New Capital Return Policy decided: Commerzbank plans to increase shareholder participation in company’s success
September 28 2023
- Total pay-out for 2022 to 2024 of €3 billion confirmed, pay-out ratio for 2024 will be at least 70%
- Net return on tangible equity (RoTE) expected to rise to more than 11% in 2027 given a CET 1 ratio of 13.5%
- For the years 2025 to 2027, pay-out ratio of more than 50% but not more than the net result after AT1 coupons and minorities is planned
- CEO Manfred Knof: “The planned increase of the pay-out ratio is an expression of our confidence in the Bank’s further development.”
Commerzbank expects increased profitability of its businesses and, given a CET1 ratio of 13.5%, a net return on tangible equity (RoTE) of more than 11% by 2027. On this basis, Commerzbank’s Board of Managing Directors has decided to update the Bank’s Capital Return Policy following consultation with the Supervisory Board.
For the years 2025 to 2027, a pay-out ratio well above 50%, but not more than the net result after the deduction of AT1 coupon payments and minorities, is planned. The pay-out ratio depends on the economic development and business opportunities. Prerequisite for a dividend is a CET1 ratio which is at least 250 basis points above the Minimum Regulatory Requirements (MDA) after distribution. The Annual General Meeting (AGM) will decide on each dividend payment. In addition to the approval of the European Central Bank (ECB) and the German Finance Agency, a prerequisite for a share buy-back is a CET1 ratio of at least 13.5% after distribution.
For 2022 to 2024, Commerzbank intends to return a total of €3 billion to shareholders as dividends and share buy-backs. To reach this target, the pay-out ratio will be at least 70% in 2024.
“With the successful implementation of our ‘Strategy 2024’, we have created the basis for a further rise in Commerzbank’s profitability,” said Manfred Knof, CEO of Commerzbank. “This increases the scope to share our success with our shareholders to an even greater extent. The planned increase in the pay-out ratio is an expression of our confidence in the Bank’s continued development.”
Following its successful restructuring, Commerzbank has resumed the return of capital to its shareholders for the 2022 financial year. In total, the Bank has distributed around €370 million by dividend and a first share buy-back – corresponding to a pay-out ratio of 30%. For the current financial year, the Bank aims to increase the pay-out ratio to 50%.
The full, revised Capital Return Policy will shortly be available on the Commerzbank website:
On 8 November 2023, Commerzbank will present all details of the further developed strategy as well as the concrete measures and targets for the years 2024 to 2027.
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Commerzbank is the leading bank for the German Mittelstand and a strong partner for around 26,000 corporate client groups and almost 11 million private and small-business customers in Germany. The Bank’s two Business Segments – Private and Small-Business Customers and Corporate Clients – offer a comprehensive portfolio of financial services. Commerzbank transacts approximately 30 per cent of Germany’s foreign trade and is present internationally in almost 40 countries in the corporate clients’ business. The Bank focusses on the German Mittelstand, large corporates, and institutional clients. As part of its international business, Commerzbank supports clients with German connectivity and companies operating in selected future-oriented industries. In the Private and Small-Business Customers segment, the Bank is at the side of its customers with its brands Commerzbank and comdirect: online and mobile, in the advisory centre, and personally in its branches. Its Polish subsidiary mBank S.A. is an innovative digital bank that serves approximately 5.7 million private and corporate customers, predominantly in Poland, as well as in the Czech Republic and Slovakia.
This release contains forward-looking statements. Forward-looking statements are statements that are not historical facts. In this release, these statements concern inter alia the expected future business of Commerzbank, efficiency gains and expected synergies, expected growth prospects and other opportunities for an increase in value of Commerzbank as well as expected future financial results, restructuring costs and other financial developments and information. These forward-looking statements are based on the management’s current plans, expectations, estimates and projections. They are subject to a number of assumptions and involve known and unknown risks, uncertainties and other factors that may cause actual results and developments to differ materially from any future results and developments expressed or implied by such forward-looking statements. Such factors include the conditions in the financial markets in Germany, in Europe, in the USA and other regions from which Commerzbank derives a substantial portion of its revenues and in which Commerzbank holds a substantial portion of its assets, the development of asset prices and market volatility, especially due to the ongoing European debt crisis, potential defaults of borrowers or trading counterparties, the implementation of its strategic initiatives to improve its business model, the reliability of its risk management policies, procedures and methods, risks arising as a result of regulatory change and other risks. Forward-looking statements therefore speak only as of the date they are made. Commerzbank has no obligation to update or release any revisions to the forward-looking statements contained in this release to reflect events or circumstances after the date of this release.