Commerzbank Results Preview: Revenues, Credit Quality and Capital

Commerzbank (CBK GY) reports 4Q23 at 0600 London time. Revenues, credit quality and capital return look to be significant events markets will look to.

• Rising rates have been a tailwind for banks’ net interest income lines across Europe; this is now slowing, if not going into reverse. NII estimates for FY24 have, after a rapid rise into mid-2023, slowed and are 1% lower than Dec-23. Consensus is still for 4% growth this year, however. Eurobank results have been mixed.
• Cost of risk is expected to tick back up in 4Q23 and across FY24; another common trend across peers but, with German real estate a particular stress point in markets right now, data on exposures, performance and outlook will be closely watched.
• CET1 should be flat on Sep-23 but expectations of a share buyback will push this lower through FY24. Good for equity holders, less so for credit investors.

Spreads are generally wider YTD, reflecting German credit risk more broadly, we feel. Conf call is 0800 London time at https://www.webcast-eqs.com/login/commerzbank-2023-q4