Bulletin: Commerzbank's New Capital Policy Underpins Expectations And Higher Profit Targets May Add Support In The Medium Term

Frankfurt (S&P Global Ratings) Sept. 29, 2023--S&P Global Ratings today said that Commerzbank AG's revised capital return policy is in line with the current ratings and outlook (see "Commerzbank AG Upgraded To 'A-/A-2' On Stronger Bail-In-Able Debt Buffer; Outlook Stable," published March 23, 2023, on RatingsDirect). Over the medium term, the bank's achievement of profit targets increased beyond 11.0% return on tangible equity by 2027 (up from 7.3% previously) could prompt us to no longer regard persistently low profitability as a key rating constraint. That said, this would depend on, among other things, not increasing the risk appetite in the revised plan. We also think the prospects of success will be materially sensitive to the economic and operating environment over

...This report does not constitute a rating action. Frankfurt (S&P Global Ratings) Sept. 29, 2023--S&P Global Ratings today said that Commerzbank AG's revised capital return policy is in line with the current ratings and outlook (see "Commerzbank AG Upgraded To 'A-/A-2' On Stronger Bail-In-Able Debt Buffer; Outlook Stable," published March 23, 2023, on RatingsDirect). Over the medium term, the bank's achievement of profit targets increased beyond 11.0% return on tangible equity by 2027 (up from 7.3% previously) could prompt us to no longer regard persistently low profitability as a key rating constraint. That said, this would depend on, among other things, not increasing the risk appetite in the revised plan. We also think the prospects of success will be materially sensitive to the economic and operating environment over the coming years. We expect to receive further details on the new plan on Nov. 8, 2023, including information on cost management, measures to improve fee income, and lending...

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