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Deutsche Bank (DB) Q4 Earnings Improve Y/Y on Lower Costs
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Deutsche Bank (DB - Free Report) reported fourth-quarter 2020 net income of €189 million ($225.4 million) against the year-ago quarter’s net loss of €1.5 billion. Also, the German lender reported profit before taxes of €175 million ($208.7 million) against a loss of $1.3 billion in the year-ago quarter.
Fourth-quarter results benefited from higher net revenues and a decline in expenses. Also, strong capital position was a tailwind. However, an increase in provision for credit losses was a major offsetting factor.
In 2020, Deutsche Bank reported net income of €624 million ($744.1 million) compared with €5.3 billion in the prior year.
Revenues Rise, Costs Decline, Provisions Increase
In 2020, the company reported net revenues of €24 billion ($28.6 billion), up 4%.
The bank generated net revenues of €5.5 billion ($6.6 billion) in the fourth quarter, up 2% year over year. The upside was primarily due to higher revenues from investment bank unit.
Provision for credit losses was €251 million ($299.3 million), up 2% from the year-ago quarter.
Non-interest expenses of €5 billion ($6 billion) were down 21% from the prior-year quarter. Excluding transformation-related charges, the bank reported adjusted costs of €4.6 billion ($5.5 billion), down 8%.
Segmental Performance
Net revenues at the Corporate Bank division of €1.2 billion ($1.4 billion) declined 4% from the year-ago quarter. Lower revenues in global transaction banking led to the downside.
Investment Bank’s net revenues totaled €1.9 billion ($2.3 billion), up 24% year over year. Higher revenues from fixed income, particularly debt origination business, along with rise in origination and advisory, resulted in the jump.
Private Bank reported net revenues of €2 billion ($2.4 billion), down 1% year over year. Impact of COVID-19 and ongoing interest rate headwinds offset the positive impact of continued growth in loan volumes.
Asset Management generated net revenues of €599 million ($714.3 million), down 11% year over year, mainly due the non-recurrence of certain performance fees. Net asset inflows during the quarter were €14 billion ($16.7 million).
Corporate & Other reported negative net revenues of €181 million ($215.8 million) against net revenues of €44 million a year ago.
Capital Release reported negative net revenues of €65 million ($77.5 million) compared with negative net revenues of €180 million, reflecting the impact of hedging costs, funding charges and de-risking costs.
Capital Position
Deutsche Bank’s Common Equity Tier 1 capital ratio (fully loaded) came in at 13.6% as of Dec 31, 2020, stable year over year. Leverage ratio, on an adjusted fully-loaded basis, was 4.7%, up from 4.2%.
Risk-weighted assets increased €4 billion in the fourth quarter to €329 billion ($392.3 billion) sequentially.
Our Viewpoint
Deutsche Bank reported decent fourth-quarter results. The company was successful in trimming costs and increasing revenues with its initiatives. Also, its capital position remained decent. The German lender’s restructuring efforts, aimed to boost revenues and drive improvement across all the business segments, look encouraging.
Deutsche Bank Aktiengesellschaft Price and Consensus
UBS Group AG (UBS - Free Report) reported fourth-quarter 2020 net profit attributable to shareholders of $1.71 billion, up significantly from $722 million in the prior-year quarter.
ICICI Bank’s (IBN - Free Report) third-quarter fiscal 2021 (ended Dec 31) net income was INR49.40 billion ($676 million), up 19% from INR41.46 billion ($567 million) in the prior-year quarter.
Itau Unibanco Holding S.A. (ITUB - Free Report) posted recurring earnings of R$5.4 billion ($1 billion) in fourth-quarter 2020, significantly down 26.2% year over year. Including non-recurring items, net income came in at R$7.6 billion ($1.4 billion), up 1.5%.
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Deutsche Bank (DB) Q4 Earnings Improve Y/Y on Lower Costs
Deutsche Bank (DB - Free Report) reported fourth-quarter 2020 net income of €189 million ($225.4 million) against the year-ago quarter’s net loss of €1.5 billion. Also, the German lender reported profit before taxes of €175 million ($208.7 million) against a loss of $1.3 billion in the year-ago quarter.
Fourth-quarter results benefited from higher net revenues and a decline in expenses. Also, strong capital position was a tailwind. However, an increase in provision for credit losses was a major offsetting factor.
In 2020, Deutsche Bank reported net income of €624 million ($744.1 million) compared with €5.3 billion in the prior year.
Revenues Rise, Costs Decline, Provisions Increase
In 2020, the company reported net revenues of €24 billion ($28.6 billion), up 4%.
The bank generated net revenues of €5.5 billion ($6.6 billion) in the fourth quarter, up 2% year over year. The upside was primarily due to higher revenues from investment bank unit.
Provision for credit losses was €251 million ($299.3 million), up 2% from the year-ago quarter.
Non-interest expenses of €5 billion ($6 billion) were down 21% from the prior-year quarter. Excluding transformation-related charges, the bank reported adjusted costs of €4.6 billion ($5.5 billion), down 8%.
Segmental Performance
Net revenues at the Corporate Bank division of €1.2 billion ($1.4 billion) declined 4% from the year-ago quarter. Lower revenues in global transaction banking led to the downside.
Investment Bank’s net revenues totaled €1.9 billion ($2.3 billion), up 24% year over year. Higher revenues from fixed income, particularly debt origination business, along with rise in origination and advisory, resulted in the jump.
Private Bank reported net revenues of €2 billion ($2.4 billion), down 1% year over year. Impact of COVID-19 and ongoing interest rate headwinds offset the positive impact of continued growth in loan volumes.
Asset Management generated net revenues of €599 million ($714.3 million), down 11% year over year, mainly due the non-recurrence of certain performance fees. Net asset inflows during the quarter were €14 billion ($16.7 million).
Corporate & Other reported negative net revenues of €181 million ($215.8 million) against net revenues of €44 million a year ago.
Capital Release reported negative net revenues of €65 million ($77.5 million) compared with negative net revenues of €180 million, reflecting the impact of hedging costs, funding charges and de-risking costs.
Capital Position
Deutsche Bank’s Common Equity Tier 1 capital ratio (fully loaded) came in at 13.6% as of Dec 31, 2020, stable year over year. Leverage ratio, on an adjusted fully-loaded basis, was 4.7%, up from 4.2%.
Risk-weighted assets increased €4 billion in the fourth quarter to €329 billion ($392.3 billion) sequentially.
Our Viewpoint
Deutsche Bank reported decent fourth-quarter results. The company was successful in trimming costs and increasing revenues with its initiatives. Also, its capital position remained decent. The German lender’s restructuring efforts, aimed to boost revenues and drive improvement across all the business segments, look encouraging.
Deutsche Bank Aktiengesellschaft Price and Consensus
Deutsche Bank Aktiengesellschaft price-consensus-chart | Deutsche Bank Aktiengesellschaft Quote
Deutsche Bank currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Banks
UBS Group AG (UBS - Free Report) reported fourth-quarter 2020 net profit attributable to shareholders of $1.71 billion, up significantly from $722 million in the prior-year quarter.
ICICI Bank’s (IBN - Free Report) third-quarter fiscal 2021 (ended Dec 31) net income was INR49.40 billion ($676 million), up 19% from INR41.46 billion ($567 million) in the prior-year quarter.
Itau Unibanco Holding S.A. (ITUB - Free Report) posted recurring earnings of R$5.4 billion ($1 billion) in fourth-quarter 2020, significantly down 26.2% year over year. Including non-recurring items, net income came in at R$7.6 billion ($1.4 billion), up 1.5%.
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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