Continued focus on rates and NII, with sensible and positive guidance As with other banks, at this turning point in the rate cycle, Commerzbank''s net interest income remains a key variable. Management are raising the near-term guidance, provide useful sensitivity analysis and mitigants, and give a confident view on medium-term NII levels. Confirming big capital returns, should be an important driver The bank is putting a big emphasis on capital returns, accruing a 100% payout for FY24, implying share buybacks around EUR 1.5bn (11% of market cap) starting later this year, on top of a 5% dividend yield, and repeating/growing in subsequent years. We think this will move the shares. Some noise around other smaller items There are other smaller moving parts worth noting too. Fair value revenues are now expected to remain negative in FY24, which dents near-term estimates, but should normalise later. Meanwhile volumes and commission income should contribute increasingly to revenue trends. RoTE progressing from 8% to 10% Taking these elements all together, the bank improved its RoTE from 5% in 2022 to 8% in 2023, is likely to stay around 8% in 2024, and is set to improve further to 10% in 2025 onwards. The shares trade around 0.5x tangible book value, well below what those returns would suggest. We maintain our positive view We update estimates, with cuts in 2024 from the fair value revenues, but little change to 2025 or beyond. We increase our target price, rolling forward to 2026 as a reference year. We keep our Outperform rating, and expect the shares to rerate as the market increases confidence in RoTE levels and share buybacks. Commerzbank remains one of our top picks in the sector.