Deutsche Bank AG (DB) Q2 2024 Earnings Call Highlights: Strong Revenue Growth Amid Litigation ...

GuruFocus News
4 min read

In This Article:

  • Revenue: EUR15.4 billion in the first half of 2024, on track for EUR30 billion for the year.

  • Adjusted Cost Target: Quarterly run rate at EUR5 billion.

  • Litigation Provision: EUR1.3 billion related to the acquisition of Postbank.

  • Post-Tax Return on Tangible Equity: 7.8%, up from 6.8% in the first half of the previous year.

  • Cost-to-Income Ratio: Improved from 73% to 69% year on year.

  • CET1 Ratio: 13.5%.

  • Pre-Provision Profit: Up 17% year on year to EUR4.7 billion.

  • Noninterest Revenues: Up 14% year on year.

  • Net Inflows in Private Bank: EUR19 billion in the first six months.

  • Assets Under Management: Grew by EUR37 billion to EUR933 billion.

  • Adjusted Costs: EUR10.1 billion year on year.

  • Workforce Reductions: 2,700, including 700 FTEs in the second quarter.

  • Provision for Credit Losses: EUR476 million or 40 basis points of average loans.

  • Net Profit: EUR52 million for the second quarter.

  • Liquidity Coverage Ratio: 136%.

  • Net Stable Funding Ratio: 122%.

  • Corporate Bank Revenues: EUR1.9 billion in the second quarter.

  • Investment Bank Revenues: 10% higher year on year in the second quarter.

  • Private Bank Revenues: EUR2.3 billion in the second quarter.

  • Asset Management Revenues: Increased by 7% versus the prior year.

  • Branch Closures: 38 in the first half of the year.

Release Date: July 25, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • Deutsche Bank AG (NYSE:DB) reported strong revenue growth, achieving EUR15.4 billion in the first half of 2024, on track to meet the EUR30 billion target for the year.

  • The bank's capital-light businesses, such as Corporate Bank and Origination & Advisory, are gaining market share, contributing to revenue growth.

  • The cost-to-income ratio improved from 73% to 69% year on year, indicating better operational efficiency.

  • The CET1 ratio remains solid at 13.5%, demonstrating capital strength despite absorbing significant litigation provisions.

  • Deutsche Bank AG (NYSE:DB) achieved a 17% year-on-year increase in pre-provision profit, reflecting positive operating leverage and strategic execution.

Negative Points

  • The bank faced a significant litigation provision of EUR1.3 billion related to the acquisition of Postbank, impacting quarterly results.

  • Non-interest expenses increased by 20% year on year, driven by higher litigation charges.

  • Provision for credit losses was elevated at EUR476 million, with concerns about commercial real estate exposures.

  • The bank's tax rate was impacted by largely non-deductible litigation charges, resulting in a high effective tax rate of 87% for the quarter.

  • The Private Bank's profitability remains a challenge, with ongoing efforts needed to improve returns, particularly in the German personal banking segment.

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