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Will Deutsche Bank (DB) Revise Investment Bank Outlook?
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Amid the prevailing impact of pandemic, Deutsche Bank AG (DB - Free Report) is expected to revise its outlook upward for the investment bank unit as the bank’s profitability is highly dependent on the fixed-income trading business, per Bloomberg. Notably, the crisis has caused significant volatility in the market, aiding overall trading activities.
However, on upward revision in the securities unit, which includes debt trading and is anticipated to exceed revenue expectations for 2022, some other unit’s outlook will be revised downward. Specifically, among retail banking, corporate banking and asset management, one might be revised downward.
The changes in the outlook are likely to be announced by chief executive officer Christian Sewing at the bank’s investor day to be held on Dec 9. The spokesman for Deutsche Bank refrained from commenting on the matter.
Emphasizing on the turnaround plan, including focus on the trading business, Sewing has always planned to concentrate on trading business rigorously, while shifting expectations from other businesses due to the impact on lending income based on the negative interest rates.
Notably, the investment bank unit contributing 40% to total revenues includes debt trading, which recorded 47% rise in the quarter ended Sep 30, 2020.
At the investor day, Deutsche Bank might announce aggressive cost-cutting targets in some units to ensure meeting profitability goals at those units. Moreover, fresh growth opportunities will likely be highlighted for these units.
Continuing with the restructuring mode, the bank recently also hinted at forming a new International Private Bank with the combination of two units for cost savings.
Deutsche Bank’s rolled out its restructuring moves even before the pandemic hit us. In a bid to improve long-term profitability, last July, the bank announced a number of major restructuring plans and the fresh set of targets it seeks to achieve by 2022 without raising additional capital.
Remarkably, year to date, the investment bank has recorded 7.4 billion euros ($9 billion) in revenues, significantly up from the revenues recorded in 2019. The corporate bank too, which was separated as a unit under Sewing as part of the revamp, recorded 3.9 billion euros this year.
Though the bank’s restructuring efforts, including cost-saving measures, look encouraging, it is difficult to determine how much it would gain, considering the prevalent headwinds.
The stock has gained 21.5% on the NYSE in the past six months compared with the industry’s growth of 16.1%.
Many other global banks are mulling over cost-containment actions through restructuring and job cuts. Among those are UBS Group AG (UBS - Free Report) , Lloyds Banking Group PLC (LYG - Free Report) and Societe Generale Group (SCGLY - Free Report) .
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
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Will Deutsche Bank (DB) Revise Investment Bank Outlook?
Amid the prevailing impact of pandemic, Deutsche Bank AG (DB - Free Report) is expected to revise its outlook upward for the investment bank unit as the bank’s profitability is highly dependent on the fixed-income trading business, per Bloomberg. Notably, the crisis has caused significant volatility in the market, aiding overall trading activities.
However, on upward revision in the securities unit, which includes debt trading and is anticipated to exceed revenue expectations for 2022, some other unit’s outlook will be revised downward. Specifically, among retail banking, corporate banking and asset management, one might be revised downward.
The changes in the outlook are likely to be announced by chief executive officer Christian Sewing at the bank’s investor day to be held on Dec 9. The spokesman for Deutsche Bank refrained from commenting on the matter.
Emphasizing on the turnaround plan, including focus on the trading business, Sewing has always planned to concentrate on trading business rigorously, while shifting expectations from other businesses due to the impact on lending income based on the negative interest rates.
Notably, the investment bank unit contributing 40% to total revenues includes debt trading, which recorded 47% rise in the quarter ended Sep 30, 2020.
At the investor day, Deutsche Bank might announce aggressive cost-cutting targets in some units to ensure meeting profitability goals at those units. Moreover, fresh growth opportunities will likely be highlighted for these units.
Continuing with the restructuring mode, the bank recently also hinted at forming a new International Private Bank with the combination of two units for cost savings.
Deutsche Bank’s rolled out its restructuring moves even before the pandemic hit us. In a bid to improve long-term profitability, last July, the bank announced a number of major restructuring plans and the fresh set of targets it seeks to achieve by 2022 without raising additional capital.
Remarkably, year to date, the investment bank has recorded 7.4 billion euros ($9 billion) in revenues, significantly up from the revenues recorded in 2019. The corporate bank too, which was separated as a unit under Sewing as part of the revamp, recorded 3.9 billion euros this year.
Though the bank’s restructuring efforts, including cost-saving measures, look encouraging, it is difficult to determine how much it would gain, considering the prevalent headwinds.
The stock has gained 21.5% on the NYSE in the past six months compared with the industry’s growth of 16.1%.
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.
Many other global banks are mulling over cost-containment actions through restructuring and job cuts. Among those are UBS Group AG (UBS - Free Report) , Lloyds Banking Group PLC (LYG - Free Report) and Societe Generale Group (SCGLY - Free Report) .
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
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