Key Morningstar Metrics for Deutsche Bank
- Fair Value Estimate: EUR 19.70
- Morningstar Rating: ★★
- Morningstar Economic Moat Rating: None
- Morningstar Uncertainty Rating: High
What We Thought of Deutsche Bank’s Earnings
Deutsche Bank DBK reported second-quarter profits before tax of EUR 2,421 million, 18% ahead of consensus estimates collected by the bank. A better-than-anticipated reduction in operating expenses and a good performance in investment banking despite a weak backdrop drove this outperformance.
Why it matters: Deutsche Bank has set ambitious profitability targets for 2025. The bank has shifted focus back to its investment bank over the last couple of years, which is paying off thus far, but also exposes the bank to the currently volatile market swings.
- The fixed-income and currencies business has shown strong performance (up 11% year over year), but the origination and advisory business (down 29%) has been a weak spot. Low appetite for primary offerings by corporates in the current uncertain environment is weighing on origination revenue.
- Loan-loss provisions of 36 basis points in the quarter were decent. The bank booked higher Stage I and Stage II provisions due to model updates and changed macroeconomic forecasts.
The bottom line: We raise our fair value estimate to EUR 19.70 per share from EUR 17.60 after reducing our cost and loan-loss provision assumptions. Shares are expensive.
- Deutsche Bank’s commercial real estate exposure and uncertainty around the impact of tariffs on corporates remain the driving force behind our above-consensus loan-loss provision assumptions. That said, we anticipate such stresses to soften in the second half of the year.
- We maintain our no moat rating.
