Excessive charges assist Germany’s Commerzbank submit finest leads to 15 years

Commerzbank on Thursday reported a 55% hike in web revenue for 2023, as excessive rates of interest helped the German banking big report its finest leads to 15 years.

Web revenue for the 12 months beat expectations to return in at 2.2 billion euros ($2.36 billion), up from 1.4 billion euros a 12 months earlier. For the fourth quarter, web revenue was 395 million euros, down over 16% on the identical quarter the 12 months earlier than, however forward of consensus estimates printed by Commerzbank.

Traders welcomed the outcomes, with shares rising round 2% in early European commerce Thursday.

Excessive rates of interest have been a driving issue behind the outcomes, with web curiosity revenue up round 30% for 2023 as an entire, and eight.5% larger within the fourth quarter.

In its outlook, the financial institution acknowledged that “continuing economic slowdown will remain a challenge in the current financial year.” Nevertheless, it stated it expects web revenue to be above 2023 ranges.

In an analyst be aware Thursday, Deutsche Financial institution’s Benjamin Goy and Marlene Eibensteiner described the numbers as a “solid set of 4Q23 results” and reiterated their purchase ranking on the inventory.

“While the pre-provision profit was modestly below expectations, the net profit was 9% ahead of consensus. More importantly, the mix was good with net interest income and costs beating expectations by 2%,” they wrote.

“The 2024 guidance is in line with expectations, however for a bank that beat and raised its own 2023 net interest income guidance five times it remains to be seen whether the implied net interest income slow down is too conservative again in our view.”

The outcomes comply with a serious enterprise overhaul at Commerzbank, which was bailed out by the German authorities in the course of the 2008-2009 monetary disaster. The financial institution stated it had decreased prices to six.4 billion euros in 2023, down from 6.5 billion euros the earlier 12 months.