Operating trends remain robust Commerzbank expects EUR 8bn NII for FY23, implying a 3Q figure around EUR 2.05bn. Fees and commissions appear to remain healthy, and operating costs well controlled. The bank continues to see little NPL formation, and expects FY23 provisions well below EUR 800m. mBank is taking extra litigation provisions The Polish subsidiary has pre-announced EUR 230m extra provisions for CHF mortgages in 3Q, resulting in a small loss for the quarter (but healthy operating business results). In our model we include a further EUR 250m CHF provisions in 4Q23 and EUR 400m in 2024. Capital should continue to build Retained earnings combined with limited balance sheet growth should allow the CET1 ratio to continue building in 3Q. We estimate an increase from 14.4% to 14.6% QoQ. Strategy update should bring NII and earnings positives The company has pre-announced capital plans (EUR 3bn distribution from 2022-24 earnings) and an 11% 2027 RoTE target. We expect further positives around NII, dipping in 2024 but building strongly in 2025-27 even with ECB rate cuts (see our recent note), supporting the RoTE uplift. We maintain our Outperform rating We keep a positive view on Commerzbank shares, one of our top picks in the sector. The restructuring has gone well, NII has further upside even at normalised rates, credit quality remains low risk and well covered by provision buffers, and the valuation remains heavily discounted.