A strong end to the year Commerzbank rounded off a strong 2024 with a strong 4Q, with NII and fees ahead of expectations, benign credit quality, capital ratios even further in surplus, and bigger than expected dividends. They have completed the first tranche of 2024 buybacks and started the second. New business plan continues the positive direction The strategy update last week aims to continue the revenue growth (6% CAGR) with flattish costs (2% CAGR), and greater balance sheet efficiency, to raise RoTE to 15%. The market will naturally wait to see how the plan progresses, but the direction of travel is positive. Capital returns will be very powerful The bank is already making large capital returns to shareholders (EUR 0.7bn dividends and 1.0bn buybacks from 2024 earnings, total 1.7bn or 8% of market cap) and we estimate that this should rise to EUR 2.5bn for FY25 and 3.2bn FY26 (12% and 15% of today''s market cap respectively). UniCredit bid interest remains on hold The Italian bank is waiting for ECB approval to increase its stake from 9.9% to 29.9% (due in March), for a new German government to be formed and to express its views on the potential combination, and to make progress with its domestic consolidation efforts first. We update numbers, keep Outperform rating In this note we revise our forecasts, with lower 2025 profits (restructuring), and limited change so far to 2026. We increase our price target, based on an 11% medium-term RoTE assumption (previously 10%) and a 13.5% cost of equity (unchanged). We keep an Outperform rating.