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Deutsche Bank's (DB) Q4 Earnings & Revenues Increase Y/Y

Deutsche Bank DB reported a fourth-quarter 2022 profit attributable to its shareholders of €1.80 billion ($1.84 billion), up significantly from the year-ago quarter. The Germany-based lender reported a profit before tax of €775 million ($791.2 million).

Results were largely driven by higher net revenues and lower expenses. However, higher provision for credit losses was an offsetting factor.

Revenues & Provisions Rise, Costs Decline

The bank generated net revenues of €6.32 billion ($6.45 billion), up 7% year over year. The upside primarily resulted from higher revenues in the Corporate Bank and Private Bank segments.

Non-interest expenses of €5.19 billion ($5.30 billion) decreased 7% from the prior-year quarter.

Provision for credit losses was €351 million ($358.4 million), up 38% from the prior-year quarter.

Segmental Performance

Net revenues of €1.76 billion ($1.80 billion) at the Corporate Bank division were up 30% year over year. The rise was mainly driven by an increase in net interest income.

Investment Bank’s net revenues totaled €1.68 billion ($1.72 billion), down 12% year over year. This highlights a decline in origination and advisory revenues, partly offset by a rise in fixed-income and currencies revenues.

Private Bank reported net revenues of €2.51 billion ($2.56 billion), up 23% year over year. Higher net interest income and a rise in remaining income led to the increase.

Asset Management generated net revenues of €609 million ($621.8 million), down 23% year over year. Declines in management fees, as well as performance and transaction fees, led to the fall.

Corporate & Other reported negative net revenues of €225 million ($229.7 million), up 13% from the prior-year period.

Capital Release reported negative net revenues of €12 million ($12.25 million).

Capital Position Robust

Deutsche Bank’s Common Equity Tier 1 capital ratio was 13.4% as of Dec 31, 2022, up from the year-ago quarter’s 13.2%. Risk-weighted assets were €360 billion ($385.1 billion), up 2.3% year over year.

The leverage ratio on a fully-loaded basis was 4.6%, down from 4.9% in the year-ago quarter.

Our Viewpoint

Deutsche Bank’s financial performance seems encouraging. The bank delivered its highest annual profit in 2022 in the last 15 years. The performance of the bank improved for the Corporate Bank and the Private Bank segments over the prior-year quarter. Lower expenses are expected to alleviate any bottom-line pressure in the near term.

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

Performance of Other Banks

Commerce Bancshares Inc.’s CBSH fourth-quarter 2022 earnings per share of $1.04 surpassed the Zacks Consensus Estimate of $1.02. The bottom line increased 15.6% from the prior-year quarter.

Results primarily benefited from an improvement in net interest income, a slight rise in loan balance and higher rates. However, an increase in non-interest expenses and provisions, and a fall in non-interest income were the major headwinds for CBSH.

BankUnited, Inc.’s BKU fourth-quarter 2022 earnings per share of 82 cents missed the Zacks Consensus Estimate of $1.11 by a considerable margin. The bottom line also declined 41.8% from the prior-year quarter. We had projected earnings per share of 96 cents.

BKU’s results were adversely impacted by subdued fee income performance and an increase in credit costs. However, higher net interest income, a decent rise in loan balance, increasing rates and a fall in expenses acted as tailwinds.

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