Commerzbank’s Strategic Defense: Record Profits and Shareholder Returns Amid Acquisition Speculation

Commerzbank finds itself navigating a complex landscape, balancing a robust defense of its independence against mounting market pressures. The German lender’s recent financial performance and capital return strategy form the core of its defensive playbook, even as a key European rival edges closer to a regulatory threshold that could trigger a formal takeover bid.

Shareholder Returns Take Center Stage

In a clear signal to the market, Commerzbank is aggressively returning capital to its investors. The bank’s board intends to propose a dividend of €1.10 per share at the upcoming Annual General Meeting, a figure that surpasses analyst expectations which, according to sources, had been set at €1.00. Concurrently, a new share buyback program worth €540 million is underway. The bank has already acted, removing over six million of its own shares from the market in mid-February.

Looking ahead to 2026, management has outlined an ambitious capital return policy, targeting a distribution of 100% of its net result through dividends and repurchases. This forms part of a broader goal to achieve a Return on Tangible Equity (ROTE) exceeding 11.2% for the coming year.

A Record 2025 Tempered by Cautious Guidance

Operationally, the bank delivered a strong performance for 2025, posting a record profit of €4.5 billion. This represented an 18% increase from the prior year. Fourth-quarter revenue grew by 6%, driven by strength in Trade Finance, Securities Services, and Payment Transactions. Key efficiency and risk metrics included a Cost-Income Ratio of 59% and credit defaults of 24 basis points. The full-year ROTE for 2025 stood at 8.7%.

Despite these record figures, the initial market reaction was subdued. The primary cause was the bank’s 2026 profit guidance. While management expressed confidence in exceeding its previous target of €3.2 billion, the market consensus was notably higher at €3.4 billion. This failure to significantly “over-deliver” against expectations disappointed a segment of investors.

Further concern stemmed from the bank’s investment in Aquila Capital, where an additional impairment of €52 million was recorded. Sources indicate this write-down means approximately two-thirds of the original 2024 purchase price has now been lost.

Should investors sell immediately? Or is it worth buying Commerzbank?

UniCredit: The Looming Strategic Threat

The specter of a potential takeover, led by Italian banking group UniCredit, adds a layer of strategic tension. A significant development occurred on 22 February, when a restriction under German securities law expired. This now allows UniCredit to potentially finance a full acquisition using its own shares.

The scale of UniCredit’s existing stake is particularly noteworthy. The Italian bank holds a direct stake of roughly 26% and, through financial instruments, controls a total of nearly 29%. This brings the 30% threshold firmly into view—a level which, if crossed, would compel UniCredit to launch a formal public takeover offer. The German federal government, which holds 12% of Commerzbank, remains opposed to a merger, creating political headwinds but not eliminating the underlying dynamic.

Market Reaction and Critical Upcoming Dates

Recent share price movement suggests the market is responding positively to the capital return announcements. The stock, trading at €35.92, currently sits above its 50-day moving average (€34.97) and has gained 4.18% over the past 7 days. It remains approximately 4.85% below its 52-week high of €37.75.

The immediate calendar presents several key milestones. The current share buyback initiative is scheduled to conclude on 26 March 2026. This will be followed by the release of first-quarter results on 8 May 2026 and the Annual General Meeting on 20 May 2026. The ex-dividend date is set for 21 May, with payment to follow on 25 May 2026.

The coming months will be decisive in determining whether Commerzbank’s combination of financial performance and shareholder remuneration can solidify its standalone position, all while UniCredit’s ~29% holding looms ever closer to the critical 30% mark.