Commerzbank has had difficult years. It has cut thousands of jobs in recent years. But the tide seems to be turning. The bank is looking at the best result in its history.
The bottom line is that profit after taxes last year was around 2.2 billion euros. That was over half more than the year before. Commerzbank said that this was the best result in around 15 years, since the merger with Dresdner Bank. It is not worth comparing with the previous year’s figures because each institute was still doing business for itself.
Like many others, the major Frankfurt bank has benefited massively from rising interest rates. That’s why the DAX group has earned more money again with loans for private individuals and corporate customers. And the loans seem comparatively solid, so the bank had to set aside less money to secure them.
Savings interest rates for customers are sometimes meager
Commerzbank was also able to attractively invest its customers’ money with the European Central Bank. There she collected handsome interest on the balances she deposited. But it won’t stay that way forever, says Volker Brühl, managing director of the Center for Financial Studies in Frankfurt: “The ECB will probably start lowering interest rates again in the course of the year.”
In contrast, Commerzbank customers see low savings interest rates. New customers of the Commerzbank subsidiary Comdirect can get 3.75 percent per year on their current account, but the promotion is limited to six months. Other interest rates are significantly lower. Commerzbank’s savings account, for example, only receives 0.5 percent per year, and even the era of penalty interest is not yet completely over.
However, due to competition, banks will soon be forced to pass on higher savings interest rates, says Florian Heider, director of the Leibniz Institute SAFE in Frankfurt. This is likely to reduce their profits again.
The downer: the Polish daughter
And even Commerzbank’s results for last year could have been even better if it weren’t for its Polish subsidiary mBank. There have been problems there in connection with Swiss franc loans for years. There is a risk of further costly legal disputes, for which Commerzbank had to set aside more than a billion euros last year alone.
Despite everything, Commerzbank still achieved record results in 2023 and wants to involve its shareholders accordingly. The dividend for the past financial year is expected to rise to 35 cents per share, after 20 cents per share in the previous year. Commerzbank is now represented in the DAX again after having to leave the first stock exchange league.
Bank wants to increase record results again
The state also benefits from this, as it continues to hold more than 15 percent of the shares in the bank. When she mishandled the ailing Dresdner Bank and had to be rescued as a result of the financial crisis, the federal government came to her aid. Since then the bank has been partially nationalized and is likely to remain so. The Federal Ministry of Finance states: “There is currently no decision to terminate the participation.”
Looking ahead to the current year, bank boss Manfred Knof is confident that the bank can exceed its good consolidated results. Although they have had a tailwind from the increased interest rates so far, they want to become more independent of them. That’s why the bank wants to expand its business with corporate customers, for example, and offer them new digital payment products to accept mobile payments without a separate card reader. She also wants to increase her income through commissions in connection with securities transactions.
U-turn at HR strategy
Years of austerity also seem to be taking effect; Commerzbank has been able to significantly reduce its costs as a result, says banking expert Brühl. Just for comparison: Since the merger with Dresdner Bank, the number of branches has shrunk from 1,200 to now 400. Of the almost 60,000 full-time employees at both banks at the time, just 38,000 remain in the Commerzbank Group.
The bank says the job cuts were unavoidable. But now it is being overwhelmed by demographic change, so to speak. There are fewer and fewer young workers facing a large number of job vacancies. In addition, there would be natural fluctuation, meaning employees would leave the bank of their own accord. That’s why the bank no longer wants to reduce staff, but on the contrary wants to hire them in a targeted manner. Almost 20,000 employees are expected to be added by 2034.
“The mood is bad for many people”
Highly motivated and enthusiastic Commerzbank employees praise their employer highly on social media. If employees attract other employees or young talent to the bank, they receive cash rewards and high-quality smartphones. According to the bank, the first employees have already been hired as a result. They are also active at young talent fairs, at universities and even schools.
Of course, long-time employees would be happy that they would now be relieved by new employees, says Stefan Wittmann, who sits on the bank’s supervisory board for the ver.di union: “On the other hand, the mood among many is bad because they know that many thousands of employees were dismantled, which are missing in every nook and cranny.”
Works council circles say that the bank should have cut fewer jobs in recent years. Because now there are sometimes absurd situations in which former colleagues who left not long ago with severance pay are being reinstated.
Ursula Mayer, HR, tagesschau, February 15, 2024 11:51 a.m