Good Q2 figures despite additional burdens from Polish CHF loans

• Revenues increased by 9% to €2.6bn driven by higher net interest income • Further provisions relating to the Swiss franc loans of mBank amounted to €347m in Q2 23 • Administrative expenses including compulsory contributions declined by 2% to €1.5bn • Consolidated profit was up by 20% to €565m for Q2 23 • Commerzbank confirmed its 2023 net result target well above FY2022 and indicated that it had asked the regulators for a share buy-back approval

Revenue decrease in Q1 but a strong profit increase thanks to lower risk costs

• Total revenues decreased by 4.5% to €2.7bn in Q1 23 compared to Q1 22 • The risk result (loan losses) improved from €464m for Q1 22 to €68m for Q1 23 • Consolidated profit was up by 95% to €580m for Q1 23 • Commerzbank confirmed all of its 2023 financial targets

Good 2022 figures pushed by rate hikes despite the burden of Polish mBank

• Total revenues were up by 12% to €9.5bn for 2022 compared to 2021 • Poland contributed negative revenue of €278m plus a further €650m of provisions for the Swiss franc loans of mBank • Net profit attributable to share increased from €291m for FY2021 to €1.24bn for FY2022 • Commerzbank is targeting a net result in 2023 well above the 2022 level. In addition, the Bank intends to increase the pay-out ratio to 50%

Good Q3 22 figures despite €500m loss of Polish mBank

• Revenues decreased by 6% to €1.9bn in Q3 22 due to one-off charges of €270m for so-called “credit holidays” at mBank • Further provisions relating to Swiss franc loans of mBank amounted to €477m in Q3 22 • The pre-tax result declined by 33% to €267m for Q3 22 due to a pre-tax loss of €528m for mBank in Q3 22 • Commerzbank confirmed its net result target of more than €1bn for the FY2022

Good Q2 figures owing to higher interest income and lower restructuring costs

• Revenues increased by 30% to €2.4bn driven by higher net interest income • Restructuring charges were €25m in Q2 22 compared €511m in Q2 21 • The net result was a profit of €470m for Q2 22 compared to a loss of €527m for Q2 21 • Commerzbank confirmed its net result target of more than €1bn for the FY2022 despite no contribution from Polish mBank • Risk costs of 20bp forecasted in a “no gas from Russia” scenario

Good Q1 figures

• Revenues increased by 12% to €2.8bn for Q1 22, driven by higher net interest income • The risk result rose to €464m for Q1 22 compared to €149m for Q1 21, owing to charges due to the war in Ukraine • The net result was €298m for Q1 22 compared to €133m for Q1 21 • Commerzbank confirmed all its 2022 financial targets

Surprisingly good preliminary Q1 figures

• Revenues increased by 12% to €2.8bn for Q1 22, driven by higher net interest income • The risk result rose to €464m for Q1 22 compared to €149m for Q1 21, owing to charges due to the war in Ukraine • The preliminary net result was €284m for Q1 22 compared €133m in Q1 21 • Commerzbank confirmed all its 2022 financial targets

Return to profit but still in restructuring mode

• Net profit increased from a loss of €2.9bn for FY2020 to a profit of €430m for FY2021 which was higher than consensus expectations of €95m. • Risk result declined from €1.75bn for 2020 to €570m for 2021. • Restructuring expenses were €1.08bn in 2021 compared to €814m in 2020. • Commerzbank expects a net profit of more than €1bn, and aims to pay a 30% dividend for FY2022, thereafter 30-50% plus potential share buy-backs.

Solid Q3 figures, profit pushed by lower loan provisions and tax income

• Total revenues decreased by 1% to €2.0bn in Q3 21 compared to Q3 20 • Net profit increased from a loss of €60m for Q3 20 to a profit of €403m for Q3 21 • Risk result (loan losses) declined €272m for Q3 20 to €22m for Q3 21 • Commerzbank expects now a net profit for FY2021

High net loss in Q2 21 from restructuring charges as expected

• Net loss was €527m for Q2 21 compared to a net profit of €183m for Q2 20 • Swing from a profit of €42m for “other income” in Q2 20 to a loss of €288m in Q2 21 • Risk result (loan losses) declined from €469m for Q2 20 to €87m for Q2 21 • Restructuring charges of €511m in Q2 21

Surprisingly good Q1 figures, net profit despite high restructuring charges

• Net profit of €133m for Q1 21 compared to a net loss of €291m for Q1 20 • Swing from a loss of €304m for the fair value result in Q1 20 to a profit of €360m in Q1 21 • Risk result (loan losses) declined from €326m for Q1 20 to €149m for Q1 21 but increase expected from H2 21 onwards • Restructuring charges of €465m in Q1 21 and another €680m in Q2-Q4 21

Huge loss for 2020 as expected

• Net profit after minorities attributable to shareholders decreased from €644m for 2019 to a loss of €2.9bn for 2020. • The resumption of dividend payments is planned for FY2023. • Up to €3bn of payouts to shareholders in the years 2023 and 2024.

