Annual profit within reach: Deutsche Bank: What investors should consider when buying Deutsche Bank shares | message

by Ralf Witzler, Euro am Sonntag

D.he Deutsche Bank under Christian Sewing has achieved a stage win on the way back to a successful bank. Not more but also not less. Since the announcement of the new strategy in the middle of last year, the institute has made progress with the restructuring, and after posting a pre-tax profit of 846 million euros in the first nine months, a profit for the full year seems within reach. The third quarter made a significant contribution to this with a profit before taxes of 482 million euros, which was well above market expectations. In the same quarter of the previous year, Deutsche Bank had to post a loss of almost 690 million euros.

With regard to the latest figures, CEO Sewing said that in addition to cost discipline, the bank had also shown that it could gain market share. He expects “that a considerable part of our earnings increases will prove to be sustainable”. In investment banking in particular, income rose in the reporting period from July to September compared to the same quarter of the previous year by 43 percent to just under 2.4 billion euros.

Within the division, capital market business in trading in fixed-income securities and currencies flourished, increasing by 47 percent to 1.8 billion euros. This means that Deutsche Bank can also be seen in comparison to the competition in the USA and Europe. Of the major banks that have presented current figures so far, only Goldman Sachs performed better with an increase of 49 percent. It certainly helped that many companies wanted to secure liquidity in the pandemic and issued bonds for it.

Gained market share

But also in the consulting and issuing business there was an increase in income by 15 percent to 567 million euros. According to the Frankfurt-based company, this is due to a much better-running share issue business, where Deutsche Bank was able to gain market share. In view of the increasing number of infections and the high probability of further restrictions on public life and the economy, the bank remains calm. According to CFO James von Moltke, the institute already demonstrated resilience during the first lockdown in spring. Deutsche Bank will also manage the phase of a second lockdown, the manager said. He sees no reason for strategic changes.

Still question marks

It is not yet clear what forms the measures against the Corona crisis will take and whether, in the end, the risks for Deutsche Bank’s loan portfolio will not increase significantly and force further provisions. In order to be able to describe the strategic restructuring of the institute, which is undoubtedly progressing, as a success, the bank must, however, provide evidence that sustainable, solid profits can be achieved with the new structure. That only works with time.

Modification: The positive operational development continues. Your sustainability has yet to prove itself, however. Investors wait.

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