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Deutsche (DB) Q1 Earnings Improve Y/Y on Lower Expenses
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Deutsche Bank (DB - Free Report) reported net income of €201 million ($467.1 million) in first-quarter 2019, up 67% from €120 million in the year-ago quarter. The bank reported profit before taxes of €292 million ($364.3 million).
First-quarter results benefited from net asset inflows and prudent expense management. Also, strong capital position remains a tailwind. However, lower revenues and higher provisions were the key undermining factors.
Lower Costs Offset Fall in Revenues & Higher Provisions
The bank generated net revenues of €6.4 billion ($6.4 billion) in the first quarter, down 9% year over year. Lower revenues across all the segments, primarily due to implementation of strategic measures and a challenging market environment, led to this downside.
Revenues at the Corporate & Investment Banking division of €3.3 billion ($3 billion) declined 13% from the year-ago quarter. Lower revenues in Sales & Trading (Fixed Income and Equity) along with Origination & Advisory revenues led to the fall.
The Private & Commercial Bank (“PCB”) segment’s revenues totaled €2.5 billion ($2.9 billion), down 5% year over year. Lower revenues from business in and outside Germany resulted in the decline.
The Asset Management segment generated revenues of €525 million ($587 million), down 4% year over year, mainly due to lower management fees. Notably, the company reported net asset inflows of €10 billion during the quarter.
Provision for credit losses increased 60% from the year-ago quarter to €140 million ($287.8 million). The rise resulted largely from higher provisions in the PCB unit.
Non-interest expenses of €5.9 billion ($6.4 billion) were down 8% from the prior-year quarter. The decline resulted from the bank’s successful implementation of cost savings initiatives.
Deutsche Bank’s Common Equity Tier 1 (CET1) capital ratio (pro-forma Capital Requirements Regulation/Capital Requirements Directive 4 fully loaded) came in at 13.7% as of Mar 31, 2019, compared with 13.4% as of Mar 31, 2018. Leverage ratio, on an adjusted fully-loaded basis, was 3.9%, up from 3.7% in the prior-year quarter. Risk-weighted assets declined €3 billion in the March-end quarter.
Our Viewpoint
Deutsche Bank reported a decent quarter. Decline in revenues was offset by relatively lower expenses. The company has made several strategic moves to boost revenues and drive improvement across all the business segments.
Though Deutsche Bank’s restructuring efforts look encouraging, it is really difficult to determine how much the bank will gain, considering the lingering headwinds. Moreover, dismal revenue performance remains another concern.
Deutsche Bank Aktiengesellschaft Price and Consensus
UBS Group AG (UBS - Free Report) reported first-quarter 2019 net profit attributable to shareholders of $1.1 billion, down 27% from $1.6 billion in the prior-year quarter.
Among other foreign banks, Itau Unibanco Holding S.A. (ITUB - Free Report) will release March-ended quarter numbers on Apr 29. Mitsubishi UFJ Financial Group (MUFG - Free Report) will report results on May 21.
Zacks' Top 10 Stocks for 2019
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-holds for the year?
Who wouldn't? Our annual Top 10s have beaten the market with amazing regularity. In 2018, while the market dropped -5.2%, the portfolio scored well into double-digits overall with individual stocks rising as high as +61.5%. And from 2012-2017, while the market boomed +126.3, Zacks' Top 10s reached an even more sensational +181.9%.
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Deutsche (DB) Q1 Earnings Improve Y/Y on Lower Expenses
Deutsche Bank (DB - Free Report) reported net income of €201 million ($467.1 million) in first-quarter 2019, up 67% from €120 million in the year-ago quarter. The bank reported profit before taxes of €292 million ($364.3 million).
First-quarter results benefited from net asset inflows and prudent expense management. Also, strong capital position remains a tailwind. However, lower revenues and higher provisions were the key undermining factors.
Lower Costs Offset Fall in Revenues & Higher Provisions
The bank generated net revenues of €6.4 billion ($6.4 billion) in the first quarter, down 9% year over year. Lower revenues across all the segments, primarily due to implementation of strategic measures and a challenging market environment, led to this downside.
Revenues at the Corporate & Investment Banking division of €3.3 billion ($3 billion) declined 13% from the year-ago quarter. Lower revenues in Sales & Trading (Fixed Income and Equity) along with Origination & Advisory revenues led to the fall.
The Private & Commercial Bank (“PCB”) segment’s revenues totaled €2.5 billion ($2.9 billion), down 5% year over year. Lower revenues from business in and outside Germany resulted in the decline.
The Asset Management segment generated revenues of €525 million ($587 million), down 4% year over year, mainly due to lower management fees. Notably, the company reported net asset inflows of €10 billion during the quarter.
Provision for credit losses increased 60% from the year-ago quarter to €140 million ($287.8 million). The rise resulted largely from higher provisions in the PCB unit.
Non-interest expenses of €5.9 billion ($6.4 billion) were down 8% from the prior-year quarter. The decline resulted from the bank’s successful implementation of cost savings initiatives.
Deutsche Bank’s Common Equity Tier 1 (CET1) capital ratio (pro-forma Capital Requirements Regulation/Capital Requirements Directive 4 fully loaded) came in at 13.7% as of Mar 31, 2019, compared with 13.4% as of Mar 31, 2018. Leverage ratio, on an adjusted fully-loaded basis, was 3.9%, up from 3.7% in the prior-year quarter. Risk-weighted assets declined €3 billion in the March-end quarter.
Our Viewpoint
Deutsche Bank reported a decent quarter. Decline in revenues was offset by relatively lower expenses. The company has made several strategic moves to boost revenues and drive improvement across all the business segments.
Though Deutsche Bank’s restructuring efforts look encouraging, it is really difficult to determine how much the bank will gain, considering the lingering headwinds. Moreover, dismal revenue performance remains another concern.
Deutsche Bank Aktiengesellschaft Price and Consensus
Deutsche Bank Aktiengesellschaft Price and Consensus | Deutsche Bank Aktiengesellschaft Quote
Deutsche Bank currently carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Foreign Banks
UBS Group AG (UBS - Free Report) reported first-quarter 2019 net profit attributable to shareholders of $1.1 billion, down 27% from $1.6 billion in the prior-year quarter.
Among other foreign banks, Itau Unibanco Holding S.A. (ITUB - Free Report) will release March-ended quarter numbers on Apr 29. Mitsubishi UFJ Financial Group (MUFG - Free Report) will report results on May 21.
Zacks' Top 10 Stocks for 2019
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-holds for the year?
Who wouldn't? Our annual Top 10s have beaten the market with amazing regularity. In 2018, while the market dropped -5.2%, the portfolio scored well into double-digits overall with individual stocks rising as high as +61.5%. And from 2012-2017, while the market boomed +126.3, Zacks' Top 10s reached an even more sensational +181.9%.
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