Commerzbank posts strongest Q1 profit beat among big European banks

Commerzbank AG posted the strongest profit beat among big European banks in the first quarter, as the German lender builds the case for its independence amid a potential takeover bid from Italy's UniCredit SpA.

The bank's net profit of €834 million exceeded analysts' projections by nearly 53%, making it the best first-quarter profit beat among Europe's 25 largest listed banks in S&P Global Market Intelligence's analysis. The result, which Commerzbank said is at its highest quarterly level since 2011, enables a commitment to a higher share buyback target while pressing ahead with a new strategy focusing on cost efficiency.

The outperformance strengthens Commerzbank's ambitious targets, which are aimed at bolstering its share price to defend itself against UniCredit's takeover overtures. This strategy has worked well so far, as its share price has doubled since September 2024, AlphaValue analyst Dieter Hein said in a May 9 note.

Swiss banking giant UBS Group AG and Spanish peer CaixaBank SA also outperformed, beating net profit estimates by 35.6% and 31.9%, respectively, while UK-headquartered Standard Chartered PLC exceeded estimates by 19.1%. UniCredit placed fifth on the top-performing list with a 16.3% profit beat.

In contrast, profit at French bank BNP Paribas SA missed consensus estimates by the widest margin.

BNP's first-quarter results were mixed. Only its corporate and institutional banking division performed better than expected, while other parts of the business were either in line with forecasts or worse, RBC Capital Markets analysts said in a research note. This mixed divisional trend indicates an uncertain outlook for the French bank's targeted 2024-26 growth trajectory, they added.

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In terms of year-over-year profit growth, French lender Société Générale SA was the best performer after its net profit rose 136.5% to €1.61 billion in the first quarter. The result was mainly due to the strong contribution from its French retail banking business and lower operating costs.

SocGen had been selling assets as part of a new strategy CEO Slawomir Krupa unveiled in September 2023, including divestments in Africa. The bank has completed most of its planned divestments, and ongoing assessments of various businesses could lead to further sales, Krupa said at its May 20 annual general meeting.

Other banks that booked sharp increases include Spain's CaixaBank SA, British peer NatWest Group PLC and Germany's Deutsche Bank AG, with profit growth of 46.3%, 40.6% and 38.4%, respectively. Rounding out the top five list is Banco Bilbao Vizcaya Argentaria SA with a 22.6% increase.

At the other end of the spectrum, UK-headquartered HSBC Holdings PLC registered the steepest profit decline of 29% to €6.96 billion, mainly reflecting business disposals in Canada and Argentina. The Asia-focused bank reiterated its full-year guidance and announced a fresh $3 billion share buyback as it ramps up its restructuring.

In aggregate, Europe's 25 largest listed banks posted a 4.2% year-over-year rise in first-quarter net profit to €45.24 billion, the highest since the second quarter of 2023, according to Market Intelligence data.

The three biggest banks by assets — HSBC, BNP and Crédit Agricole — all reported profit declines on a yearly basis.

Meanwhile, the double-digit profit growth at Spain's three biggest lenders was partly due to a change in their windfall tax accounting. The banks have split the payments into quarterly installments for 2025, instead of a single annual payment for the first quarter of each year previously.