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The Zacks Analyst Blog Highlights: Deutsche Bank, HSBC, DBS and Banco Latinoamericano

Zacks Equity Research

For Immediate Release

Chicago, IL –June 25, 2019 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Deutsche Bank DB, HSBC Holdings plc HSBC, DBS Group Holdings Ltd DBSDY and Banco Latinoamericano de Comercio Exterior, S.A. BLX.

Here are highlights from Monday’s Analyst Blog:

Fed Questions Deutsche Bank (DB) for Bad Bank Proposal

Per a Financial Times article, Deutsche Bank is being questioned by the U.S. regulators related to the impact on the German Bank’s U.S. operations after implementation of its “bad bank” proposal. The U.S. Federal Reserve officials demand details of the bank’s strategic plan which involves cutting down its investment banking operations.

Notably, following the failure of the annual stress test last year, the U.S. unit of the German bank is deprived off providing any payments to its parent company in Germany without Fed permission. For failure of the test, Fed said “widespread and critical deficiencies” in the bank’s capital planning.

Though Deutsche Bank’s U.S. arm has cleared the first round of stress tests 2019, the second-round results to be reported later this week will decide the rescinding of restrictions on the bank.

The Expected Proposal

Under the proposals, Deutsche Bank is mulling to make cutbacks in the U.S. equities trading business, including prime brokerage and equity derivatives. The bank would create a ‘bad bank’, a measure used by failed U.K. banks post the 2008 financial crisis.

The newly-formed unit would hold tens of billions of Euros of assets worth around €50 billion as the bank’s chief executive officer (CEO) Christian Sewing is trimming its investment banking division. This includes Sewing’s plans to shrink or shut down the equity and rates trading businesses outside continental Europe completely, and focus on the core transaction banking and private wealth management business.

The German bank’s planned divestiture of the assets is unlikely to hit its profit or capital due to the non-toxic nature. However, better-performing bond trading business and currency-trading operation will be retained by the bank.

The proposed changes are expected to be announced with the bank’s six-month results in the second half of July.

“As we said at the AGM on 23 May, Deutsche Bank is working on measures to accelerate its transformation so as to improve its sustainable profitability. We will update all stakeholders if and when required,” Deutsche Bank noted in an e-mailed statement.

Our Viewpoint

Deutsche Bank is under pressure to trim its investment banking division, following the collapse of merger talks with domestic rival Commerzbank. Though Deutsche Bank’s restructuring efforts, including cost-saving measures, look encouraging, it is difficult to determine how much the bank will gain, considering the prevalent headwinds. Furthermore, dismal revenue performance is another concern.

Deutsche Bank currently carries a Zacks Rank #4 (Sell).

Shares of Deutsche Bank have lost around 9.2% on the NYSE, in the last six months, as against the industry’s growth of 9.7%.

Stocks to Consider

HSBC Holdings plc has been witnessing upward estimate revisions for the past 60 days, with the company’s shares surging nearly 1.8% on the NYSE, in six months’ time. It sports a Zacks Rank of 1 (Strong Buy), at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

DBS Group Holdings Ltd has been witnessing upward estimate revisions for the past 60 days. Over the past six months, this Zacks #1 Ranked company’s shares have been up more than 12% on the NYSE.

Banco Latinoamericano de Comercio Exterior, S.A. has been witnessing upward estimate revisions for the past 60 days. In the past six months, this Zacks Rank #1 company’s shares have been up more than 27% on the NYSE.

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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.


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Deutsche Bank Aktiengesellschaft (DB) : Free Stock Analysis Report
 
DBS Group Holdings Ltd (DBSDY) : Free Stock Analysis Report
 
HSBC Holdings plc (HSBC) : Free Stock Analysis Report
 
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