FRANKFURT (dpa-AFX) - Commerzbank is setting itself more ambitious goals for the next few years and wants its shareholders to participate more in the company's success. Among other things, the management wants to raise the payout ratio. Analysts described the newly set profitability targets as ambitious. On the stock market, the news, which also resulted in an upgrade to "neutral" by Bank of America, was well received: Commerzbank shares were recently up more than eight percent.

After their losses at the beginning of September, they regained some ground. Since the beginning of the year, the stock has risen by almost a fifth to 13 billion euros. Thanks to the recent sharp rise in interest rates and the resulting increase in the profitability of the deposit and lending business, the share price had already risen by around a third last year. Since the record low in the Corona crash in March 2020, the share price has even risen by around 275 percent.

Thanks to the rally, Commerzbank has also been back in the Dax since February this year. The bank had to vacate its place in Germany's leading index in September 2018 for the now insolvent payment processor. Despite the recent significant gains, the share price is miles away from the record high adjusted for umpteen capital measures since the financial crisis - this was almost 285 euros at the beginning of the millennium, according to calculations by the Bloomberg news agency.

For the fiscal years 2022 to 2024, a total of three billion euros is to be distributed to shareholders via dividends and share buybacks, as the Frankfurt-based Dax group announced after close of business on Thursday evening. "In order to achieve this, the payout ratio for 2024 will be at least 70 percent," Commerzbank announced after deliberations by the Board of Managing Directors and Supervisory Board.

In principle, the bank aims to distribute more than 50 percent of its profit - after deducting interest payments on certain bonds and minority interests - in the years 2025 to 2027. It would also be possible for all profit remaining after that to go to shareholders - but not beyond that, as some analysts have recently called for.

"The planned increase in the payout ratio is an expression of our confidence in the further development of the bank," said Group CEO Manfred Knof. Last year, the bank, whose largest shareholder since the financial crisis has been the German state, generated a surplus of a good 1.4 billion euros, the highest since 2007. For the current year, the Board of Management is targeting a significant increase in profits.

And that is supposed to be just the beginning: The bank expects "increased profitability" and a return on equity after taxes of more than 11 percent for 2027. In 2022, the figure had been 4.9 percent, and the target for 2024 is more than 7.3 percent. Return on equity puts profit in relation to equity employed and thus shows how efficiently a company has used this money.

The after-tax return on equity target of more than 11 percent for 2027 appears ambitious given the consensus estimate of 9.3 percent for 2025, JPMorgan analyst Kian Abouhossein wrote. The medium-term payout policy promises an attractive yield, he added. However, investors' expectations are also comparatively high, he added.

As with other banks, Commerzbank's business is being boosted by higher interest rates. In addition, the cost-cutting measures of recent years are paying off: Commerzbank has cut thousands of jobs and shrunk the number of branches in Germany from 1,000 to 400. The foreign network has also been downsized.

For the financial year 2022, Commerzbank had for the first time again granted a dividend of 20 cents per share after three zero rounds, about 370 million euros went to shareholders. For the current year, CFO Bettina Orlopp had recently held out the prospect of a profit distribution in the order of around 900 million euros. The bank has now confirmed this in its planning. For 2024, shareholders can therefore expect around 1.7 billion euros according to current planning. The share price was 0.8 percent above the Xetra closing price on the Tradegate trading platform on Thursday evening.

The German government is also benefiting from the windfall: Since the rescue of Commerzbank in the financial crisis of 2008/2009, the German government has been the largest single shareholder in the bank, currently holding a 15.6 percent stake. Federal Finance Minister Christian Lindner recently confirmed that the German government was "very satisfied with the bank's performance. Commenting on a possible sale of Commerzbank shares, the FDP politician said: "The federal government is sticking to its goal of privatizing state holdings that are not needed in the long term. No concrete decisions have been made regarding Commerzbank."

Commerzbank plans to present details of the revised strategy as well as specific measures and targets for the years 2024 to 2027 on November 8. The publication of the interim financial statements for the third quarter of 2023 is also planned for that day.

There will be no further large-scale job cuts this time, as Group CEO Knof had recently indicated. "The financial restructuring of Commerzbank is complete, of course we will continue to look at costs in a disciplined way," he had said at a banking conference in Frankfurt. "Growth in customer business is our priority: we want to continue to grow in both segments - retail and corporate banking."/ben/jcf/tih/zb