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Deutsche Bank (DB) Q1 Earnings Rise Y/Y on Higher Revenues
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Deutsche Bank (DB - Free Report) reported first-quarter 2020 net income of €66 million ($72.8 million) compared with the year-ago quarter’s €201 million. Also, the German lender reported adjusted profit before taxes of €303 million ($334.3 million), up 13% year over year.
First-quarter results benefitted 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 Remain Stable, Provisions Flare Up
The bank generated net revenues of €6.35 billion ($7 billion), stable year over year.
Provision for credit losses was €506 million ($558.3 million) compared with $140 million in the year-ago quarter.
Non-interest expenses of €5.64 billion ($6.22 billion) were down 5% from the prior-year quarter. Excluding restructuring-related charges, the bank reported adjusted costs of €5.5 billion ($6.07 billion), down 7%.
Segmental Performance
Net revenues at the Corporate Bank division of €1.33 billion ($1.47 billion) declined 1% from the year-ago quarter. Lower revenues in global transaction banking led to the fall.
Investment Bank segment’s net revenues totaled €2.34 billion ($2.58 billion), up 18% year over year. Higher revenues from fixed income, particularly debt origination business, along with rise in origination and advisory resulted in the rise.
Private Bank reported net revenues of €2.16 billion ($2.38 billion), up 2% year over year. The rise primarily stemmed from higher revenues from international businesses and wealth management unit.
Asset Management segment generated net revenues of €519 million ($572.7 million), down 1% year over year mainly due to the negative change in fair value of guarantees, mainly driven by lower interest rates.
Corporate & Other unit reported net revenues of €63 million ($70 million) against negative net revenues of €16 million a year ago.
Capital Release unit reported negative net revenues of €59 million ($65.1 million) against net revenues of €387 million. Funding and credit valuation adjustments and de-risking costs were partly offset by hedging and risk management gains, and income from the BNP Paribas agreement.
Capital Position
Deutsche Bank’s Common Equity Tier 1 capital ratio (fully loaded) came in at 12.8% as of Mar 31, 2020, compared with 13.7% in the year-ago quarter. Leverage ratio, on an adjusted fully-loaded basis, was 4%, up from 3.9%.
Risk-weighted assets increased €17 billion in the March-end quarter to €341 billion ($376.3 billion) sequentially.
Our Viewpoint
Deutsche Bank delivered impressive first-quarter results. The company was successful in trimming costs and increased revenues with its initiatives. Also, capital position remained decent.
Deutsche Bank’s restructuring efforts, aimed to boost revenues and drive improvement across all the business segments, look encouraging. However, it is difficult to determine how much the bank will gain, considering the lingering headwinds.
Deutsche Bank Aktiengesellschaft Price and Consensus
HSBC Holdings’ (HSBC - Free Report) first-quarter 2020 pre-tax profit of $3.2 billion represents a decline of 48% from the prior-year quarter’s reported number. The reduction primarily reflects the adverse impact of the coronavirus outbreak and weakening oil prices.
UBS Group AG (UBS - Free Report) reported first-quarter 2020 net profit attributable to shareholders of $1.6 billion compared with $1.14 billion in the prior-year quarter.
TCF Financial Corporation reported first-quarter 2020 adjusted earnings per share of 57 cents, beating the Zacks Consensus Estimate of 35 cents. However, the figure declined 45.2% from the prior quarter.
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Deutsche Bank (DB) Q1 Earnings Rise Y/Y on Higher Revenues
Deutsche Bank (DB - Free Report) reported first-quarter 2020 net income of €66 million ($72.8 million) compared with the year-ago quarter’s €201 million. Also, the German lender reported adjusted profit before taxes of €303 million ($334.3 million), up 13% year over year.
First-quarter results benefitted 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 Remain Stable, Provisions Flare Up
The bank generated net revenues of €6.35 billion ($7 billion), stable year over year.
Provision for credit losses was €506 million ($558.3 million) compared with $140 million in the year-ago quarter.
Non-interest expenses of €5.64 billion ($6.22 billion) were down 5% from the prior-year quarter. Excluding restructuring-related charges, the bank reported adjusted costs of €5.5 billion ($6.07 billion), down 7%.
Segmental Performance
Net revenues at the Corporate Bank division of €1.33 billion ($1.47 billion) declined 1% from the year-ago quarter. Lower revenues in global transaction banking led to the fall.
Investment Bank segment’s net revenues totaled €2.34 billion ($2.58 billion), up 18% year over year. Higher revenues from fixed income, particularly debt origination business, along with rise in origination and advisory resulted in the rise.
Private Bank reported net revenues of €2.16 billion ($2.38 billion), up 2% year over year. The rise primarily stemmed from higher revenues from international businesses and wealth management unit.
Asset Management segment generated net revenues of €519 million ($572.7 million), down 1% year over year mainly due to the negative change in fair value of guarantees, mainly driven by lower interest rates.
Corporate & Other unit reported net revenues of €63 million ($70 million) against negative net revenues of €16 million a year ago.
Capital Release unit reported negative net revenues of €59 million ($65.1 million) against net revenues of €387 million. Funding and credit valuation adjustments and de-risking costs were partly offset by hedging and risk management gains, and income from the BNP Paribas agreement.
Capital Position
Deutsche Bank’s Common Equity Tier 1 capital ratio (fully loaded) came in at 12.8% as of Mar 31, 2020, compared with 13.7% in the year-ago quarter. Leverage ratio, on an adjusted fully-loaded basis, was 4%, up from 3.9%.
Risk-weighted assets increased €17 billion in the March-end quarter to €341 billion ($376.3 billion) sequentially.
Our Viewpoint
Deutsche Bank delivered impressive first-quarter results. The company was successful in trimming costs and increased revenues with its initiatives. Also, capital position remained decent.
Deutsche Bank’s restructuring efforts, aimed to boost revenues and drive improvement across all the business segments, look encouraging. However, it is difficult to determine how much the bank will gain, considering the lingering headwinds.
Deutsche Bank Aktiengesellschaft Price and Consensus
Deutsche Bank Aktiengesellschaft price-consensus-chart | Deutsche Bank Aktiengesellschaft Quote
Deutsche Bank currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Banks
HSBC Holdings’ (HSBC - Free Report) first-quarter 2020 pre-tax profit of $3.2 billion represents a decline of 48% from the prior-year quarter’s reported number. The reduction primarily reflects the adverse impact of the coronavirus outbreak and weakening oil prices.
UBS Group AG (UBS - Free Report) reported first-quarter 2020 net profit attributable to shareholders of $1.6 billion compared with $1.14 billion in the prior-year quarter.
TCF Financial Corporation reported first-quarter 2020 adjusted earnings per share of 57 cents, beating the Zacks Consensus Estimate of 35 cents. However, the figure declined 45.2% from the prior quarter.
Zacks Top 10 Stocks for 2020
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2020?
Last year's 2019 Zacks Top 10 Stocks portfolio returned gains as high as +102.7%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
Access Zacks Top 10 Stocks for 2020 today >>