On Wednesday, Germany's Commerzbank (CBKG) reported that its net profit doubled during Q1. This was achieved due to the higher interest rates in the country & the rest of the world.
Overall, the net profit earned by Commerzbank was 580 million euros or around $638.46 million. Just last year, the bank only earned 298 million euros in net profit during the same quarter.
For the most part, analysts were only expecting Commerzbank to make 481 million euros in net profit. But the actual result turned out to be 99 million euros higher.
Upside Potential Expected By Commerzbank
Looking ahead, Commerzbank said that it is expecting upside potential in regard to the net income coming from the interest rates.
Another important development occurring at Commerzbank is the major overhaul in which the company closed hundreds of branches and fired thousands of employees. So that's another factor which allowed the bank to cut back on costs & to improve its profitability.
If we look around, it appears that many banks are reporting better-than-expected earnings on account of higher interest rates.
Just last year, the bank posted yet another profitable year in a row and also rejoined the famous DAX index of Germany, which only contains blue-chip companies.
Although the bank was bailed out after the financial crisis more than 10 years ago, the government still holds a partial stake in it!
According to analysts, Commerzbank is still exposed to a lot of problems, such as a slow economy, high inflation, and even loans.
However, the Commerzbank CEO said that the financial institution is in good shape. He added that the transformation of the bank is going smoothly and has already started to show results.
If we look at the better than expected net-profit and the potential risks side-by-side, it becomes clear that not all is good with the Commerzbank. For the short to medium-term, the bank may post higher profits on account of interest rates though!