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Deutsche Bank (DB) Q2 Earnings Rise Y/Y on Lower Expenses

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Deutsche Bank’s DB second-quarter 2021 net income of €828 million ($997.5million) increased substantially from the year-ago quarter’s €66 million. Also, the German lender reported profit before taxes of €1.17 billion ($1.4 billion) compared with the year-ago quarter’s €158 million.

The quarterly results benefited from a decline in expenses. Also, the company’s strong capital position was a tailwind. Further, a decline in provision for credit losses was another positive.

Revenues Fall, Costs & Provisions Decline

The bank generated net revenues of €6.23 billion ($7.51 billion) in the second quarter, down marginally, year over year. This downside primarily resulted from lower revenues in the investment bank and corporate bank segments.

Provision for credit losses came in at €75 million ($90.3 million), tanking 90% from the €761 million reported in the year-ago quarter.

Non-interest expenses of €4.9 billion ($6.02 billion) slid 6.9% from the prior-year quarter on fall in all components. Excluding transformation-related charges, the bank reported adjusted costs of €4.6 billion ($5.53 billion), down 6%.

Segmental Performance

Net revenues at the Corporate Bank division of €1.23 billion ($1.48 billion) declined 8% from the year-ago quarter. Lower revenues in all components of corporate bank services led to this downside.

Investment Bank’s net revenues totaled €2.34 billion ($2.82 billion), down 11% year over year. Lower revenues from origination and advisory, and other, resulted in this decline.

Private Bank reported net revenues of €2.02 billion ($2.43 billion), up 3% year over year. Higher revenues from International Private Bank revenues drove this upswing.

Asset Management generated net revenues of €626 million ($753.7 million), up 14% year over year, mainly aided by an increase in management fees. Net asset inflows during the quarter were €20 billion ($24.1 billion).

Corporate & Other reported negative net revenues of €7 million ($8.5 million) compared to negative net revenues of €173 million reported in the prior-year period.

Capital Release reported negative net revenues of €24 million ($28.9 million) compared with negative net revenues of €66 million seen in the year-earlier period, reflecting the impact of risk management, funding charges and de-risking costs.

Capital Position

Deutsche Bank’s Common Equity Tier 1 capital ratio (fully loaded) came in at 13.2% as of Jun 30, 2021, down from the year-ago quarter’s 13.3%. Leverage ratio, on an adjusted fully-loaded basis, was 4.8%, up from 4% in the year-ago quarter.

Risk-weighted assets increased €15 billion in the second quarter to €345 billion ($415.4 billion) sequentially.

Our Viewpoint

Deutsche Bank reported decent second-quarter results. The company was successful in trimming costs and fueling top-line growth on the back of its initiatives in some of the business segments. Also, its capital position was 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, Consensus and EPS Surprise

Deutsche Bank Aktiengesellschaft Price, Consensus and EPS Surprise
Deutsche Bank Aktiengesellschaft Price, Consensus and EPS Surprise

Deutsche Bank Aktiengesellschaft price-consensus-eps-surprise-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

Bank of America’s BAC second-quarter 2021 earnings of $1.03 per share handily beat the Zacks Consensus Estimate of 77 cents. The bottom line compared favorably with the 37 cents earned in the prior-year quarter.

PNC Financial PNC delivered second-quarter 2021 earnings surprise of 42.4% on substantial reserve release. Adjusted earnings per share of $4.50 surpassed the Zacks Consensus Estimate of $3.16.

Large reserve releases, solid investment banking performance and modest rise in loan demand drove JPMorgan’s JPM second-quarter 2021 earnings of $3.78 per share. The bottom line comfortably outpaced the Zacks Consensus Estimate of $3.05.


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