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Why Is Deutsche Bank (DB) Up 10.6% Since Last Earnings Report?
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A month has gone by since the last earnings report for Deutsche Bank (DB - Free Report) . Shares have added about 10.6% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Deutsche Bank due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Deutsche Bank Q3 Earnings & Revenues Solid
Deutsche Bank reported a third-quarter 2023 profit attributable to its shareholders of €1.03 billion ($1.12 billion), down 7.5% from the year-ago quarter. The Germany-based lender reported a profit before tax of €1.72 billion ($1.88 billion), up 6.7% year over year.
The company saw higher net revenues, lower provisions and a strong capital position. However, a rise in operating expenses was an offsetting factor.
Revenues & Costs Rise, Provisions Fall
The bank generated net revenues of €7.13 billion ($7.76 billion), up 3.1% year over year. This upside primarily resulted from higher revenues in the Corporate Bank and Private Bank segments. Our estimate for net revenues was €6.95 billion.
Non-interest expenses of €5.16 billion ($5.62 billion) increased 4.2% from the prior-year quarter. Our estimate for non-interest expenses was €4.94 billion.
Provision for credit losses was €245 million ($266 million), down 30% from the prior-year quarter.
Segmental Performance
Net revenues of €1.89 billion ($2.06 billion) at the Corporate Bank division increased 20.8% year over year. The rise was mainly driven by an increase in net interest income (NII) and remaining income. Our estimate for the same was €1.64 billion.
Investment Bank’s net revenues totaled €2.27 billion ($2.47 billion), down 4.3% year over year. This highlights a decline in Fixed Income, Currency Sales & Trading revenues and other revenues. Our estimate for the metric was €2.46 billion.
Private Bank reported net revenues of €2.34 billion ($2.55 billion), up 3.4% year over year. Higher NII led to the increase. Our estimate for the metric was €2.23 billion.
Asset Management generated net revenues of €594 million ($646.4 million), down 10.1% year over year. Declines in management fees, as well as performance and transaction fees, led to the fall.
Corporate & Other reported net revenues of €35 million ($38.1 million), down 36.4% year over year.
Capital Position Robust
Deutsche Bank’s Common Equity Tier 1 capital ratio was 13.9% as of Sep 30, 2023, up from the year-ago quarter’s 13.3%. Risk-weighted assets were €354 billion ($385.2 billion), down 4.1% year over year.
The leverage ratio on a fully loaded basis was 4.7%, up from the year-ago quarter's 4.3%.
Share Repurchase Update
On Jul 25, Deutsche Bank received supervisory approvals for its share repurchases of up to €450 million by 2023-end.
During the quarter, it repurchased nearly 27.5 million shares for a total consideration of approximately €271 million.
Outlook
Full-Year 2023
Management projects revenues of €29 billion.
Management anticipates non-interest expenses to be slightly higher on elevated non-operating costs, whereas adjusted costs are expected to remain essentially flat.
Deutsche Bank expects provision for credit losses to be at the upper end of 25-30 bps.
Financial Targets for 2025
Revenues are anticipated to increase, seeing a CAGR of 3.5-4.5% from 2021 to 2025.
Management targets post-tax RoTE above 10%. The cost/income ratio is expected to be below 62.5%.
The CET1 capital ratio is projected to be 13%.
Deutsche Bank has an RWA optimization target of €25-30 billion.
The company intends to distribute €8 billion in capital for financial years 2021-2025. It expects to hike the dividend by 50% in 2023 and 2024 each, and achieve a payout ratio of 50% from 2025 onward.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month.
The consensus estimate has shifted 38.46% due to these changes.
VGM Scores
Currently, Deutsche Bank has a poor Growth Score of F, however its Momentum Score is doing a lot better with a B. Charting a somewhat similar path, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of this revision looks promising. Notably, Deutsche Bank has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Deutsche Bank is part of the Zacks Banks - Foreign industry. Over the past month, Barclays (BCS - Free Report) , a stock from the same industry, has gained 10.1%. The company reported its results for the quarter ended September 2023 more than a month ago.
Barclays reported revenues of $7.92 billion in the last reported quarter, representing a year-over-year change of +13.1%. EPS of $0.42 for the same period compares with $0.44 a year ago.
