Commerzbank Reports Good Underlying Performance in Third Quarter, but Remains Risky Pick in Our List

No-moat Commerzbank reported third-quarter operating profits of EUR 282 million, ahead of the EUR 137 million consensus estimate collected by the bank prior to the release. The quarter was hit by a EUR 477 million provision for the Swiss franc loan portfolio at mBank, which was communicated already prior to this release. Excluding these effects, performance was good. Net interest income grew 45% to EUR 1,621 million as the increasing deposit rates by the European Central Bank are unwinding the strain Commerzbank has felt for a decade now. Operating expenses also showed good development, declining nearly 4% to EUR 1,429 million as the shrinking of Commerzbank’s employee and branch base has progressed. We maintain our EUR 9 per-share fair value estimate.