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Deutsche Bank (DB) Q3 Earnings Improve Y/Y on Lower Costs
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Deutsche Bank (DB - Free Report) reported third-quarter 2020 net income of €309 million ($361.1 million) against the year-ago quarter’s net loss of €832 million. Also, the German lender reported adjusted profit before taxes of €826 million ($965.3 million) against a loss of $84 million in the year-ago quarter.
Third-quarter results benefited from higher net revenues and a decline in expenses. Also, strong capital position was a tailwind. However, a drastic increase in provision for credit losses due to the impacts of the coronavirus outbreak was a major offsetting factor.
Revenues Rise, Costs Decline, Provisions Flare Up
The bank generated net revenues of €5.94 billion ($6.94 billion), up 13% year over year. The upside was primarily due to higher revenues from investment bank along with corporate & other unit.
Provision for credit losses was €273 million ($319.1 million), up 56% from the year-ago quarter.
Non-interest expenses of €5.18 billion ($6.1 billion) were down 10% from the prior-year quarter. Excluding restructuring-related charges, the bank reported adjusted costs of €4.7 billion ($5.5 billion), down 10%.
Segmental Performance
Net revenues at the Corporate Bank division of €1.3 billion ($1.5 billion) declined 5% from the year-ago quarter. Lower revenues in global transaction banking led to the downside.
Investment Bank’s net revenues totaled €2.4 billion ($2.8 billion), up 43% 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 ($2.3 billion), almost stable 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 €563 million ($658 million), up 4% year over year, mainly due to a favorable change in the fair value of guarantees and lower funding costs. Net asset inflows during the quarter were €11 billion ($12.9 million).
Corporate & Other reported negative net revenues of €240 million ($280.5 million) compared with negative net revenues of €84 million a year ago.
Capital Release reported negative net revenues of €36 million ($42.1 million) compared with negative net revenues of €220 million, reflecting 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 13.3% as of Sep 30, 2020, compared with 13.4% in the year-ago quarter. Leverage ratio, on an adjusted fully-loaded basis, was 4.4%, up from 3.9%.
Risk-weighted assets decreased €3 billion in the September quarter to €39 billion ($45.6 billion) sequentially.
Our Viewpoint
Deutsche Bank reported decent third-quarter results. The company was successful in trimming costs and increasing revenues with its initiatives. Also, the 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
First Horizon (FHN - Free Report) reported third-quarter 2020 adjusted earnings per share of 35 cents, surpassing the Zacks Consensus Estimate of 17 cents. However, the bottom line compares unfavorably with 43 cents reported in the year-ago quarter.
Barclays (BCS - Free Report) reported third-quarter 2020 net income attributable to ordinary equity holders of £611 million ($789 million) against a net loss recorded in the prior-year quarter.
TCF Financial Corporation reported third-quarter 2020 adjusted earnings per share of 63 cents, beating the Zacks Consensus Estimate by 1 cent. Also, the figure increased 16.7% from the prior quarter.
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Deutsche Bank (DB) Q3 Earnings Improve Y/Y on Lower Costs
Deutsche Bank (DB - Free Report) reported third-quarter 2020 net income of €309 million ($361.1 million) against the year-ago quarter’s net loss of €832 million. Also, the German lender reported adjusted profit before taxes of €826 million ($965.3 million) against a loss of $84 million in the year-ago quarter.
Third-quarter results benefited from higher net revenues and a decline in expenses. Also, strong capital position was a tailwind. However, a drastic increase in provision for credit losses due to the impacts of the coronavirus outbreak was a major offsetting factor.
Revenues Rise, Costs Decline, Provisions Flare Up
The bank generated net revenues of €5.94 billion ($6.94 billion), up 13% year over year. The upside was primarily due to higher revenues from investment bank along with corporate & other unit.
Provision for credit losses was €273 million ($319.1 million), up 56% from the year-ago quarter.
Non-interest expenses of €5.18 billion ($6.1 billion) were down 10% from the prior-year quarter. Excluding restructuring-related charges, the bank reported adjusted costs of €4.7 billion ($5.5 billion), down 10%.
Segmental Performance
Net revenues at the Corporate Bank division of €1.3 billion ($1.5 billion) declined 5% from the year-ago quarter. Lower revenues in global transaction banking led to the downside.
Investment Bank’s net revenues totaled €2.4 billion ($2.8 billion), up 43% 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 ($2.3 billion), almost stable 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 €563 million ($658 million), up 4% year over year, mainly due to a favorable change in the fair value of guarantees and lower funding costs. Net asset inflows during the quarter were €11 billion ($12.9 million).
Corporate & Other reported negative net revenues of €240 million ($280.5 million) compared with negative net revenues of €84 million a year ago.
Capital Release reported negative net revenues of €36 million ($42.1 million) compared with negative net revenues of €220 million, reflecting 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 13.3% as of Sep 30, 2020, compared with 13.4% in the year-ago quarter. Leverage ratio, on an adjusted fully-loaded basis, was 4.4%, up from 3.9%.
Risk-weighted assets decreased €3 billion in the September quarter to €39 billion ($45.6 billion) sequentially.
Our Viewpoint
Deutsche Bank reported decent third-quarter results. The company was successful in trimming costs and increasing revenues with its initiatives. Also, the 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
First Horizon (FHN - Free Report) reported third-quarter 2020 adjusted earnings per share of 35 cents, surpassing the Zacks Consensus Estimate of 17 cents. However, the bottom line compares unfavorably with 43 cents reported in the year-ago quarter.
Barclays (BCS - Free Report) reported third-quarter 2020 net income attributable to ordinary equity holders of £611 million ($789 million) against a net loss recorded in the prior-year quarter.
TCF Financial Corporation reported third-quarter 2020 adjusted earnings per share of 63 cents, beating the Zacks Consensus Estimate by 1 cent. Also, the figure increased 16.7% from the prior quarter.
Zacks’ 2020 Election Stock Report:
In addition to the companies you learned about above, we invite you to learn more about profiting from the upcoming presidential election. Trillions of dollars will shift into new market sectors after the votes are tallied, and investors could see significant gains. This report reveals specific stocks that could soar: 6 if Trump wins, 6 if Biden wins.
Check out the 2020 Election Stock Report >>