Deutsche Bank Tumbles Post Q4 Loss - Analyst Blog
Deutsche Bank AG
) were in the red at the close of the trading session on
Frankfurt's DAX index on Monday, after the bank reported a net
loss of €965 million ($1.3 billion) in the final quarter of 2013.
The shares fell 5.41% to close at €37.21, indicating investors'
disappointment over the unexpected numbers delivered by Deutsche
The loss stemmed from a 27% slump in revenues from Corporate Banking & Securities (CB&S) unit, primarily due to a 31% drop in debt sales and trading revenues. Moreover, litigation charges of €528 million ($718.6 million) during the quarter negatively impacted the results.
As the U.S. markets were closed yesterday, the first business day following its earnings release, the ADRs of Deutsche Bank did not witness any pressure. But following investors' reaction in its local markets, the chance of slump is high for the ADRs in today's session.
For further details on Deutsche Bank's fourth-quarter 2013 earnings please read:
Though Deutsche Bank anticipates 2014 to be a challenging
year, it remains firm on achieving its targets under Strategy
2015+ efforts. In Sep 2012, Deutsche Bank declared a number of
initiatives aimed at increasing its competitiveness. These
include improvement in efficiency, aggressive cost cuts, a
simplified capital structure and a change in the company's
The company contemplates making investments of approximately €4 billion and undertaking other such measures to help achieve full run-rate annual cost savings of €4.5 billion by 2015.
Further, Deutsche Bank aims to reduce its risk-weighted assets and continue with its de-risking measures. Notably, risk-weighted assets decreased 11.5% year over year to €355 billion ($483.1 billion) as of Dec 31, 2013.
Strategy 2015+ efforts are encouraging and we expect such efforts to help improve its operating efficiency. However, the related costs could weigh on the profitability. Moreover, given the stressed operating environment and unexpected legal woes, we do not expect any significant improvement in earnings in the coming quarters.
Deutsche Bank currently carries a Zacks Rank #2 (Buy). Other foreign banks worth considering include Erste Group Bank AG ( EBKDY ), Barclays PLC ( BCS ) and Grupo Financiero Galicia S.A. ( GGAL ). All these banks carry a Zacks Rank #2.
BARCLAY PLC-ADR (BCS): Free Stock Analysis Report
DEUTSCHE BK AG (DB): Free Stock Analysis Report
ERSTE GROUP BNK (EBKDY): Get Free Report
GRUPO GALIC ADR (GGAL): Free Stock Analysis Report
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