GuruFocus -
- Revenue: EUR22.9 billion for the first nine months of 2024.
- Adjusted Costs: EUR5 billion for the third quarter, consistent with 2024 guidance.
- Pretax Profit: EUR2.3 billion, up over EUR500 million year on year.
- Return on Tangible Equity (RoTE): 10.2% for the third quarter; 6% for the first nine months, excluding litigation impact 7.8%.
- CET1 Ratio: 13.8%.
- Pre-provision Profit: EUR7 billion for the first nine months, up 17% year on year.
- Non-interest Revenues: Up 14% year on year.
- Cost Income Ratio: Improved to 69% from 73% year on year, excluding litigation impacts.
- Net Inflows (Private Bank): EUR27 billion year-to-date.
- Branch Closures (Private Bank): Around 50 closures year-to-date.
- Assets Under Management (Asset Management): Increased by EUR67 billion year-to-date to EUR963 billion.
- Liquidity Coverage Ratio: 135%.
- Net Stable Funding Ratio: 122%.
- Group Revenues (Q3): EUR7.5 billion, up 5% year on year.
- Non-interest Expenses (Q3): EUR4.7 billion, down 8% year on year.
- Net Profit (Q3): EUR1.7 billion, up 39% year on year.
- Net Interest Income (NII): EUR3.2 billion across key banking book segments.
- Provision for Credit Losses (Q3): EUR494 million, equivalent to 41 basis points of average loans.
- Common Equity Tier 1 (CET1) Ratio (Q3): 13.8%, up 30 basis points from the previous quarter.
- Corporate Bank Revenues (Q3): EUR1.8 billion, flat year on year.
- Investment Bank Revenues (Q3): Up 11% year on year.
- Private Bank Revenues (Q3): EUR2.3 billion, flat year on year.
- Asset Management Revenues (Q3): Increased by 11% year on year.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Deutsche Bank AG (ETR:DBKGn) (NYSE:DB) achieved strong operating performance with revenues of EUR22.9 billion in the first nine months, on track to meet the EUR30 billion target for the year.
- The bank recorded a third successive quarter of adjusted costs at EUR5 billion, aligning with 2024 guidance.
- Reported pre-tax profit increased to EUR2.3 billion, up over EUR500 million year-on-year, supported by litigation settlements.
- Asset management saw a significant increase in assets under management by EUR67 billion year-to-date, reaching EUR963 billion.
- The bank's CET1 ratio of 13.8% reflects strong organic capital generation, positioning it well for planned capital distribution to shareholders, including a share buyback.
- Provision for credit losses increased sequentially, with a notable impact from transitional Postbank integration effects.
- The bank faced headwinds from larger corporate events impacting provisions, although mitigated by credit concentration hedging.
- Non-interest expenses were slightly higher year-on-year in the Corporate Bank due to front office investments and higher internal service cost allocations.
- The Private Bank experienced a decline in net interest income due to higher funding costs and negative episodic effects from lending books.
- The ongoing Postbank integration has taken longer than expected, impacting collections and recovery processes.
A: Christian Sewing, CEO, explained that the loan provisions were impacted by the Postbank integration and a large corporate event, which are expected to fade. The commercial real estate provisions are also stabilizing. The bank anticipates a normalized run rate for loan provisions of approximately EUR350 million per quarter in 2025.
Q: Can you provide more details on the share buyback plans and how the recent court ruling affects this?
A: Christian Sewing, CEO, stated that Deutsche Bank applied for a share buyback after showing strong quarters. The recent court ruling does not affect the buyback plans as the bank had fully provisioned for it. The bank remains confident in exceeding the EUR8 billion distribution target for 2021-2025.
Q: What is the outlook for net interest income (NII) given the current interest rate environment?
A: James von Moltke, CFO, indicated that the bank expects NII to remain stable, with a potential increase due to hedges rolling over at higher rates. The bank has locked in 90% of its hedge income for next year, providing a stable outlook despite potential rate changes.
Q: How does Deutsche Bank view the potential impact of private credit on its business?
A: James von Moltke, CFO, sees private credit as more of an opportunity than a threat. It allows for increased origination and collaboration with private credit firms and DWS, Deutsche Bank's asset management arm, to manage private credit, thus expanding the bank's business model.
Q: What are the expectations for Deutsche Bank's revenue growth to reach EUR32 billion in 2025, especially in a challenging German environment?
A: Christian Sewing, CEO, expressed confidence in achieving the EUR32 billion target, citing growth in NII, market share gains in origination and advisory, and investments in non-NII businesses like wealth management and asset management. The bank expects a EUR300-400 million increase in NII and further revenue growth from strategic investments.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.