Commerzbank Climbs as Morgan Stanley Raises to Overweight

Commerzbank AG (CBK), Germany’s second-largest bank, advanced after Morgan Stanley (MS) raised the company to overweight from equal weight saying it was making faster progress with offloading non-core assets.

Commerzbank climbed as much as 4 percent in Frankfurt trading, reaching the highest level in a month, and increased 2.2 percent to 13.29 euros at 2:16 p.m. The benchmark Bloomberg Europe Banks and Financial Services Index fell 0.2 percent.

“We expect accelerated disposals to continue with net positive capital release, as well as greater capital recovery and clarity,” Morgan Stanley analysts including Hubert Lam and Francesca Tondi said in an e-mailed report today.

Morgan Stanley said it increased its price estimate for the shares to 16.00 euros from 11.80 euros.

Commerzbank, which received an 18.2 billion-euro government bailout in 2009, is offloading assets including shipping and real estate loans to boost profitability. Chief Executive Officer Martin Blessing’s salary remained at 1.31 million euros last year and he hasn’t received a bonus since 2007 as he works to clean up the bank’s balance sheet.

The value of Commerzbank’s non-core assets, which the bank is trying to wind down, rose to about 2.6 billion euros, based on the price of such sales in the past, Morgan Stanley said.

Commerzbank said last month that it expected to reduce its non-core assets faster than estimated, to about 75 billion euros by the end of 2016 from a previous goal of less than 90 billion. In its annual report published today, Commerzbank said it expects a smaller loss from the non-core asset business in 2014 than the 1.07 billion euros it posted last year, which reduced total profit for the company.

Commerzbank also said today that it expects operating profit to increase this year.

To contact the reporter on this story: Shane Strowmatt in Frankfurt at sstrowmatt@bloomberg.net

To contact the editors responsible for this story: Frank Connelly at fconnelly@bloomberg.net Mark Bentley, Cindy Roberts

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