Commerzbank Sees 30% YoY Jump in Q2 Revenues

Germany-based bank Commerzbank has posted its financial results for the second quarter of 2022, revealing a jump in revenues on a yoy basis.

In the second quarter, Commerzbank increased its revenues by 30% to €2,422 million (Q2 2021:€1,862 million) thanks to strong customer business and rising interest rates. Driven by significant interest rate hikes in Poland and the rise in long-term interest rates in Germany, net interest income increased by 26% to €1,478 million (Q2 2021: €1,173 million). Compared to an already strong result in the previous year, the Bank also improved net commission income by a further 5% to €896 million (Q2 2021: €852 million). This was above all supported by high volumes in payment transactions in the Corporate Clients segment as well as by a high level of transaction business at mBank.

In the first six months, revenues increased by around 20% to €5,216 million (H1 2021:€4,353 million). As already announced, Commerzbank expects a revenue burden in the third quarter due to new legislation in Poland allowing private borrowers "credit holidays" for mortgage loans.

With minus €106 million (Q2 2021: minus €87 million), the risk result in the second quarter was in line with expectations. The ratio of non-performing loans remained low at 0.8%. With €27 million, the basic loan loss provisions were also at a low level. In addition, there were charges of €228 million in connection with the Russia-Ukraine war, which were covered to a large extent by the existing top level adjustment (TLA). As of the end of June, the Bank has a total of €564 million TLA available for potential further direct effects from the Russia-Ukraine war, as well as for secondary effects such as the interruption of supply chains or high energy prices. Driven by provisioning effects in connection to Russia booked in the first quarter, the risk result was at minus €570 million after the first six months (H1 2021: minus €235 million). Since the beginning of the Russian invasion of Ukraine, the Bank has reduced its Russian net exposure by around 45% to net €1.02 billion by mid-July.

The Bank is on track with its cost-reduction programmes. In the second quarter, the operating costs declined by more than 16% to €1,425 million (Q2 2021: €1,704 million). This particularly reflects personnel reductions and savings from the optimised branch network. In addition, there was a negative one-off effect in the previous year. The reductions were again offset by higher compulsory contributions, which more than tripled to €144 million (Q2 2021: €39 million), above all due to new charges in Poland. Total expenses decreased by 10% to €1,570 million (Q2 2021: €1,743 million). Therefore, the cost-income ratio in the second quarter was 65% (Q2 2021: 94%). Total expenses in the first six months declined by 5.4% to €3,356 million (H1 2021: €3,548 million).

All in all, the operating result increased considerably in the second quarter to €746 million (Q2 2021: €32 million); in the first six months the operating result was €1,289 million (H1 2021: €570 million). The result for the quarter after taxes and minority interests amounted to €470 million (Q2 2021: minus €527 million). After six months the Bank has generated a net profit of €768 million (H1 2021: minus €394 million).

The Common Equity Tier 1 ratio (CET 1 ratio) as of 30 June increased to 13.7% (Q1 2022: 13.5%). This already includes a deferral for the planned dividend payment of 30% of the net profit. ​Furthermore, the ratio already reflects an increase in the credit RWA due to an anticipated effect of model adjustments. The buffer to the current regulatory requirement (MDAthreshold) of 9.4% was about 430 basis points at the end of June.

"With our comfortable capital base and our conservative risk provisioning we are well equipped for upcoming challenges. Thanks to the strong development of our operating business and the progress in costs we continue to expect a net result of more than 1 billion euros for the year 2022. This, however, assumes that there will be no material additional provisions for the Swiss franc loan portfolio at mBank and no severe deterioration in the general development of the economy. In this respect, natural gas supplies to the German economy remain a major source of uncertainty," said Bettina Orlopp, Chief Financial Officer of Commerzbank.