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Deutsche Bank (DB) Q2 Net Income Improves Y/Y, Cost Down

·4 min read

Deutsche Bank DB reported second-quarter 2022 net income of €1.21 billion ($1.14 billion) compared with the year-ago quarter’s €828 million. Also, the Germany-based lender reported a profit before taxes of €1.55 billion ($1.45 billion), up 33% from the year-ago quarter.

The results of the second quarter were supported by higher net revenues and lower expenses. However, declining capital position was an offsetting factor.

Revenues & Provisions Rise, Costs Decrease

The bank generated net revenues of €6.65 billion ($6.24 billion) in the second quarter, up 7% year over year. This upside primarily resulted from higher revenues in all segments except Corporate & Other.

Non-interest expenses of €4.87 billion ($4.57 billion) decreased 3% from the prior-year quarter. Adjusted costs ex-transformation charges and bank levies were up 2% to €4.7 billion ($4.41 billion).

Provision for credit losses came in at €233 million ($218.71 million) compared with the prior-year quarter’s €75 million.

Segmental Performances

Net revenues of €1.55 billion ($1.45 billion) at the Corporate Bank division were up 26% year over year. The growth was mainly driven by a stable interest rate environment, improvement in the business volume and higher fee income.

Investment Bank’s net revenues totaled €2.65 billion ($2.49 billion), up 11% year over year. This highlights growth in fixed income and currencies revenues, offset by a decline in origination and advisory revenues.

Private Bank reported net revenues of €2.16 billion ($2.02 billion), up 7% year over year. Higher revenues (excluding adjustments) from Private Bank Germany, along with the International Private Bank revenues, led to this upside.

Asset Management generated record net revenues of €656 million ($615.8 million), up 5% year over year, mainly aided by increased management fees.

Corporate & Other reported negative net revenues of €370 million ($347.3 million) compared with the negative net revenues of €6 million ($5.6 million ) reported in the prior-year period.

Capital Release reported net revenues of €7 million ($6.5 million) against negative net revenues of €24 million ($22.5 million) recorded in the year-ago quarter.

Capital Position Deteriorates

Deutsche Bank’s Common Equity Tier 1 (CET1) capital ratio came in at 13% as of Jun 30, 2022, down from the year-ago quarter’s 13.2%. Leverage ratio on a fully-loaded basis was 4.3%, down from 4.7% in the year-ago quarter.

Risk-weighted assets were stable at €25 billion ($23.92 billion).

Our Viewpoint

Deutsche Bank’s overall financial performance seems encouraging. Also, the segmental performance of the bank significantly improved over the prior-year quarter except in the Corporate and Capital Release segment.

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 #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Banks

Synovus Financial Corp. SNV reported second-quarter 2022 adjusted earnings per share of $1.17, beating the Zacks Consensus Estimate of $1.10. However, the bottom line declined 2.5% from the prior-year quarter’s reported number.

Synovus Financial’s results were affected by escalating expenses and a fall in fee income. Nonetheless, it recorded a rise in NII, net interest margin, total loans and a significant decline in non-performing loans and assets.

Regions Financial Corporation RF reported second-quarter 2022 earnings of 59 cents per share, beating the Zacks Consensus Estimate of 53 cents. However, the results compare unfavorably with the prior-year figure of 77 cents.

Regions Financial’s results were driven by a rise in fee income and NII. Average loan and deposit balances also improved. However, rising expenses and provision for credit losses affected the bottom line. Capital ratios continued to deteriorate in the quarter.

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