Commerzbank Posts €913M Q1 Profit as UniCredit Bid Faces Steep Market Test Ahead of AGM

Commerzbank beats Q1 expectations with €913M profit, sharpening valuation gap as UniCredit's all-share bid lags market price ahead of AGM.

With just five days until its annual general meeting, Commerzbank has delivered a first-quarter profit that sharpens the valuation gap at the heart of the takeover battle with UniCredit. The Frankfurt-based lender earned €913 million attributable to shareholders in the three months to March, a 9% year-on-year increase that beat market expectations and gave management fresh ammunition to argue for independence.

The operating result climbed 11% to €1.358 billion – the best quarterly figure in the bank’s history – while total income reached €3.2 billion. Fee and commission income was the standout driver, hitting a record €1.102 billion on the back of strong securities activity among retail clients and revenues from bond and syndicated loan operations. Net interest income held steady at €2 billion, despite lower benchmark rates weighing on the Polish subsidiary mBank, and the risk result came in better than feared at minus €142 million.

The cost-income ratio improved to 53.4%, and the common equity tier 1 ratio stood at 14.5% at the end of March. On that capital strength, the board raised its full-year profit guidance to at least €3.4 billion.

Offer Lags Market Price as AGM Approaches

UniCredit published its offer document on 5 May, proposing 0.485 new UniCredit shares for each Commerzbank share, a value that equated to roughly €31.07 per share – well below Commerzbank’s current trading level of around €36.40. The stock has gained more than 41% over twelve months, leaving the Italian bank’s all-share bid without any premium and drawing criticism from Commerzbank’s leadership.

Management has declined to endorse the approach, pointing to a lack of detail on integration risks and what it calls misleading representations. A formal reasoned opinion from the board under Section 27 of Germany’s securities takeover act is still pending, but the tone is clear: shareholders would hand over control and future value upside without receiving any takeover premium.

The AGM on 20 May will test that message. On the agenda are the proposed dividend of €1.10 per share for the 2025 financial year and an authorisation to buy back up to 10% of the bank’s share capital. Combined with buybacks already completed worth around €1.5 billion, total shareholder distributions for 2025 are set to reach roughly €2.7 billion.

“Momentum 2030” Plan Lays Out Independence Path

Beyond the current year, Commerzbank has spelled out a medium-term strategy that is designed to make any takeover less attractive. Under the “Momentum 2030” programme, the bank targets a net return on tangible equity of 21% by the end of the decade and a cost-income ratio of 43%. Investments of around €600 million in artificial intelligence are planned over the same period.

The capital return policy is also part of the defence. The bank wants to keep a CET1 ratio of 13.5% as a floor, above which it will continue returning surplus capital to shareholders. That framework, combined with the improved earnings outlook, raises the bar for any potential acquirer.

Political backing has come from Berlin. Chancellor Friedrich Merz described UniCredit’s move as “hostile and aggressive” and rejected it “decisively”. The German government still holds just over 12% of Commerzbank.

Next Steps and Market Signals

The extended acceptance period for UniCredit’s offer is expected to run until 3 July 2026, with a formal closing not anticipated until 2027 due to regulatory approvals. The next major catalyst is the still-absent reasoned opinion from Commerzbank’s board, which will lay out the official counter-arguments in detail.

In the meantime, the share price continues to trade at a clear premium to the offer, though technical indicators suggest the rally may be overheating. The relative strength index stands at 83.3, a level typically considered overbought. On Friday, the stock edged 0.36% lower to €36.35, but the underlying message from the market is clear: investors are pricing in a significantly higher outcome than UniCredit has put on the table.