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Deutsche Bank (DB) Up 3.7% Since Last Earnings Report: Can It Continue?
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A month has gone by since the last earnings report for Deutsche Bank (DB - Free Report) . Shares have added about 3.7% 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 the most recent earnings report in order to get a better handle on the important catalysts.
Deutsche Bank Reports Q2 Loss on Lawsuit Provision
Deutsche Bank reported a second-quarter 2024 loss attributable to its shareholders of €143 million ($155.6 million) against the year-ago reported profit attributable to shareholders of €763 million ($830.7 million).
The Germany-based lender reported a profit before tax of €411 million ($477.5 million), down 71% year over year. Excluding a provision of €1.3 billion ($1.41 billion) for litigation related to the Postbank takeover, the bank reported a profit before tax of €1.7 billion ($1.9 billion).
Results were negatively impacted by an increase in expenses and a rise in provision for credit losses. However, an increase in commissions and fee income and stable net interest income acted as a tailwind.
Revenues & Expenses Increases
The bank generated net revenues of €7.6 billion ($8.26 billion), up 2% year over year. This upside was primarily driven by double-digit growth in commissions and fee income and stable net interest income.
Non-interest expenses of €6.7 billion ($7.3 billion) increased 20% from the prior-year quarter’s tally.
Provision for credit losses was €476 million ($474.9 million), up 19% from the prior-year quarter’s figures.
Segmental Performance
Corporate Bank: Net revenues of €1.92 billion ($2.07 billion), down 1% year over year. The result was due to lower net interest income, a decline in loan net interest income and the discontinuation of minimum reserve remuneration by the European Central Bank, partially offset by a rise in commissions and fee income.
Investment Bank: Net revenues totaled €2.6 billion ($3.26 billion), up 10% year over year. The upside was primarily driven by a doubling of Origination & Advisory revenues.
Private Bank: Net revenues of €2.33 billion ($2.50 billion) declined 3% year over year. Lower revenues in Personal Banking primarily led to the downtick.
Asset Management: Net revenues of €663 million ($721.8 million) rose 7% year over year. An increase in management fees led to the rise.
Corporate & Other: It reported net revenues of €73 million ($79.4 million), down 15% year over year.
Capital Position Deteriorate
Deutsche Bank’s Common Equity Tier 1 capital ratio was 13.5% as of Jun 30, 2024, down from the year-ago quarter’s 13.8%.
The leverage ratio on a fully-loaded basis was 4.6%, down from the year-ago quarter's 4.7%.
Share Repurchase Update
On Jul 12, 2024, the bank completed its €675-million ($734.9 million) share repurchase program, taking total capital distributions, including the bank’s 45 cents per share dividend paid in May 2024, to €1.6 billion ($1.74 billion) in 2024 to date.
Outlook
Full Year 2024
Management expects revenues to be around €30 billion at the Group level.
Management anticipates an adjusted cost run-rate of €5 billion.
Deutsche Bank expects the ratio of provision for credit losses to average loans to slightly above 30 basis points.
Financial Targets for 2025
Revenues are anticipated to witness a CAGR of 5.5-6.5% from 2021 to 2025.
Management expects total costs to be €20 billion.
Deutsche Bank has an RWA optimization target of €25-€30 billion.
Post-tax Return on Average Tangible Equity is expected to be above 10%.
Management expects cost/income ratio to be less than 62.5%.
CET1 capital ratio is anticipated to be approximately 13%.
Total payout ratio is expected to be 50% from 2025.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last two month period as none of them issued any earnings estimate revisions.
The consensus estimate has shifted -6.79% due to these changes.
VGM Scores
At this time, Deutsche Bank has a poor Growth Score of F, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Deutsche Bank has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
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Deutsche Bank (DB) Up 3.7% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for Deutsche Bank (DB - Free Report) . Shares have added about 3.7% 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 the most recent earnings report in order to get a better handle on the important catalysts.
Deutsche Bank Reports Q2 Loss on Lawsuit Provision
Deutsche Bank reported a second-quarter 2024 loss attributable to its shareholders of €143 million ($155.6 million) against the year-ago reported profit attributable to shareholders of €763 million ($830.7 million).
The Germany-based lender reported a profit before tax of €411 million ($477.5 million), down 71% year over year. Excluding a provision of €1.3 billion ($1.41 billion) for litigation related to the Postbank takeover, the bank reported a profit before tax of €1.7 billion ($1.9 billion).
Results were negatively impacted by an increase in expenses and a rise in provision for credit losses. However, an increase in commissions and fee income and stable net interest income acted as a tailwind.
Revenues & Expenses Increases
The bank generated net revenues of €7.6 billion ($8.26 billion), up 2% year over year. This upside was primarily driven by double-digit growth in commissions and fee income and stable net interest income.
Non-interest expenses of €6.7 billion ($7.3 billion) increased 20% from the prior-year quarter’s tally.
Provision for credit losses was €476 million ($474.9 million), up 19% from the prior-year quarter’s figures.
Segmental Performance
Corporate Bank: Net revenues of €1.92 billion ($2.07 billion), down 1% year over year. The result was due to lower net interest income, a decline in loan net interest income and the discontinuation of minimum reserve remuneration by the European Central Bank, partially offset by a rise in commissions and fee income.
Investment Bank: Net revenues totaled €2.6 billion ($3.26 billion), up 10% year over year. The upside was primarily driven by a doubling of Origination & Advisory revenues.
Private Bank: Net revenues of €2.33 billion ($2.50 billion) declined 3% year over year. Lower revenues in Personal Banking primarily led to the downtick.
Asset Management: Net revenues of €663 million ($721.8 million) rose 7% year over year. An increase in management fees led to the rise.
Corporate & Other: It reported net revenues of €73 million ($79.4 million), down 15% year over year.
Capital Position Deteriorate
Deutsche Bank’s Common Equity Tier 1 capital ratio was 13.5% as of Jun 30, 2024, down from the year-ago quarter’s 13.8%.
The leverage ratio on a fully-loaded basis was 4.6%, down from the year-ago quarter's 4.7%.
Share Repurchase Update
On Jul 12, 2024, the bank completed its €675-million ($734.9 million) share repurchase program, taking total capital distributions, including the bank’s 45 cents per share dividend paid in May 2024, to €1.6 billion ($1.74 billion) in 2024 to date.
Outlook
Full Year 2024
Management expects revenues to be around €30 billion at the Group level.
Management anticipates an adjusted cost run-rate of €5 billion.
Deutsche Bank expects the ratio of provision for credit losses to average loans to slightly above 30 basis points.
Financial Targets for 2025
Revenues are anticipated to witness a CAGR of 5.5-6.5% from 2021 to 2025.
Management expects total costs to be €20 billion.
Deutsche Bank has an RWA optimization target of €25-€30 billion.
Post-tax Return on Average Tangible Equity is expected to be above 10%.
Management expects cost/income ratio to be less than 62.5%.
CET1 capital ratio is anticipated to be approximately 13%.
Total payout ratio is expected to be 50% from 2025.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last two month period as none of them issued any earnings estimate revisions.
The consensus estimate has shifted -6.79% due to these changes.
VGM Scores
At this time, Deutsche Bank has a poor Growth Score of F, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Deutsche Bank has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.