Frankfurt, Germany – Germany’s second-largest lender Commerzbank on Thursday said higher interest rates had helped it achieve its biggest net profit in 15 years in 2023.
Net profit soared by 55 percent year-on-year to reach 2.2 billion euros ($2.4 billion), Commerzbank said, while revenues climbed by 10.6 percent to 10.5 billion euros.
The lender said it had “benefited from strong customer business and persistently high interest rates”.
Like other European lenders, Commerzbank was boosted by the European Central Bank’s unprecedented streak of rate hikes last year, aimed at taming red-hot inflation.
CEO Manfred Knof said he expected “a further increase in net profit” in 2024, even as the ECB is widely expected to begin cutting rates later this year in the face of slowing consumer prices and a weakening eurozone economy.
To offset the expected impact of lower rates, Commerzbank is betting on increased income from commissions.
“We want to broaden our revenue base and thus become less dependent on net interest income,” Knof said.
The group is aiming for a four-percent increase in net commission income in 2024, while net interest income is expected to fall by almost six percent.
Commerzbank, in which the German government still holds a stake after a 2008 bailout, has embarked on a major turnaround in recent years to improve profitability. The cost-cutting drive has included job culls and branch closures as well as a strong focus on winning new customers.
The bank said it continued its “strict cost discipline” in 2023, reducing total costs by nearly one percent to 6.4 billion euros.
