Frankfurt, Germany – Commerzbank has announced plans to buy back shares worth up to €400 million, according to its earnings statement released on Friday. The move comes as the German lender fends off a potential takeover by Italy’s UniCredit.

The bank confirmed that it had secured regulatory approvals for the buyback, which it aims to complete by its Annual General Meeting in mid-May.

Strong Earnings and Increased Dividends

Commerzbank reported earnings of €2.68 billion for 2024, reflecting a 20% increase compared to 2023. The bank’s revenues grew by 6% year-on-year to €11.11 billion, driven by higher commission income and interest returns.

Additionally, the bank announced an increase in its dividend to €0.65 per share, up from €0.35 in the previous year. This means that from 2022 to 2024, Commerzbank will have returned €3.1 billion to shareholders.

CEO Stresses Strength of Commerzbank as a Standalone Entity

Commerzbank CEO Bettina Orlopp emphasized that the bank had exceeded its capital return promise to investors.

“By consistently managing costs and focusing on growth initiatives, we were able to significantly increase the net result for the past financial year,” Orlopp said in a statement.

She also reaffirmed that Commerzbank remains an attractive investment, sending a clear message to investors as she works to defend the bank from UniCredit’s takeover attempt.

UniCredit’s Growing Stake Raises Political Concerns

Under CEO Andrea Orcel, UniCredit has been steadily increasing its stake in Commerzbank. In December, the Italian lender raised its holdings to 28%, having previously disclosed a 9% stake in September.

UniCredit initially acquired the shares through derivatives, a method that allowed it to avoid immediate disclosure. This has sparked criticism from German politicians, who accused the Italian bank of lacking transparency about its intentions.

Upcoming Strategy Meeting

Orlopp is set to present an updated strategy to Commerzbank’s board of managing directors on February 13, in an effort to reinforce the bank’s independence and convince shareholders that a takeover is unnecessary.

As the battle for control of Germany’s second-largest lender continues, Commerzbank’s latest financial results and shareholder-friendly initiatives could play a key role in determining the bank’s future.

The eurozone economy stagnated in the final quarter of 2024, as Germany and France posted unexpected contractions, reinforcing expectations that the European Central Bank (ECB) will cut interest rates to support struggling growth.

According to preliminary data from Eurostat, eurozone GDP remained flat in Q4 2024, a sharp slowdown from the 0.4% growth recorded in the previous quarter and below analysts’ expectations of a 0.1% expansion. This marks the weakest performance since Q4 2023.

Germany and France Struggle, Portugal Leads Growth

The biggest drag on growth came from the bloc’s two largest economies:

• Germany’s GDP shrank by 0.2%, worse than the 0.1% decline forecasted.
• France’s economy contracted by 0.1%, missing expectations of stagnation.
• Italy’s GDP remained flat for the second consecutive quarter, defying projections of a 0.1% increase.

Meanwhile, some smaller economies outperformed:

• Portugal led growth with a 1.5% increase, followed by Lithuania (+0.9%) and Spain (+0.8%).
• The worst-performing economies were Ireland (-1.3%), Germany (-0.2%), and France (-0.1%).

“Once again, it is the periphery driving growth, while Germany and France remain a drag due to structural and cyclical headwinds,” said Kyle Chapman, FX Markets Analyst at Ballinger Group.

ECB Poised for Rate Cuts

The weak GDP figures have strengthened market expectations that the ECB will cut rates at its next policy meeting. Analysts predict a 25-basis-point cut to 2.75%, with at least four reductions expected by the end of 2025.

The ECB faces pressure to stimulate the economy, particularly as inflation trends toward the 2% target. ECB President Christine Lagarde is expected to emphasize that monetary policy alone is not enough, calling for fiscal support and structural reforms to improve competitiveness.

Policy Gap Widens Between ECB and Federal Reserve

The ECB’s likely rate cuts contrast sharply with the US Federal Reserve, which held rates steady at 4.25%–4.50% in its latest meeting. Fed Chair Jerome Powell signaled that there is “no rush” to cut rates further, citing continued US economic resilience.

“The eurozone is fragile, with stagnant growth and rising recession risks,” said Boris Kovacevic, Global Macro Strategist at Convera. “In contrast, the US economy remains strong, driven by consumer spending, a tight labor market, and AI-driven investment.”

Market Reactions: Euro Steady, Bond Yields Fall

Financial markets reacted cautiously to the data:

• The euro held steady at $1.04 ahead of the ECB decision.
• Sovereign bond yields fell, reflecting increased demand for safe-haven assets:
  • German Bund yield dropped 6 basis points to 2.52%.
  • France’s 10-year OAT yield fell to 3.26%.
  • Italy’s BTP yield slid 7 basis points to 3.60%.
• Eurozone equities saw muted movement, with the Euro STOXX 50 rising 0.5%.
• Germany’s DAX hit a record high (+0.2%), while Deutsche Bank shares fell 3.4% on weak revenue guidance.
• Spain’s IBEX 35 outperformed (+0.8%), boosted by gains in real estate and banking stocks.

Outlook: More Cuts Ahead?

With Germany and France struggling, the ECB faces growing pressure to support growth through monetary easing. However, policy divergence with the US Fed could weigh on the euro, while persistent structural issues in Europe’s biggest economies remain a key concern.