Commerzbank (ETR:CBK) executives highlighted record profitability, higher-than-planned shareholder distributions, and an improved outlook for 2026 during the bank’s fourth-quarter and full-year 2025 results call. CEO Bettina Orlopp said the “momentum strategy” delivered both growth and transformation milestones, while CFO Carsten Schmitt pointed to exceptionally strong fourth-quarter revenues and a stable capital position.
Record operating result and improved profitability metrics
Orlopp said Commerzbank delivered an operating result of EUR 4.5 billion in 2025, up 18% year over year, alongside total revenues that increased 10% to EUR 12.2 billion. Return on tangible equity (ROTE) before restructuring expenses reached 10%, which Orlopp described as the highest level since the global financial crisis and an important milestone setting a new profitability baseline from 2026 onward.
Capital return increases; dividend emphasis and new buyback
Management reiterated its focus on shareholder distributions. For the 2025 financial year, Commerzbank plans to return EUR 2.7 billion to shareholders, which Orlopp said was EUR 200 million more than originally planned and equated to a 100% payout ratio before restructuring expenses. She also cited a 7% total yield based on market capitalization at the start of the year.
Given the bank’s valuation “well above book value,” Orlopp said Commerzbank intends to put more emphasis on dividends, proposing an increase to EUR 1.10. On buybacks, she said the bank would start another share repurchase program of up to EUR 540 million, following the completion of a EUR 1 billion buyback in December.
Looking ahead, management said it continues to target a 100% payout ratio of net result after AT1 coupon payments, with an intention to increase the dividend share toward 50% over time. Orlopp said the capital return policy is designed to support a total yield rising to 10% in 2028.
Fourth-quarter performance: strong revenues, stable CET1
Schmitt said fourth-quarter results “strongly” contributed to the full-year outcome. In Q4, net ROTE reached 10.1% and the operating result was near-record on “very strong revenues.” Revenues rose 6% year over year in the quarter. The CET1 ratio was unchanged at 14.7%.
In Q4, Schmitt said:
- Net commission income was the best ever achieved by the bank in a fourth quarter, with growth across all customer segments.
- Net fair value results were EUR 74 million, up EUR 27 million year over year, driven mainly by a higher fair value result at mBank.
- Other income (excluding FX loan provisions) was EUR 79 million, mainly from a positive hedge result.
On net interest income (NII), Schmitt said the bank had “exited the trough” induced by ECB rate cuts and expected NII to continue growing in coming quarters. He noted that NII in Commerzbank rose slightly in Q4, helped by unchanged ECB rates versus Q3, strong corporate loan business, and deposit management. In contrast, mBank’s NII reflected materially lower central bank rates in Poland, partially offset by net fair value results.
Strategy execution: AI and asset management; Aquila impairment
Orlopp emphasized artificial intelligence as a “fundamental driver” of transformation, citing applications including AI-powered call support (“Agent Assist”), workplace tools (“ComGPT”), a fraud detection tool (“Fraud AI”), and a virtual assistant (“Ava”) in the banking app. She said Commerzbank increased its 2026 change budget from the originally planned EUR 500 million to “almost” EUR 600 million, with a rising share allocated to AI. Management also outlined planned 2026 use cases such as legal contract generation and annual report analysis for risk assessment, alongside further pilots of “agentic AI” with partners.
On asset management, Orlopp said the bank’s strategy combines in-house offerings and partnerships. She stated that the in-house units manage EUR 67 billion, while partner solutions cover EUR 95 billion in standard funds and ETFs. She noted current inflows are stronger in liquid assets, while the environment remains more challenging for less liquid assets.
Orlopp also addressed Aquila Capital, saying market challenges in early-stage renewable energy investments put pressure on two specialized institutional funds. As a result, the bank “pulled forward the full depreciation of the acquired capitalized client value,” and said it is now focusing on developing existing business and adding new business aligned with client demand. In the Q&A, Schmitt added that the bank has done the “full depreciation” of the relevant intangibles and said it did not expect further write-downs related to the remaining goodwill.
2026 outlook raised; key drivers and risks discussed
Management increased its 2026 outlook, citing a strong start to January and expectations for a “supportive, albeit modest” German macro backdrop. Orlopp referenced assumptions including 0.9% GDP growth, inflation near 2%, and the ECB deposit rate remaining at 2% through 2026.
Commerzbank’s targets for 2026 include:
- Net result of more than EUR 3.2 billion
- Cost-income ratio of 54% (improved from prior planning)
- ROTE of more than 11.2%
- 100% payout of net result after AT1 coupon payments
Schmitt raised the NII outlook to around EUR 8.5 billion for 2026, citing a more favorable forward curve and a larger replication portfolio, which he said would contribute an additional EUR 600 million in 2026. He also discussed offsets, including around -EUR 200 million from deposits invested at floating rates and an expected rise in deposit beta from 40% (average 2025) to 42% in 2026, which he said would reduce NII by around EUR 100 million. He also flagged that lower rates in Poland are expected to reduce mBank’s interest income in 2026.
On costs, Schmitt provided an absolute reference point during the Q&A, stating that the bank had EUR 6.9 billion of costs in 2025, including around EUR 200 million of extraordinary effects. He said that after considering general salary increases and about EUR 100 million of additional investments, costs in 2026 should “be nearing EUR 7.1 billion from below.”
Risk and capital guidance were also reiterated. Schmitt said the 2025 risk result was EUR 722 million, below the bank’s guidance of less than EUR 850 million, and guided again to around EUR 850 million in 2026 (25–30 basis points cost of risk), citing prudence amid structural changes and higher default rates. The bank’s overlays were unchanged at EUR 147 million at quarter-end. On regulatory requirements, Schmitt said Commerzbank’s 2026 capital requirements were lowered by 10 basis points following the ECB’s SREP letter, reducing the MDA by around 6 basis points effective in January.
Looking beyond 2026, Orlopp reiterated the bank’s 2028 ROTE target of 15% and outlined drivers including reduced burdens from FX loans in Poland, restructuring benefits, loan growth, the replication portfolio’s support to NII, and targeted annual growth of 7% in net commission income. She also cited potential upside from a steeper yield curve, stronger German stimulus, and faster AI-related efficiencies, while naming geopolitical risk, trade tensions, and deposit competition as potential headwinds.
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.
