Germany's Commerzbank experiences its best financial performance in 15 years due to high interest rates.

• Commerzbank reported a higher-than-expected net profit of 2.2 billion euros ($2.36 billion) for the year, an increase from 1.4 billion euros the previous year.
• The increase in net interest income for 2023 was around 30%, with a 8.5% rise in the fourth quarter, due to high interest rates.
• On Thursday, Deutsche Bank's Benjamin Goy and Marlene Eibensteiner characterized the numbers as a "strong 4Q23 results" and maintained their buy rating on the stock.

The German banking giant reported its best results in 15 years on Thursday, with a 55% hike in net profit for 2023 due to high interest rates.

The net profit for the year exceeded expectations, reaching 2.2 billion euros ($2.36 billion), an increase from 1.4 billion euros the previous year. In the fourth quarter, net profit was 395 million euros, a 16% decrease from the same quarter the year before, but still ahead of consensus estimates published by Commerzbank.

The session ended with shares provisionally up 5.5% after investors welcomed the results.

The increase in net interest income for 2023 was around 30%, with a 8.5% rise in the fourth quarter, due to high interest rates.

Despite recognizing that the continuing economic slowdown will remain a challenge in the current financial year, the bank expects its net profit to be above 2023 levels.

On Thursday, Deutsche Bank's Benjamin Goy and Marlene Eibensteiner characterized the numbers as a "strong 4Q23 results" and maintained their buy rating on the stock.

Although the pre-provision profit was slightly below expectations, the net profit was 9% above the consensus. Additionally, the mix was favorable as net interest income and costs exceeded expectations by 2%.

Although the 2024 guidance aligns with expectations, it is uncertain whether the bank's implied net interest income slowdown is too conservative, given its history of beating and raising its own 2023 net interest income guidance five times.

Despite being bailed out by the German government during the 2008-2009 financial crisis, Commerzbank has managed to reduce its costs by 10 million euros from the previous year, to 6.4 billion euros in 2023.