Germany's Commerzbank aims for better returns after UniCredit bid

Commerzbank is setting itself higher profitability targets in its battle with the Italian bank UniCredit, which is making a bid to take over the German lender.

Commerzbank on Thursday announced plans to increase the return on equity for investors by more than 12% by 2027, higher than previously planned. The bank's return on equity in 2023 was about 8%.

The bank said it also plans to distribute more profit to shareholders.

Commerzbank has "considerable potential for growth and value enhancement," said Jens Weidmann, chairman of Commerzbank's supervisory board.

The bank said it expects net profit to increase to well over €3 billion ($3.3 billion) in 2027. By comparison, the bank reported net profits of €2.2 billion in 2023.

For the years 2025 to 2027, payout ratios of more than 90% are targeted, a significant increase over previously announced plans.

Incoming Commerzbank chief executive Bettina Orlopp said the bank also hopes to tap into additional earnings potential in certain business areas, including corporate banking, asset management and at its Polish subsidiary, mBank.

Commerzbank is under pressure to offer its shareholders attractive prospects in view of UniCredit's move to buy 21% of the shares in Commerzbank.

The investment would make UniCredit by far the largest shareholder in Commerzbank, ahead of the German government, which holds around 12%.

UniCredit also applied for permission to increase its stake to up to 29.9%.