Why Is Deutsche Bank Stock Surging Premarket Thursday?

Zinger Key Points
  • Deutsche Bank reported 5% Y/Y revenue growth to €6.66 billion led by Corporate Bank and Investment Bank performance.
  • Deutsche Bank expects to cut 3,500 jobs to save cost.

Deutsche Bank AG DB shares are trading higher after it reported fourth quarter FY23 results. 

The bank reported revenue growth of 5% Y/Y to €6.66 billion. In USD terms, revenue of $7.17 billion missed the consensus of $7.39 billion.

Corporate Bank net revenues increased 9% Y/Y to €1.9 billion, reflecting a continued favorable interest rate environment and pricing discipline, thanks to a strong deposit base and higher fee and commission income.

Private Bank revenues fell 4% Y/Y to €2.4 billion as Private Bank Germany revenues rose 10% Y/Y while revenues in the International Private Bank declined 21% Y/Y.

Investment Bank net revenues rose 10% Y/Y to €1.84 billion in the quarter. Asset Management revenues were down 5% Y/Y to €580 million, reflecting lower management fees (-3% Y/Y) on a decline in fees in Alternatives.

Noninterest expense grew 5% Y/Y to €5.5 billion on restructuring and severance costs and Numis-related goodwill impairment.

Provision for credit losses stood at €488 million (up from €245 million in the third quarter of FY23). EPS stood at €0.67, down 27% Y/Y. In USD terms, EPS of $0.72 beat the consensus of $0.34.

Common Equity Tier 1 capital ratio was 13.7%, down from 13.9% at the end of the third quarter. At the end of the fourth quarter, liquidity reserves stood at €261 billion, up from €245 billion at the end of the third quarter, including high-quality assets of €219 billion.

Cost saving: Deutsche Bank continues to be on track with an incremental operational efficiencies target of €2.5 billion annually by 2025 and saved around €1.3 billion by end-2023.

The remaining cost savings of €1.6 billion reflect approximately 3,500 job cuts, mainly in non-client-facing areas. 

The bank targets a quarterly run-rate of adjusted costs of €5 billion and aims to operate with total costs of around €20 billion in 2025.

Shares Repurchase & Dividend: Deutsche Bank plans to increase share repurchases and dividends by at least 50% Y/Y in 2024. The bank has received supervisory approval for a further share repurchase of €675 million, expected to be completed in the first half of 2024, and completed €450 million in share repurchases in 2023.

The bank proposed dividend per share of €1.00 for the financial year 2025, subject to delivery of financial targets and a 50% payout ratio.

The bank achieved around €13 billion of its 2025 RWA optimization target of €25 billion-€30 billion. Deutsche Bank expects capital distributions of €1.6 billion in the first half of 2024 and now projects to exceed its goal of €8 billion in capital distributions to shareholders paid in 2022-26.

Also Read: Deutsche Bank’s DWS Group, Galaxy Digital Plan Euro-Backed Stablecoin Launch Pending Regulatory Approval

Price Action: DB shares are up 6.61% at $13.70 premarket on the last check Thursday.

Photo via Wikimedia Commons

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