Deutsche Bank (DB) Mulls to Bolster Payment-Processing Business

Deutsche Bank AG DB is mulling to strengthen its payment-processing business on acquisitions and joint ventures with an aim to stand out in Europe's digital payment market. The news was reported by the Financial Times.

The company is eyeing small payment-processing companies that find it harder to meet strict regulatory requirements as an option to acquire. Further, it plans to enter joint ventures with firms that are based outside Europe.

"Digital payments are one area with the highest strategic priority for us," and "non-organic growth is clearly an option," said Stefan Hoops, head of Deutsche Bank’s corporate bank unit.

The German lender’s digital payment-processing business is quite small at present and contributed about €100 million in annual fees but Hoops seeks to more than double this figure in the next three years.

Deutsche Bank is already making progress toward achieving this target, the article said. It recently made some strategic hires in the unit, including André Bajorat, the founder of fintech Figo, as the corporate bank’s new head of strategy, and former senior managers from a payment processing group Wirecard.

Deutsche Bank seeks to gain competitive advantages over other big U.S. players by stepping up in the booming payments industry.

Our Take

The company’s restructuring efforts, aimed to boost revenues and drive improvement across all the business segments, look encouraging. However, it is still plagued by several headwinds and is under the scrutiny of investors. Also, litigation issues related to past misconducts and legal costs might impede bottom-line growth.

Shares of Deutsche Bank have gained 50.8% over the past six months compared with the 38.1% rally of the industry.

 

 

Currently, Deutsche Bank carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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Earnings estimates for the ongoing year for Bank of Montreal BMO have moved 3.4% north over the past 60 days. The company’s shares have gained 58.1% over the past six months. It currently has a Zacks Rank of 2 (Buy).

UBS Group AG UBS has witnessed a 19.7% upward earnings estimate revision for the current year in the past 60 days. This Zacks Rank #2 stock has gained 48.3% over the past six months.

The Bank of N.T. Butterfield & Son Limited NTB 2020 earnings estimates have moved 6.2% north over the past 60 days. The company’s shares have rallied 49.5% over the past six months. It carries a Zacks Rank of 2 at present.

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