Commerzbank (ETR:CBK) Chief Executive Bettina Orlopp said the German lender’s updated “Momentum 2030” strategy is built on continued revenue growth, lower costs and efficiency gains from artificial intelligence, while reiterating that the bank sees UniCredit’s current takeover offer as unattractive.
Speaking at a Goldman Sachs financial institutions event alongside Christoph Wortig, Commerzbank’s head of investor relations, Orlopp said the bank’s May strategy update followed what she described as a “very successful year” and a continued improvement in profitability. She said the plan is based on a robust business model, growth in net interest income and net commission income, and ongoing transformation of the cost base.
Commerzbank Targets Higher Returns and Lower Costs
Orlopp said Commerzbank is targeting a return on tangible equity of 17% in 2028 and 21% in 2030, with interim targets of 12% this year, 14% next year and 19% before reaching the 2030 goal. She said the targets reflect “continuous improvement” rather than a “hockey stick” plan and carry “very limited execution risk” from management’s perspective.
The bank also expects its cost-income ratio to fall from 56% to 53% this year, then to 48% by 2028 and 43% by 2030. Orlopp said artificial intelligence is one of the most important drivers of that efficiency improvement, both by improving customer experience and by accelerating internal processes.
Commerzbank currently estimates AI will contribute about 500 million euros in value from 2030 onward, with most of that linked to cost reductions. Orlopp also cited cost avoidance, revenue gains and fraud prevention as potential benefits. She described an example from the bank’s legal team, where a first draft of a new policy that would normally take a week was generated in seconds using a legal technology tool.
Deposit Growth Seen as Modest, Competition Monitored
On net interest income, Orlopp said growth is expected to come from loan growth and stable deposit development. She said the bank is not assuming significant deposit growth, but rather a modest 2% to 3% increase driven by inflation.
Orlopp said Commerzbank is assuming its deposit beta will rise from an already high 41% in Germany to 45%, reflecting competitive pressures. Asked about Chase entering the German deposit market, she said the offer has so far attracted the same “interest rate hoppers” that have been moving among direct banks and other competitors.
She said Chase’s offer is currently a call money account rather than a current account, and that Commerzbank does not see it as a direct threat at the moment. However, she said the bank is monitoring the situation and investing in its mobile app and onboarding processes to improve its own value proposition.
Orlopp also said Commerzbank’s replicating portfolio is expected to add value each year, assuming no significant change in forward rates and stable deposits. She said the portfolio’s average yield is currently 1.3% for this year and described the related revenue stream as “a very safe bet.”
Loan Growth Supported by International Network
On lending, Orlopp said Commerzbank had assumed continued loan growth in its plan and that recent growth had exceeded expectations. She said the bank previously expected annual loan growth of about 8%, but last year achieved 10%.
She said double-digit growth may not continue, but the figure should remain high. While the bank had expected more growth in Germany due to fiscal stimulus and stronger GDP assumptions, Orlopp said German corporate clients are increasingly investing outside Germany, partly because of geopolitical uncertainty. She said Commerzbank’s international network is supporting that growth.
She also cited strength in the public sector, institutions business and renewable energy as contributors.
CEO Says UniCredit Offer Lacks Premium
Turning to UniCredit’s takeover offer, Orlopp said Commerzbank remains open to discussions about a friendly transaction, but only if two conditions are met. First, she said shareholders would need to receive a “decent” or “significant” premium, because they would be giving up control and future value creation potential. Second, she said any combination would need to reflect the value of Commerzbank’s business model and include appropriate governance.
Orlopp said the current offer contains no premium and instead represents a discount. She argued that, under those circumstances, investors who want UniCredit shares would be better off selling Commerzbank shares and buying UniCredit directly, though she also emphasized Commerzbank’s standalone strategy and capital return plan.
She said Commerzbank’s current plan would return approximately 50% of its market capitalization to shareholders over the next four years.
Orlopp also said a hostile approach would be “value destructive” for stakeholders on both sides, including Commerzbank, UniCredit and HVB. She warned that competitors could seek to take clients and employees during a disorderly process.
Commerzbank Questions Tender Dynamics
Orlopp said Commerzbank issued a press release questioning the progress of the offer because management saw tendering activity it did not view as economically rational, given that the offer was below the prevailing share price. She said the bank’s analysis indicated that some tendering parties were banks connected to UniCredit through tier structures, and that retail investor participation was negligible at 0.05%.
She also raised concerns about the inclusion of derivative structures in assessing UniCredit’s position, saying Commerzbank wanted the process to be more transparent. Orlopp said the bank had asked German regulator BaFin to review the matter.
Asked about a potential scenario in which UniCredit holds between 40% and 50%, Orlopp said that is not Commerzbank’s base case. She described such an outcome as a “limbo” or “messy” scenario in which UniCredit could have a large stake but still lack the 75% majority required for structural measures.
Orlopp closed by saying management would pursue a friendly agreed deal if it believed that was best for the company, but said shareholders should compare the alternatives carefully. “The worst of all options is a hostile takeover because it will destroy a lot of value,” she said.
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.
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