rewrite this title Commerzbank posts 20% hike in annual profit and launches new share buyback as it wards off UniCredit

Commerzbank on Friday unexpectedly released quarterly results, touting “record” annual profit and announcing a new share buyback scheme.

The bank said it achieved a 20% increase in net profit to 2.68 billion euros ($2.78 billion) in 2024. This compares with a $2.47 billion net profit forecast for the period, according to a consensus estimate cited by Reuters.

The group laid out intentions to repurchase 400 million euros of shares and proposed to lift its dividend payout to 0.65 euros per share, compared with 0.35 euros per share in the previous year.

Shares in the lender were up 2% at 2:10 p.m. London time, following the release.

Other annual highlights included net income of 8.33 billion euros in 2024, versus 8.37 billion euros in the previous year, with the bank noting it benefitted from foreign exchange valuation effects in the fourth quarter. Its return on tangible equity — a measure of profit performance — picked up to 9.2% in 2024 from 7.7% in 2023, exceeding the group’s target of hitting at least 8%.

The group had originally listed plans to publish its fourth-quarter and annual earnings on Feb. 13, when it also intends to deliver its annual strategy update and outlook. The early release falls in step with German legal requirements when the amount of capital return significantly surpasses the expectations of capital markets.

The results come as Commerzbank has been making a case to stand alone, after a surprise stake build from Italy’s second-largest lender UniCredit stoked market speculation of interest in a potential takeover. UniCredit now owns a direct 9.5% stake and a 18.5% stake via derivatives in Commerzbank, after first building its stake in September, then subsequently increasing its position.

The move has been met with resistance from the German government, whose Finance Minister Jörg Kukies criticized UniCredit’s “very aggressive, very opaque” bid in a CNBC interview last week.

“We have exceeded our capital return promise to our shareholders,” said Commerzbank CEO Bettina Orlopp in a statement accompanying the results, citing cost management and growth initiatives as driving the profit increase.

“Thanks to increasing profitability and new growth initiatives, we will further enhance capital return in the coming years. Commerzbank is and remains an attractive investment,” she noted.

Since its September overture, UniCredit has also launched a takeover bid for domestic Italian peer Banco BPM, raising questions on whether it will press ahead with a domestic or German venture.