Commerzbank AG

All three major U.S. stock indices closed lower, with the Dow falling 113.52 points, or 0.21%, to 53,463.88, after the Personal Consumption Expenditures (PCE) price index came in higher than expected. Investors held back trading ahead of Nvidia's earnings, the AI industry leader, due after the close. The S&P 500 closed at 7,675.70, down 0.02%, and the Nasdaq closed at 26,130.20, down 0.08%. The Commerce Department reported that the overall PCE index rose 3.7% year-over-year in July, above the 3.6% analysts had forecast, while the core PCE index rose 3.3%, in line with expectations. The data increased market expectations that the Fed may raise interest rates at its September meeting, with CME FedWatch indicating a 38.1% probability. Nvidia shares fell 1.6% ahead of its earnings release, while Meta rose 1% after reaching a settlement of up to $18 billion in a lawsuit over harm to young users. CrowdStrike gained 2% ahead of its second-quarter results. Healthcare stocks fell the most, down 1%, with Moderna down 5.8% and Intuit down 3.2% after issuing weaker revenue guidance. J.M. Smucker rose 4.3% after forecasting a smaller-than-expected sales decline. On other economic data, durable goods orders rose 1.1% in July, above expectations, and second-quarter GDP grew 1.5%, unchanged from the initial estimate. European stocks were flat, with the STOXX 600 closing at 656.41, down 0.01%, while the FTSE 100 fell 0.07%, but the CAC-40 rose 0.27% and the DAX rose 0.08%. Investors are watching talks between Iran and Oman over the Strait of Hormuz, a route for up to a fifth of the world's oil and gas. European bank stocks led gains, up 1%, with Deutsche Bank surging 4.3% to its highest level since 2011, and Commerzbank up 2.8% after reports that Germany's finance minister plans to discuss a potential acquisition of Commerzbank with UniCredit's CEO. Sources said the ECB is ready to raise interest rates in September to counter the impact of the war in Iran. WTI crude oil fell 0.16% to close at $82.23 per barrel, and Brent fell 0.84% to close at $87.84 per barrel.

Commerzbank has raised its near-term forecast for the euro against the Polish zloty to 4.30 from 4.20. Analyst Tatha Ghose cited recent global risk-off moves and uncertainty surrounding the oil price shock as reasons for the revision.

Commerzbank reported a second-quarter net result attributable to shareholders of 898 million euros, nearly doubling from 462 million euros a year earlier. The operating result increased around 17 percent to 1.37 billion euros, while revenues rose 9 percent to 3.30 billion euros. Net interest income held steady at 2.06 billion euros and net commission income grew 7 percent to 1.08 billion euros. The bank confirmed its full-year net result target of at least 3.4 billion euros, along with net interest income of around 8.6 billion euros and revenue of about 13.2 billion euros.

Commerzbank reported more than €800 million in first-quarter net income, its strongest quarterly result in over a decade, alongside record revenues above €3 billion and a double-digit return on tangible equity. The shares trade at €37.45, with a 90-day return of 5.55% and a one-year total shareholder return of 29.2%, while the five-year total shareholder return is around seven times. A widely followed valuation narrative places fair value at €39.40, implying the stock is about 4.9% undervalued, though the current price-to-earnings ratio of 16.9 times sits above an estimated fair ratio of 13.1 times and the European banks average of 12 times. The bank is accelerating digital capabilities including AI-driven solutions and fintech adoption to lower costs and expand fee-based revenues, but faces risks from fintech competition and regulatory costs.

German authorities have officially rejected UniCredit's takeover bid for Commerzbank, removing a major uncertainty around the bank's ownership. The decision confirms the proposed acquisition will not proceed, leaving Commerzbank as an independent listed bank with UniCredit capped at a minority stake. Commerzbank's stock last closed at €38.61, with returns of 4.8% over the past week, 3.9% over the past month, 6.1% year to date, and 40.6% over the past year, including a rise of 335.3% over three years. Attention now shifts back to Commerzbank's stand-alone strategy, including digital transformation and cost reduction, as well as its active use of debt markets. The regulatory outcome underscores the scrutiny on large cross-border banking deals and reshapes the risk profile away from deal uncertainty toward day-to-day credit quality, funding, profitability, and governance.

Europe's antitrust chief Teresa Ribera called on EU governments to support cross-border bank mergers, saying they are urgently needed to complete the single market. Her remarks came a day after Germany rejected Italian bank UniCredit's offer for shares in Germany's Commerzbank, citing price and what it called an aggressive approach. Ribera criticized countries that speak in favor of pan-European champions but do not support the steps required, and stressed that Europe cannot argue it needs globally competitive firms while refusing to examine whether its analytical frameworks reflect global competition and investment needs. The push for cross-border banking consolidation is linked to the bloc's need for multi-trillion-euro funding for green and digital projects, though plans for a full banking union remain stuck over the lack of a common deposit guarantee scheme.