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Deutsche Bank's (DB) Capital Requirement Lowered for 2017

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The European Central Bank (ECB) has set the minimum capital requirements for 2017 for Deutsche Bank AG (DB - Free Report) , based on the results of the 2016 Supervisory Review and Evaluation Process.

In its latest press release, Deutsche Bank said that the ECB requires it to maintain a minimum phase-in common equity tier 1 (CET 1) ratio of 9.51% on a consolidated basis in 2017. This is down from the 2016 requirement of 10.76%.

The lower requirement for 2017 is expected to provide more flexibility to the company to structure dividend, bonus and coupon payments and will likely reduce any capital related pressures.

Additionally, the tier 1 capital ratio and total capital ratio for 2017 are set at 11.01% and 13.01%, respectively.

The Frankfurt-based bank is focused on its capital position. Moreover, it is on track to achieve its targets of CET 1 ratio of a minimum 12.5% at the end of 2018, Leverage ratio of minimum 4.5% at the end of 2018 and minimum 5.0% at the end of 2020.

Despite showing some progress on this front, various litigation, arbitration and regulatory issues remain major concerns for the company. In Sep 2016, the bank confirmed the proposed $14-billion settlement by the U.S. Department of Justice pertaining to its issuance and underwriting of residential mortgage-backed securities and related securitization activities during the period between 2005 and 2007.

Notably, shares of the company have lost more than 22% year to date, as against a gain of 5.8% for the Zacks categorized Foreign Banks industry.



Currently, Deutsche Bank carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the same space include Barclays PLC (BCS - Free Report) , Societe Generale Group (SCGLY - Free Report) and Banco Santander, S.A. (SAN - Free Report) .

Barclays witnessed an upward earnings estimate revision of 11.9% for the current year, over the past 60 days. Its share price has risen more than 51% in the last six months. It currently boasts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Societe Generale also sports a Zacks Rank #1. For the current year, over the past 60 days, its Zacks Consensus Estimate increased 11.4%. Its share price has increased 59.9% in the last six months.

Banco Santander carries a Zacks Rank #2 (Buy). It witnessed an upward earnings estimate revision of 7% for the current year, over the past 60 days. Its share price has been up 33.1% in the last six months.

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