New restructuring programme draft with harsh staff cuts

Commerzbank will reduce c.10,000 full-time equivalents in gross terms. Costs will be reduced by €1.4bn, or around 20%, by 2024. Restructuring expenses totalling €1.8bn, which will be fully financed with existing funds. Commerzbank targets a Return on Tangible Equity (RoTE) of 6.5-7% for FY2024.

New CEO starts with a profit warning

Commerzbank expects to impair fully the existing goodwill of around €1.5bn in FY2020. The loan loss provision guidance of €1.3-1.5bn for FY2020 was increased to at least €1.7bn too. The bank is planning further restructuring measures as part of a new strategy to be announced in the first quarter of 2021.

Q3 loss due to restructuring charges

• Net result after minorities was a loss of €69m for Q3 20 compared to a net profit of €297m for Q3 19 • Commerzbank booked restructuring charges of €201m in Q3 20 • Risk result (loan losses) was €272m for Q3 20 including €181m due to the COVID-19 impact • The bank expects a negative net result for FY2020

Strong H1'23 results; forecasts upgraded

LIBERUM: Housebuilders: Darkest before dawn

Strategic progress drives robust growth

H1 interims are in line. Argentex has delivered strong growth (+28% yoy revenue) by driving growth initiatives. New technology-enabled products have been launched, including Alternative Transaction Banking, which are already delivering compelling growth ahead of expectations. Pressing into Europe via the Netherlands is also delivering strong growth. At the core, client KPIs remain strong. We leave our forecasts unchanged, with revenue momentum continuing into Q3. We believe the current 12.4x Dec

LIBERUM: Alpha Group International: A winning business at a cheap valuation

LIBERUM: Housebuilders: Rate peak nears & Gove less BANANAs

Equals Group (EQLS LN) - Interims justify rise in forecasts

What’s new: Equals Group has delivered outstanding interims, which have exceeded even the positive commentary at the Capital Markets Day in May and the trading update on 5 July. With trading “ahead of expectations”, we raise our 2023E revenue forecast by 7% to £95m and adj EBITDA forecast by 11% to £20m, as well as nudging up our forecasts for 2024E and 2025E.

LIBERUM: Alpha Group International: Underlying strength

H1 23: focusing on capital generation

Promising results for M&G in H1 23. The new CEO, Andrea Rossi, continues to execute the company’s new strategy, and we have confidence that he is positioning M&G to surpass its financial targets for the 2022-24 plan. The H1 23 operating capital generation results significantly outperformed expectations, exceeding the consensus by more than 50%. This substantial capital accumulation is poised to deliver strong returns to shareholders, rewarding them for their patience during this transitional per

Gore Street Energy Storage + (GSF, House Stock, 84p) - Steady NAV growth

Robust interims; small reductions to FY24 forecasts

LIBERUM: Harworth: Valuation gains reflect management actions and operational progress

LIBERUM: Pollen Street : Fundraising momentum continues

Taking the Upper Brand: Brands Sector Overview

The earliest dated brand has long been contested; the majority point to Kongō Gumi, a family run construction company that specialised in Buddhist temples in Japan; its documented record of ownership goes back to 578 AD. Like Kongō Gumi, several different brands have withstood the test of time, albeit without then same degree of longevity. The term brand originates from the 1500s and means "to burn" in Ancient Norse and was initially used to mark cattle for ownership. This practice can be consid

Interim Results

FSFL, a UK centric solar electricity generator, delivered a solid H1’23 total return (-2.4%) in a difficult environment. During the period, the fund continued with its forward sales (locking in cashflows for the next 2.5 years), increased its discount rate by c50bps to 7.5% (UK), maintained its medium term inflation (2024-2030) assumption of 3.0% and announced plans to recycle 200MW of assets into higher returning projects. During 2023 the sector has de-rated as investors, grappling with valuati

Morning Note – 6 September 2023