Deutsche Bank (DB) Up 3.7% Since Last Earnings Report: Can It Continue?

Core Viewpoint - Deutsche Bank reported a significant loss in Q2 2024 due to litigation provisions, contrasting sharply with the profit from the previous year, raising concerns about its financial stability and future performance [2][3]. Financial Performance - The bank recorded a Q2 2024 loss of €143 million ($155.6 million), compared to a profit of €763 million ($830.7 million) in the same quarter last year [2]. - Profit before tax was €411 million ($477.5 million), down 71% year over year, but would have been €1.7 billion ($1.9 billion) without the €1.3 billion ($1.41 billion) litigation provision [2][3]. - Net revenues increased by 2% year over year to €7.6 billion ($8.26 billion), driven by growth in commissions and fee income [3]. - Non-interest expenses rose by 20% to €6.7 billion ($7.3 billion), and provisions for credit losses increased by 19% to €476 million ($474.9 million) [3]. Segmental Performance - Corporate Bank: Net revenues decreased by 1% to €1.92 billion ($2.07 billion) due to lower net interest income [4]. - Investment Bank: Net revenues increased by 10% to €2.6 billion ($3.26 billion), primarily from a doubling of Origination & Advisory revenues [4]. - Private Bank: Net revenues fell by 3% to €2.33 billion ($2.50 billion) due to lower revenues in Personal Banking [4]. - Asset Management: Net revenues rose by 7% to €663 million ($721.8 million) driven by increased management fees [4]. - Corporate & Other: Reported net revenues of €73 million ($79.4 million), down 15% year over year [5]. Capital Position - The Common Equity Tier 1 capital ratio decreased to 13.5% from 13.8% year over year [6]. - The leverage ratio on a fully-loaded basis fell to 4.6% from 4.7% in the previous year [6]. Shareholder Returns - The bank completed a €675 million ($734.9 million) share repurchase program, bringing total capital distributions to €1.6 billion ($1.74 billion) in 2024 [7]. Future Outlook - For the full year 2024, management expects revenues around €30 billion and an adjusted cost run-rate of €5 billion [8]. - Financial targets for 2025 include a revenue CAGR of 5.5-6.5%, total costs of €20 billion, and a CET1 capital ratio of approximately 13% [8]. Analyst Sentiment - Analysts have not made any earnings estimate revisions recently, with the consensus estimate shifting down by 6.79% [9]. - Deutsche Bank currently holds a Zacks Rank 2 (Buy), indicating expectations for above-average returns in the coming months [11].