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Why Is Deutsche Bank (DB) Up 10.6% Since Last Earnings Report?
A month has gone by since the last earnings report for Deutsche Bank (DB - Free Report) . Shares have added about 10.6% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Deutsche Bank due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Deutsche Bank Q3 Earnings & Revenues Solid
Deutsche Bank reported a third-quarter 2023 profit attributable to its shareholders of €1.03 billion ($1.12 billion), down 7.5% from the year-ago quarter. The Germany-based lender reported a profit before tax of €1.72 billion ($1.88 billion), up 6.7% year over year.
The company saw higher net revenues, lower provisions and a strong capital position. However, a rise in operating expenses was an offsetting factor.
Revenues & Costs Rise, Provisions Fall
The bank generated net revenues of €7.13 billion ($7.76 billion), up 3.1% year over year. This upside primarily resulted from higher revenues in the Corporate Bank and Private Bank segments. Our estimate for net revenues was €6.95 billion.
Non-interest expenses of €5.16 billion ($5.62 billion) increased 4.2% from the prior-year quarter. Our estimate for non-interest expenses was €4.94 billion.
Provision for credit losses was €245 million ($266 million), down 30% from the prior-year quarter.
Segmental Performance
Net revenues of €1.89 billion ($2.06 billion) at the Corporate Bank division increased 20.8% year over year. The rise was mainly driven by an increase in net interest income (NII) and remaining income. Our estimate for the same was €1.64 billion.
Investment Bank’s net revenues totaled €2.27 billion ($2.47 billion), down 4.3% year over year. This highlights a decline in Fixed Income, Currency Sales & Trading revenues and other revenues. Our estimate for the metric was €2.46 billion.
Private Bank reported net revenues of €2.34 billion ($2.55 billion), up 3.4% year over year. Higher NII led to the increase. Our estimate for the metric was €2.23 billion.
Asset Management generated net revenues of €594 million ($646.4 million), down 10.1% year over year. Declines in management fees, as well as performance and transaction fees, led to the fall.
Corporate & Other reported net revenues of €35 million ($38.1 million), down 36.4% year over year.
Capital Position Robust
Deutsche Bank’s Common Equity Tier 1 capital ratio was 13.9% as of Sep 30, 2023, up from the year-ago quarter’s 13.3%. Risk-weighted assets were €354 billion ($385.2 billion), down 4.1% year over year.
The leverage ratio on a fully loaded basis was 4.7%, up from the year-ago quarter's 4.3%.
Share Repurchase Update
On Jul 25, Deutsche Bank received supervisory approvals for its share repurchases of up to €450 million by 2023-end.
During the quarter, it repurchased nearly 27.5 million shares for a total consideration of approximately €271 million.
Outlook
Full-Year 2023
Management projects revenues of €29 billion.
Management anticipates non-interest expenses to be slightly higher on elevated non-operating costs, whereas adjusted costs are expected to remain essentially flat.
Deutsche Bank expects provision for credit losses to be at the upper end of 25-30 bps.
Financial Targets for 2025
Revenues are anticipated to increase, seeing a CAGR of 3.5-4.5% from 2021 to 2025.
Management targets post-tax RoTE above 10%. The cost/income ratio is expected to be below 62.5%.
The CET1 capital ratio is projected to be 13%.
Deutsche Bank has an RWA optimization target of €25-30 billion.
The company intends to distribute €8 billion in capital for financial years 2021-2025. It expects to hike the dividend by 50% in 2023 and 2024 each, and achieve a payout ratio of 50% from 2025 onward.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month.
The consensus estimate has shifted 38.46% due to these changes.
VGM Scores
Currently, Deutsche Bank has a poor Growth Score of F, however its Momentum Score is doing a lot better with a B. Charting a somewhat similar path, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of this revision looks promising. Notably, Deutsche Bank has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Deutsche Bank is part of the Zacks Banks - Foreign industry. Over the past month, Barclays (BCS - Free Report) , a stock from the same industry, has gained 10.1%. The company reported its results for the quarter ended September 2023 more than a month ago.
Barclays reported revenues of $7.92 billion in the last reported quarter, representing a year-over-year change of +13.1%. EPS of $0.42 for the same period compares with $0.44 a year ago.