Deutsche Bank Says Q1 Results Will Beat Market Estimates

Deutsche Bank AG DB on Sunday said its first-quarter results would beat analyst estimates despite the negative impact of the novel coronavirus (COVID-19) pandemic.

What Happened

In an unexpected statement ahead of its earnings report scheduled on Wednesday, the German bank said it estimates a revenue of $6.9 billion in Q1, about 12.3% higher than the $6.2 billion consensus of analysts polled by Bloomberg.

Deutsche Bank expects net income in the quarter to be $71.6 million and pre-tax group profit to be $223.6 million.

The better-than-expected revenue and reduced costs will help the bank offset a $542.6 million provision for credit losses due to the novel coronavirus (COVID-19) pandemic, it said.

Deutsche Bank said it's Common Equity Tier 1 (CET1) ratio was 12.8% at the end of Q1, down 13.6% year-on-year. It said that at least 40 basis points from the CET1 ratio were lost to the pandemic.

The Frankfurt-based bank said, later this year, its CET1 ratio could fall below the guidance of at least 12.5% it gave earlier.

"The short-term implications of the COVID-19 pandemic make it difficult for the bank to accurately reflect the timing and the magnitude of changes to its original capital plan," Deutsche Bank said.

The bank noted that its Q1 CET1 ratio is 240 basis points ahead of the requirements for its current tier, and even if it "temporarily" falls below its guidance, the bank will "continue to work towards its 2022 targets of a 12.5% CET1 ratio target and 5% leverage ratio."

Price Action

Deutsche Bank shares closed 3.72% lower at $5.95 in New York on Friday.

Photo Credit: Public domain photo via Wikimedia.