Update: Commerzbank AG

The stable outlook reflects our view that Commerzbank's multiyear restructuring will succeed and that it will largely achieve its financial targets. We anticipate a steady improvement in structural profitability and efficiency over the coming 12-24 months and continued sound capital levels. We see the most likely downgrade scenario for Commerzbank as one in which our economic forecasts weaken materially, implying depressed fee income and far weaker asset quality, including higher risk provisioning needs than expected. Although less likely, we could also downgrade the bank if its transformation seemed likely to fail to improve structural profitability, for example, due to failure to realize cost savings, or if it becomes evident that revenue potential is significantly weaker after the restructuring. Although currently

...Commerzbank AG is on track in its multi-year transformation and has exceeded its preliminary financial targets, thanks largely to interest rate hikes in the eurozone and Poland. S&P Global Ratings believes that Commerzbank has made solid progress in its multi-year transformation and realignment of its business model, which it began in early 2021. We see cost and efficiency measures broadly on track, including major headcount and branch reductions, as well as exiting unprofitable businesses and digital transforming the operating model. In 2022, Commerzbank achieved, if not exceeded, many of its interim targets. It reported a return on tangible equity (RoTE) of 4.9% and a cost efficiency of 69% for the year, which means the bank is well on track to meet its targets for 2024 of an over 7.3% RoTE and 60%...

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