Commerzbank Earnings: Carried by Higher Rates Commerzbank Announces Ambitious New Strategic Goals

No-moat Commerzbank reported third-quarter operating profit of EUR 1.116 billion, up 25% on a sequential basis driven by a better risk result performance. With the tailwind of higher interest rates and an overall good execution on its cost savings initiatives, Commerzbank has come close to its 2024 targets early. Prompted by the good performance of late, the bank announced an extension of its strategy to 2024, now expecting to achieve a net return on tangible equity of 11.5%, a cost/income ratio of 55%, and a net result of EUR 3.4 billion by 2027. Commerzbank is looking to improve its noninterest dependent income stream, partially by moving into the asset and wealth management space. While the strategic direction is understandable, we believe Commerzbank has a steep hill to climb if it plans to gain a meaningful foothold in the asset and wealth management segment. Other European banks made such a strategic shift years ago, all going after the lucrative capital asset and wealth management space. We maintain our EUR 11.60 per share fair value estimate and no-moat rating.