

Business Description

Commerzbank operates primarily in Europe. Germany, the group’s home country, contributes about 70% to total income. The bank operates two business segments: private and small-business customers as well as corporate clients. In its private and small-business segment, the group runs its branch business, a mobile bank with a focus on the Polish market, an online broker, and an asset manager for physical assets. Its corporate client business provides cash management and trade finance solutions to small and medium-size enterprises and large corporates.

Frankfurt, HE, 60261, Germany
T +49 6913620
Sector Financial Services
Industry Banks - Regional
Most Recent Earnings Mar 31, 2022
Fiscal Year End Dec 31, 2022
Stock Type
Employees 38,706

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