On Oct 7, 2013, we initiated our coverage on well-known
Deutsche Bank AG
) at Outperform based on its superior position in the market
aided by its positive approach to market conditions and
cost-curtailment efforts. Moreover, a healthy capital position is
indicative of the company's robust standing. However, the
regulatory reforms and an unsettled global economy might act as
deterrents for this Zacks Rank #1 (Strong Buy) stock.
Deutsche Bank's organic growth through its strong top line
expansion, internal capital adequacy and prudent expense
management prompted us to initiate with this stance.
Further, in its Strategy 2015+ announced in Sep 2012, Deutsche
Bank declared a number of initiatives aimed at increasing its
competitiveness. These initiatives included reductions in costs,
duplication and complexity in the years ahead. The bank plans to
spend approximately €4 billion over a three-year period starting
2012 with the goal of achieving full run-rate annual cost savings
of €4.5 billion by 2015. We believe such achievements will aid
Moreover, Deutsche Bank exhibited a strong capital position as of
Jun 30, 2013. Core Tier 1 capital ratio came in at 13.3% at the
quarter-end, up from 12.1% at the end of the prior quarter.
Further, the bank's Basel 3 core Tier 1 ratio came in at 10.0%,
higher than the company's estimate of 8.5%. Moreover,
risk-weighted assets declined mainly due to successful execution
of the risk reduction program in the NCOU and model roll outs.
Additionally, Deutsche Bank's internal capital adequacy ratio
(CAR) was 170% as of Jun 30, 2013 compared with 158% as of Dec
31, 2012. A CAR of more than 100% signifies that the total
capital supply is sufficient to cover the capital demand
determined by the risk positions.
While progress was made on many issues during 2012, many of the
underlying challenges still remain in 2013. Lingering issues
related to the Eurozone sovereign debt situation and European
banking system, tepid economic growth in the U.S. and the bleak
outlook for growth in the global economy would continue to exert
a strong influence on client confidence and, thus, Deutsche
Bank's activity levels are expected to remain under pressure in
the near term.
For Deutsche Bank, over the last 60 days, the Zacks Consensus
Estimate for 2013 jumped 13% to $5.99 per share, while it moved
north by 11.5% to $6.91 per share for 2014.
Other Stocks to Consider
Besides Deutsche Bank, other foreign stocks that are currently
performing well include
Sumitomo Mitsui Financial Group, Inc.
Credit Suisse Group AG
Banco Bilbao Vizcaya Argentaria, S.A.
). All these 3 carry a Zacks Rank #1.
BANCO BILBAO VZ (BBVA): Free Stock Analysis
CREDIT SUISSE (CS): Free Stock Analysis
DEUTSCHE BK AG (DB): Free Stock Analysis
SUMITOMO-MITSUI (SMFG): Free Stock Analysis
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