J.P. Morgan has revised its ratings on two of Germany’s largest banks, downgrading Commerzbank to “neutral” from “overweight” while maintaining an “overweight” rating on Deutsche Bank and placing it on Positive Catalyst Watch.
The move comes after a strong run in Commerzbank shares, which have returned 119% year to date.
“CBK management has delivered strongly so far in turning the bank around and putting it on a solid footing with a clear path to double-digit RoTE on a sustainable basis,” J.P. Morgan said.
But the brokerage now sees limited upside. Commerzbank trades at 9.8 times price-to-earnings and 1.2 times price-to-tangible book value, with a forecast return on tangible equity of 12.4% in 2027.
Commerzbank has outlined an ambitious plan through 2028, targeting a net result of €4.2 billion, compared with €2.7 billion in 2024. Consensus estimates, however, already reflect the €4.2 billion projection.
Net interest income has also exceeded expectations in recent quarters, but consensus forecasts are now above company targets, at €8.1 billion in 2025 versus the €8 billion floor and €9.1 billion in 2028 against a €8.9 billion goal.
“Hence, we see a reduced scope for positive surprises vs. consensus expectations,” the brokerage said. J.P. Morgan raised its December 2026 price target for Commerzbank to €33 from €30, citing a lower sector cost of equity.
Deutsche Bank, meanwhile, remains one of J.P. Morgan’s top picks in Europe. The lender was placed on Positive Catalyst Watch ahead of its Investor Deep Dive on Nov. 17.
“With the Investor Deep Dive, DBK could move towards a medium-term RoTE target of 12%+ vs. the current target of 10%+ for 2025, which could drive the next leg of outperformance for the stock,” the brokerage said. Deutsche Bank trades at 8.8 times price-to-earnings and 0.9 times price-to-tangible book value, with a projected RoTE of 10.5% in 2027.
The bank’s recovery has shown progress across all divisions. “Unlike in the past (2015-18), all four core divisions of DBK are profitable, with the group generating 1H RoTE of 11% on a stated basis,” J.P. Morgan said.
The lender also reported a CET1 ratio of 14.2%. Non-interest income has supported results, particularly in trading, where Deutsche Bank remains “the only European FICC player in the Top 5 by revenues globally.” Its December 2026 price target was raised to €34.20 from €30.
J.P. Morgan flagged risks for both banks. For Deutsche Bank, performance remains tied to capital markets and trading activity, while global economic conditions, credit spreads, legal exposures and regulatory shifts could also weigh on results.
For Commerzbank, competitive pressure in Germany, interest-rate sensitivity, loan provisions, and uncertainty surrounding CHF mortgages in Poland remain key downside factors.
Source :
https://www.investing.com/news/stock-market-news/commerzbank-downgraded-by-jpmorgan-deutsche-bank-put-on-positive-catalyst-watch-4230780
