What Commerzbank (CBK) Said on Its Q3 Earnings Call

Commerzbank ETR: CBK reported record profit for the first nine months of 2026 and reaffirmed its full-year earnings outlook, even as it lowered its net interest income forecast amid increased competition for deposits in Germany.

The bank also said it was preparing for consolidation into UniCredit Group, with outstanding regulatory approvals expected in the fourth quarter of 2026 or the first quarter of 2027. CEO Bettina Orlopp said the immediate focus was on that initial stage rather than a potential deeper integration, whose timing remains unclear.

Revenue rose 8% year over year to €9.7 billion in the first nine months, while operating profit increased 17% to €4 billion. Net profit reached €2.7 billion, which Orlopp described as a record for the period. The bank’s net return on tangible equity was 12.4%, and its cost-income ratio was 50% excluding compulsory contributions.

For the third quarter, Commerzbank reported operating profit of €1.3 billion and net profit of €859 million. Revenue increased 9% from a year earlier, while net commission income rose 9% to €1.1 billion, supported by the securities business in Germany.

Deposit Competition Prompts Interest Income Revision

Commerzbank reduced its 2026 net interest income forecast to approximately €8.5 billion from €8.6 billion. CFO Carsten Schmitt attributed the revision to deposit competition and pressure on loan margins, while noting that some movements in interest income were offset by fair value results.

The bank maintained its total revenue forecast of €13.2 billion, raising its expectation for combined net fair value and other income to about €400 million. Schmitt said the changes in the two line items were not entirely linked: stronger underlying business in corporate clients also contributed to the fair value result.

Schmitt said Commerzbank had allowed approximately €3 billion of rate-sensitive call money to leave in the third quarter rather than match unusually high rates offered by competitors. The bank introduced more attractive offers for new call deposits in the fourth quarter and expects deposit volumes to increase again, he said.

Corporate client loans grew by €15 billion, or 14%, over the preceding 12 months. Schmitt said growth was largely international, while loan margins had come under modest pressure across the portfolio.

For 2027, Schmitt said the bank’s replication portfolio could contribute approximately €700 million in additional interest income. He said part of that increase would help offset deposit competition and that he was “not uncomfortable” with the €9.3 billion analyst consensus for 2027 net interest income. The bank plans to provide its 2027 guidance with full-year results in February.

Full-Year Targets and Capital Returns

Commerzbank reaffirmed its 2026 forecast for net profit of at least €3.4 billion, a cost-income ratio of about 53% and a return on tangible equity of around 12%. It also maintained its outlook for approximately €7 billion in costs and a risk result of about €850 million.

The third-quarter risk result was €210 million, and the non-performing exposure ratio stood at 1.2%. Asked about the full-year risk forecast, Orlopp said the bank was taking a cautious stance but would look at the €850 million figure “from the lower end than from the upper end.”

The bank’s common equity tier 1 ratio fell to 14.2% from 14.4% in the second quarter, largely because of market-related valuation effects. Commerzbank continues to expect a year-end ratio above 14% and reiterated its target of distributing 100% of earnings through dividends and share buybacks.

Schmitt said the bank had reserved €2.5 billion for distribution in the first nine months, representing the full net result after payments on additional tier 1 instruments. Orlopp said the bank remained committed to its capital return policy as it moves toward becoming part of UniCredit Group.

UniCredit Preparations and Longer-Term Plans

Orlopp said Commerzbank expects to remain listed with 51% minority shareholders during the initial phase of UniCredit’s consolidation. The banks are discussing potential benefits from joint procurement, technology, cybersecurity, artificial intelligence and cooperation on products and financing, she said.

A deeper integration could create further synergies, but Orlopp said its timing was unclear and that the bank was focused on the first phase. She also pointed to protections for minority shareholders under German company law and said management must act in the interests of all shareholders.

Commerzbank reaffirmed its longer-term targets, including a 21% net return on tangible equity and a 41% cost-income ratio by 2030. Orlopp said restructuring charges for an additional planned reduction of 3,000 full-time equivalent positions would likely begin in the fourth quarter, with the remainder expected in 2027.

Asked whether Commerzbank could update its medium-term targets in February to reflect potential UniCredit-related efficiencies, Orlopp said that would be an objective, but she did not know whether the bank would be ready to do so.

About Commerzbank (ETR:CBK)

Commerzbank AG provides banking and capital market products and services to private and small business customers, corporate, financial service providers, and institutional clients in Germany, rest of Europe, the Americas, Asia, and internationally. It operates through two segments, Private and Small-Business Customers, and Corporate Clients. The company offers saving, checking, business, and current accounts; term deposits; pension; credit and debit cards; payment solutions; overdraft services; various loans; and insurance products.

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