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Deutsche Bank (DB) Q3 Earnings Rise Y/Y on Higher Revenues
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Deutsche Bank’s (DB - Free Report) third-quarter 2021 net income of €329 million ($387.9 million) increased 6% from the year-ago quarter’s €309 million. Also, the German lender reported profit before taxes of €554 million ($653million) compared with the year-ago quarter’s €482 million.
The quarterly results benefited from a decline in expenses. Also, the company’s robust capital position was a tailwind. Further, a decline in provision for credit losses was another positive.
Revenues Rise, Costs Flare Up & Provisions Decline
The bank generated net revenues of €6 billion ($7.1 billion) in the third quarter, up 2%, year over year. This upside primarily resulted from lower revenues in the asset management segment.
Provision for credit losses came in at €117 million ($137.9 million), tanking 57% from the €273 million reported in the year-ago quarter.
Non-interest expenses of €5.4 billion ($6.4 billion) rose 4% from the prior-year quarter, including € 583 million in transformation charges. These were steered majorly by a contract settlement and software impairments, principally triggered by Deutsche Bank’s migration to the cloud. Excluding the transformation-related charges, the bank reported adjusted costs of €4.7 billion ($5.5 billion), down 3%.
Segmental Performance
Net revenues of €1.3 billion ($1.5 billion) at the Corporate Bank division were flat, year over year. No specific items impacted revenues in the reported quarter.
Investment Bank’s net revenues totaled €2.3 billion ($2.7 billion), down 6% year over year. This highlights the continual normalization of market conditions in trading businesses, slightly offset by revenue growth in Financing and Origination & Advisory.
Private Bank reported net revenues of €2 billion ($2.4 billion), down 2% year over year. Lower revenues from Private Bank Germany revenues led to this downside.
Asset Management generated net revenues of €656 million ($773 million), up 17% year over year, mainly aided by an increase in management fees. Net asset inflows during the quarter were €12 billion ($24.1 billion).
Corporate & Other reported negative net revenues of €61 million ($71.9 million) compared to the negative net revenues of €243 million reported in the prior-year period.
Capital Release reported negative net revenues of €36 million ($42.4 million) which was flat, year on year, reflecting the impact of risk management, funding charges and the impacts of portfolio reduction, partly offset by positive revenues from Prime Finance cost recovery.
Mixed Capital Position
Leverage ratio, on an adjusted fully-loaded basis, was 4.8%, up from the year-ago quarter’s 4.4%.
However, Deutsche Bank’s Common Equity Tier 1 capital ratio (fully loaded) came in at 13% as of Sep 30, 2021, down from the year-ago quarter’s 13.3%. Risk-weighted assets were reduced to €30 billion ($34.8 billion) in the third quarter, ahead of the year-end 2022 target of €32 billion ($37.1 billion). It compared unfavorably to €39 billion ($45.2 billion) reported in the year-ago quarter.
Our Viewpoint
Deutsche Bank reported decent third-quarter results. The company was successful in fueling top-line growth on the back of its initiatives in some of the business segments. Also, its capital position was decent. The German lender’s restructuring efforts, aimed to boost revenues and drive improvement across all the business segments, look encouraging. However, rise in expenses posed a headwind.
Deutsche Bank Aktiengesellschaft Price, Consensus and EPS Surprise
Bank of America’s (BAC - Free Report) third-quarter 2021 earnings of $1.03 per share handily beat the Zacks Consensus Estimate of 77 cents. The bottom line compared favorably with the 37 cents earned in the prior-year quarter.
PNC Financial (PNC - Free Report) pulled off a third-quarter earnings surprise of 42.4% on substantial reserve release. The adjusted earnings per share of $4.50 exceeded the Zacks Consensus Estimate of $3.16.
Large reserve releases, solid investment banking performance and a modest rise in loan demand drove JPMorgan’s (JPM - Free Report) third-quarter 2021 earnings of $3.78 per share. The bottom line comfortably outpaced the Zacks Consensus Estimate of $3.05.
