Commerzbank: Raising Fair Value as We Anticipate Structurally Higher Returns Through the Cycle

We are raising our Commerzbank fair value estimate to EUR 15.80 per share from EUR 11.60 after updating our model. We believe that the bank has achieved significant progress in addressing its previously lackluster profitability outlook. Partially, this is owed to the much-improved interest-rate outlook, but structural cost cuts have also contributed materially. While interest rates appear set to be cut again in 2024, we don't anticipate them to get close to or below zero again. A leaner Commerzbank in a positive interest-rate environment is ultimately a more stable bank; the lack of stability over the past years has been one of the biggest hindrances in its investment case.