anticipation fulfilled: Deutsche Bank shares deliver more than anticipated, generous dividend announced
Deutsche Bank reported a significant increase in its third-quarter pre-tax profits, with a 31% rise to €2.3 billion, and a 39% increase in after-tax profits to €1.7 billion. Unlike Commerzbank, Deutsche Bank has an active investment banking business, which contributed to its strong financial performance.
The bank's investment banking business saw a 21% increase in pre-tax profits, reaching €813 million. However, Deutsche Bank suffered losses in its private and corporate client business.
Meanwhile, Commerzbank, which does not have an investment banking business, is set to publish its quarterly figures on November 6.
Elsewhere, the DWS Group, Deutsche Bank's subsidiary, surpassed experts' expectations. In contrast, the risk provision in Deutsche Bank's credit business for the third quarter was almost doubled compared to the previous year, reaching almost half a billion euros. This significant provision contributed positively to the profit increase in the third quarter.
In a separate development, the Cologne Higher Regional Court ruled in favor of 13 former Postbank shareholders in a long-standing dispute. The plaintiffs sued Deutsche Bank because they believed the bank had gained control of Postbank before the financial crisis in 2008. As a result, the bank will likely have to pay compensation to the plaintiffs, as the Cologne judges did not allow an appeal.
The provision resulting from these settlements amounted to €440 million, but the current ruling has no further impact on this provision. Deutsche Bank has €550 million set aside for the remaining pending lawsuits in the matter.
In response, a spokesperson from Deutsche Bank stated that they will examine a non-admission complaint with the Federal Court of Justice after receiving the grounds for the judgment.
Finance chief James von Moltke raised the forecast for the risk provision for the full year from €1.4 to €1.8 billion. Despite these headwinds, the outlook for Deutsche Bank's DAX stock in the upcoming quarters is positive, supported by strong earnings momentum, improved profitability metrics, and favorable analyst sentiment.
Analysts like Morgan Stanley and UBS have raised target prices for Deutsche Bank shares to €32, maintaining "Overweight" and "Buy" ratings respectively. The stock is trading near a multi-decade high with bullish technical indicators, signaling upward price momentum.
However, investors should monitor the impact of legal outcomes and risk provisions on Deutsche Bank's performance in the coming quarters. Despite these challenges, current market signals and financial metrics imply a favorable outlook for the bank.
In contrast, Commerzbank, without an investment banking business, will release its quarterly figures on November 6, providing insights into its financial performance. Finance chief James von Moltke has ruled out a possible takeover of Commerzbank.
Deutsche Bank's investment banking business substantially increased its pre-tax profits by 21%, reaching €813 million, showcasing a key contributor to the bank's overall financial growth. Meanwhile, Deutsche Bank encountered losses in its personal-finance sector, specifically within its private and corporate client business.
Regarding Commerzbank, while it does not have an investment banking business and is set to publish its quarterly figures on November 6, its focus remains primarily on business dealings outside of investing.