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Deutsche Bank (DB) Q3 Earnings Rise Y/Y on Higher Revenues
Deutsche Bank’s (DB - Free Report) third-quarter 2021 net income of €329 million ($387.9 million) increased 6% from the year-ago quarter’s €309 million. Also, the German lender reported profit before taxes of €554 million ($653million) compared with the year-ago quarter’s €482 million.
The quarterly results benefited from a decline in expenses. Also, the company’s robust capital position was a tailwind. Further, a decline in provision for credit losses was another positive.
Revenues Rise, Costs Flare Up & Provisions Decline
The bank generated net revenues of €6 billion ($7.1 billion) in the third quarter, up 2%, year over year. This upside primarily resulted from lower revenues in the asset management segment.
Provision for credit losses came in at €117 million ($137.9 million), tanking 57% from the €273 million reported in the year-ago quarter.
Non-interest expenses of €5.4 billion ($6.4 billion) rose 4% from the prior-year quarter, including € 583 million in transformation charges. These were steered majorly by a contract settlement and software impairments, principally triggered by Deutsche Bank’s migration to the cloud. Excluding the transformation-related charges, the bank reported adjusted costs of €4.7 billion ($5.5 billion), down 3%.
Segmental Performance
Net revenues of €1.3 billion ($1.5 billion) at the Corporate Bank division were flat, year over year. No specific items impacted revenues in the reported quarter.
Investment Bank’s net revenues totaled €2.3 billion ($2.7 billion), down 6% year over year. This highlights the continual normalization of market conditions in trading businesses, slightly offset by revenue growth in Financing and Origination & Advisory.
Private Bank reported net revenues of €2 billion ($2.4 billion), down 2% year over year. Lower revenues from Private Bank Germany revenues led to this downside.
Asset Management generated net revenues of €656 million ($773 million), up 17% year over year, mainly aided by an increase in management fees. Net asset inflows during the quarter were €12 billion ($24.1 billion).
Corporate & Other reported negative net revenues of €61 million ($71.9 million) compared to the negative net revenues of €243 million reported in the prior-year period.
Capital Release reported negative net revenues of €36 million ($42.4 million) which was flat, year on year, reflecting the impact of risk management, funding charges and the impacts of portfolio reduction, partly offset by positive revenues from Prime Finance cost recovery.
Mixed Capital Position
Leverage ratio, on an adjusted fully-loaded basis, was 4.8%, up from the year-ago quarter’s 4.4%.
However, Deutsche Bank’s Common Equity Tier 1 capital ratio (fully loaded) came in at 13% as of Sep 30, 2021, down from the year-ago quarter’s 13.3%. Risk-weighted assets were reduced to €30 billion ($34.8 billion) in the third quarter, ahead of the year-end 2022 target of €32 billion ($37.1 billion). It compared unfavorably to €39 billion ($45.2 billion) reported in the year-ago quarter.
Our Viewpoint
Deutsche Bank reported decent third-quarter results. The company was successful in fueling top-line growth on the back of its initiatives in some of the business segments. Also, its capital position was decent. The German lender’s restructuring efforts, aimed to boost revenues and drive improvement across all the business segments, look encouraging. However, rise in expenses posed a headwind.
Deutsche Bank Aktiengesellschaft Price, Consensus and EPS Surprise
Deutsche Bank Aktiengesellschaft price-consensus-eps-surprise-chart | Deutsche Bank Aktiengesellschaft Quote
Deutsche Bank currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Banks
Bank of America’s (BAC - Free Report) third-quarter 2021 earnings of $1.03 per share handily beat the Zacks Consensus Estimate of 77 cents. The bottom line compared favorably with the 37 cents earned in the prior-year quarter.
PNC Financial (PNC - Free Report) pulled off a third-quarter earnings surprise of 42.4% on substantial reserve release. The adjusted earnings per share of $4.50 exceeded the Zacks Consensus Estimate of $3.16.
Large reserve releases, solid investment banking performance and a modest rise in loan demand drove JPMorgan’s (JPM - Free Report) third-quarter 2021 earnings of $3.78 per share. The bottom line comfortably outpaced the Zacks Consensus Estimate of $3.05.