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Deutsche Bank (DB) Shares Gain on Q1 Profit, Provisions Rise
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Deutsche Bank (DB - Free Report) reported a first-quarter 2023 profit attributable to its shareholders of €1.16 billion ($1.24 billion), up 9% from the year-ago quarter. The Germany-based lender reported a profit before tax of €1.85 billion ($1.98 billion), up 12% year over year.
Results were largely driven by higher net revenues and a rise in capital position. However, higher provision for credit losses was an offsetting factor. The investors turned bullish on the stock as the share price rose 2.5% following the release of the quarterly results.
Revenues, Costs & Provisions Rise
The bank generated net revenues of €7.68 billion ($8.24 billion), up 5% year over year. The upside primarily resulted from higher revenues in the Corporate Bank and Private Bank segments.
Non-interest expenses of €5.46 billion ($5.86 billion) increased 1% from the prior-year quarter.
Provision for credit losses was €372 million ($399 million), up 27% from the prior-year quarter.
Segmental Performance
In the first quarter of 2023, the Capital Release Unit ceased to be reported as a separate segment. Its remaining portfolio, assets and employees are included in the Corporate & other segment.
Net revenues of €1.97 billion ($2.11 billion) at the Corporate Bank division were up 35% year over year. The rise was mainly driven by an increase in net interest income (NII).
Investment Bank’s net revenues totaled €2.69 billion ($2.88 billion), down 19% year over year. This highlights a decline in origination and advisory revenues, Fixed Income, Currency Sales & Trading revenues.
Private Bank reported net revenues of €2.44 billion ($2.62 billion), up 10% year over year. Higher NII and a rise in remaining income led to the increase.
Asset Management generated net revenues of €589 million ($631.8 million), down 14% year over year. Declines in management fees, as well as performance and transaction fees, led to the fall.
Corporate & Other reported negative net revenues of €10 million ($10.7 million), which improved from negative revenues of €359 million in the prior-year period.
Capital Position Robust
Deutsche Bank’s Common Equity Tier 1 capital ratio was 13.6% as of Mar 31, 2023, up from the year-ago quarter’s 12.8%. Risk-weighted assets were €360 billion ($391.6 billion), down 1% year over year.
The leverage ratio on a fully-loaded basis was 4.6%, unchanged from the year-ago quarter.
Our Viewpoint
Deutsche Bank’s financial performance seems encouraging. The performance improved due to the Corporate Bank and the Private Bank segments. An increase in net revenues is expected to drive earnings growth in the near term.
Deutsche Bank Aktiengesellschaft Price, Consensus and EPS Surprise
Commerce Bancshares Inc.’s (CBSH - Free Report) first-quarter 2023 earnings per share of 95 cents surpassed the Zacks Consensus Estimate of 92 cents. The bottom line increased 3.3% from the prior-year quarter.
CBSH's results benefited from an increase in NII driven by a rise in loan balance and higher interest rates. Also, non-interest income grew during the quarter.
BankUnited, Inc. (BKU - Free Report) also reported its first-quarter 2023 results. Earnings per share of 70 cents missed the Zacks Consensus Estimate of 93 cents. The bottom line also declined 11.4% from the prior-year quarter. We had projected earnings per share of 97 cents.
BKU's results were adversely impacted by an increase in operating expenses, lower deposits and high provisions for credit losses. However, higher NII, non-interest income and increasing rates acted as tailwinds.
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Deutsche Bank (DB) Shares Gain on Q1 Profit, Provisions Rise
Deutsche Bank (DB - Free Report) reported a first-quarter 2023 profit attributable to its shareholders of €1.16 billion ($1.24 billion), up 9% from the year-ago quarter. The Germany-based lender reported a profit before tax of €1.85 billion ($1.98 billion), up 12% year over year.
Results were largely driven by higher net revenues and a rise in capital position. However, higher provision for credit losses was an offsetting factor. The investors turned bullish on the stock as the share price rose 2.5% following the release of the quarterly results.
Revenues, Costs & Provisions Rise
The bank generated net revenues of €7.68 billion ($8.24 billion), up 5% year over year. The upside primarily resulted from higher revenues in the Corporate Bank and Private Bank segments.
Non-interest expenses of €5.46 billion ($5.86 billion) increased 1% from the prior-year quarter.
Provision for credit losses was €372 million ($399 million), up 27% from the prior-year quarter.
Segmental Performance
In the first quarter of 2023, the Capital Release Unit ceased to be reported as a separate segment. Its remaining portfolio, assets and employees are included in the Corporate & other segment.
Net revenues of €1.97 billion ($2.11 billion) at the Corporate Bank division were up 35% year over year. The rise was mainly driven by an increase in net interest income (NII).
Investment Bank’s net revenues totaled €2.69 billion ($2.88 billion), down 19% year over year. This highlights a decline in origination and advisory revenues, Fixed Income, Currency Sales & Trading revenues.
Private Bank reported net revenues of €2.44 billion ($2.62 billion), up 10% year over year. Higher NII and a rise in remaining income led to the increase.
Asset Management generated net revenues of €589 million ($631.8 million), down 14% year over year. Declines in management fees, as well as performance and transaction fees, led to the fall.
Corporate & Other reported negative net revenues of €10 million ($10.7 million), which improved from negative revenues of €359 million in the prior-year period.
Capital Position Robust
Deutsche Bank’s Common Equity Tier 1 capital ratio was 13.6% as of Mar 31, 2023, up from the year-ago quarter’s 12.8%. Risk-weighted assets were €360 billion ($391.6 billion), down 1% year over year.
The leverage ratio on a fully-loaded basis was 4.6%, unchanged from the year-ago quarter.
Our Viewpoint
Deutsche Bank’s financial performance seems encouraging. The performance improved due to the Corporate Bank and the Private Bank segments. An increase in net revenues is expected to drive earnings growth in the near term.
Deutsche Bank Aktiengesellschaft Price, Consensus and EPS Surprise
Deutsche Bank Aktiengesellschaft price-consensus-eps-surprise-chart | Deutsche Bank Aktiengesellschaft Quote
The stock 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
Commerce Bancshares Inc.’s (CBSH - Free Report) first-quarter 2023 earnings per share of 95 cents surpassed the Zacks Consensus Estimate of 92 cents. The bottom line increased 3.3% from the prior-year quarter.
CBSH's results benefited from an increase in NII driven by a rise in loan balance and higher interest rates. Also, non-interest income grew during the quarter.
BankUnited, Inc. (BKU - Free Report) also reported its first-quarter 2023 results. Earnings per share of 70 cents missed the Zacks Consensus Estimate of 93 cents. The bottom line also declined 11.4% from the prior-year quarter. We had projected earnings per share of 97 cents.
BKU's results were adversely impacted by an increase in operating expenses, lower deposits and high provisions for credit losses. However, higher NII, non-interest income and increasing rates acted as tailwinds.