Yahoo Finance Deutsche Bank (DB) Q1 Earnings & Revenues Rise Y/Y, Stock Up
Deutsche Bank DB reported first-quarter 2024 profit attributable to its shareholders of €1.3 billion ($1.41 billion), up 10.1% year over year. The Germany-based lender reported a profit before tax of €2 billion ($2.17 billion), up 10% year over year.
Results were positively impacted by higher net revenues and lower expenses. This led investors to turn bullish on the stock, resulting in a gain of 8.7%. However, higher provision for credit losses was an offsetting factor.
Revenues Rise & Expenses Fall
The bank generated net revenues of €7.8 billion ($8.47 billion), up 1% year over year. This upside primarily resulted from higher revenues in the Investment Bank and Asset Management segments.
Non-interest expenses of €5.3 billion ($5.75 billion) decreased 3% from the prior-year quarter. Our estimate for non-interest expenses was €6.8 billion.
Provision for credit losses was €439 million ($476.56 million), up 18% from the prior-year quarter.
Segmental Performance
Corporate Bank: Net revenues of €1.9 billion ($2.06 billion) decreased 5% year over year. The fall was due to lower net interest income, a decline in loan net interest income and the discontinuation of minimum reserve remuneration by the European Central Bank, partially offset by a rise in commissions and fee income. Our estimate for the same was €2.4 billion.
Investment Bank: Net revenues totaled €3 billion ($3.26 billion), up 13% year over year. This highlights a rise in Fixed Income & Currencies and Credit Trading revenues. Our estimate for the metric was €3.1 billion.
Private Bank: Net revenues of €2.4 billion ($2.61 billion), down 2% year over year. A decline in revenues in Personal Banking majorly led to the decrease. Our estimate for the metric was €3.1 billion.
Asset Management: Net revenues of €617 million ($669.8 million) rose 5% year over year. An increase in management fees, as well as other revenues, led to the rise. Our estimate for the metric was €676.6 billion.
Corporate & Other: It reported negative net revenues of €140 million ($152 million) compared with negative $10 million in the prior-year quarter.
Capital Position: Mixed Bag
Deutsche Bank’s Common Equity Tier 1 capital ratio was 13.4% as of Mar 31, 2024, down from the year-ago quarter’s 13.6%. Risk-weighted assets were €355 billion ($383.1 billion), down 1.3% year over year.
The leverage ratio on a fully-loaded basis was 4.5%, down from the year-ago quarter's 4.6%.
Share Repurchase Update
As of Apr 19, 2024, Deutsche Bank had repurchased 20.6 million shares for a total of €283 million. The bank anticipates to complete the current repurchase program of €675 million (launched Mar 4, 2024) by the end of the first half of 2024.
Our Viewpoint
Deutsche Bank’s financial performance seems encouraging. The performance of the bank improved due to the Asset Management and Investment Bank segments’ performances over the prior-year quarter. An increase in net revenues is expected to drive earnings growth in the near term. However, a rise in provisions is a major concern.
Deutsche Bank Aktiengesellschaft Price, Consensus and EPS Surprise
Deutsche Bank Aktiengesellschaft price-consensus-eps-surprise-chart | Deutsche Bank Aktiengesellschaft Quote
The company 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
Texas Capital Bancshares, Inc. TCBI reported first-quarter 2024 EPS of 62 cents (excluding non-recurring items), which beat the Zacks Consensus Estimate of 59 cents. However, earnings compared unfavorably with 70 cents reported in the year-ago quarter.
TCBI's results benefited from an increase in non-interest income and higher loan and deposit balances. Additionally, strong capital position and lower provisions were other positives. However, a decline in NII and an increase in expenses were the undermining factors.
Citizens Financial Group CFG reported first-quarter 2024 EPS of 65 cents, missing the Zacks Consensus Estimate of 75 cents. The bottom line declined from $1 reported in the year-ago quarter.
Underlying EPS for the first quarter of 2024 was 79 cents, down from $1.10 reported in the year-ago quarter.
CFG’s results were adversely affected by lower NII and a rise in provisions and operating expenses. However, an increase in non-interest income and lower allowance for credit losses offered some support.
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