FINANCIALS: Commerzbank Preview: DBK A Weak Indicator

Commerzbank (CMZB: Baa2 pos/BBB- pos) results are due on 7-Aug. Deutsche’s recent domestic results were disappointing but CMZB spreads have remained well supported (relative) which implies some degree of expectation built in… or that bid speculation persists.

• The bank last reported on 15-May and results were good with CET1, loan losses and non-performers all better than expectations. Revenues were also ahead and NII guidance was upgraded, as was equity payout guidance.
• Deutsche results (24-Jul) were a little disappointing in its domestic retail businesses, so that’s a weak indicator. Unicredit’s CEO has been talking up bank M&A recently, CMZB being one of those linked to the Italian major. CMZB also got an AT1 issue away during the quarter with strong demand. Russia continues to feature with Commerz still having a local business – the ECB is pressuring all banks to exit more rapidly than prior plans may have indicated.
• CMZB spreads have outperformed since those good results in May, and have done similar during recent market volatility which may indicate some bid speculation keeping them tight, we feel. Either way, expectations are relatively high.
• Estimates are, however, little changed since last results, largely because mgmt simply reaffirmed over FY24 guidance, even with the improved NII commentary, we feel.

Results are likely at 0600 (London time) with an 0800 conf call at: https://www.webcast-eqs.com/commerzbank-2024-q2