Commerzbank (ETR:CBK) CFO Bettina Orlopp told investors at an RBC event that the bank is “on a growth path,” pointing to a strong start to 2025, updated net interest income (NII) expectations, continued fee momentum, and a focus on efficiency and artificial intelligence (AI) initiatives.
Early-year momentum amid volatility
Orlopp said the bank was “pretty satisfied with the start in the year” across January and February, noting that market volatility can be supportive for securities and capital markets activity. She cited solid activity at comdirect, Commerzbank’s direct banking brand, which benefits from transaction volumes during volatile periods.
In the near term, she said the main negative impact the bank was seeing was in DAX-related securities income when securities volumes decline. She also said it was “too early to tell” what recent volatility implies for medium-term GDP growth, noting the bank’s own Germany GDP growth assumption was “rather moderate” at 0.9%.
Net interest income: replication portfolio and deposit dynamics
Discussing NII, Orlopp said Commerzbank views last year as the trough, with NII expected to rise. She described the replication portfolio as a major driver for both the current outlook and longer-term targets, and said current forward rates support the bank’s figures.
She outlined several factors embedded in NII expectations:
- A positive contribution from the replication portfolio.
- A reduction effect due to a lower average interest-rate level versus last year, with an assumed stable level of 2%.
- An expected increase in deposit beta due to competition, including a prospective new market entrant.
- Positive effects from volume growth on both loans and deposits.
- An assumption of further interest-rate cuts in Poland, affecting mBank, given rates there remain “at a very high level.”
Orlopp said these elements lead to an overall NII increase of about EUR 300 million year-over-year. Looking further out, she said that aside from the replication portfolio, other effects are expected to “equal out” over the next two to three years, with loan growth ambitions—particularly in corporate clients—offsetting higher deposit beta assumptions. She reiterated that corporate client loan growth is expected at 8% per annum.
Deposit competition and client behavior
On deposit competition, Orlopp said Germany remains highly competitive, with rate-sensitive customers moving between offers. She said Commerzbank-branded clients tend to be “much more sticky,” while comdirect’s digital customer base shows more movement.
She described the market as largely deposits “flying around” among direct banks, neobanks, and new entrants. She referenced BBVA’s prior entry and said the bank had not seen much outflow from that, while noting market talk that Chase may enter at some point with an attractive offering.
Fee income: multiple levers across segments
Orlopp emphasized that revenue growth was not solely driven by NII. She said last year revenue rose 10%, with net commission income growth of 7%, and cited contributions including mBank and other factors.
She described fee drivers as diversified across corporate clients, private clients, and mBank. For mBank, she highlighted payment-related fee growth and additional potential in securities and asset management, pointing to low investment penetration in Poland and a client base she characterized as younger, better educated, and more affluent than average. She also noted a pension reform in Poland as part of the broader backdrop.
In corporate clients, she pointed to capital markets business, payments, and the link between loan growth and fee income. In private clients, she cited comdirect’s transaction-driven model, broader securities volumes, payments, and discretionary portfolio management in wealth and asset management. She also noted Commerzbank introduced account fees last year for all accounts for part of the year, and expects a full-year effect in 2025.
Costs, AI investment, risk outlook, and capital returns
On efficiency, Orlopp said the bank has “clear targets” and intends to keep improving. She said Commerzbank delivered a 50% cost-income ratio last year versus a promised 57%, despite unexpected costs, including higher provisions tied to the long-term incentive program as the share price rose. For 2025, she said the bank improved its cost-income ratio guidance to 54% from an original 56% target, citing progress on both revenues and costs.
She also said the bank increased its investment program for change to EUR 600 million from a little above EUR 500 million, with spending directed toward innovative technology and AI. Orlopp said Commerzbank has worked on AI since 2017 through a Big Data and Analytics unit, and last year rolled out large language models to the entire organization. She described use cases including an in-app avatar generating about 30,000 monthly contacts, call-center “agent assist” tools, fraud detection during onboarding, and applications in operations, complaint management, and KYC. She said the bank is now focused on scaling use cases and driving adoption internally while balancing digital and more traditional client preferences, and maintaining appropriate human oversight for liability and customer protection reasons.
On asset quality, Orlopp said the bank feels “very comfortable” and does not yet see significant deterioration. She noted Commerzbank released top-level adjustments last year after embedding them into models. Still, she said the bank remains cautious and guided for an elevated risk result of EUR 850 million.
On capital returns, Orlopp said Commerzbank completed its second share buyback program for 2025 and intends to propose a EUR 1.10 dividend to the AGM. She said that would bring 2025 capital returns to EUR 2.7 billion, above net income, and noted that restructuring costs booked last year could be excluded for payout ratio purposes under the bank’s capital return policy. Orlopp said the bank has returned EUR 5.8 billion to shareholders in recent years and expects more to come, while reiterating a prioritization of organic investment, then value-accretive M&A, followed by capital return.
Closing the discussion, Orlopp characterized Commerzbank’s current positioning as a “growth… and transformation story,” highlighting cost discipline, growth opportunities, and the bank’s pace in adopting AI.
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.
