DBK 4Q23 Results; Big Lift In Equity Payout, M&A Risk Rising

Deutsche Bank (DBK GY) reported 4Q23 which show some credit deterioration (not a huge surprise) and a big lift in payout to equity holders.

• Revenues were EUR6.66bn (+5% y/y, consensus: 6.79bn), credit losses were EUR488m (cons: 395m) but a big tax write-back meant net profit of EUR1.4bn was well ahead of consensus of EUR851m. At the pre-tax level, profits missed expectations.
• Credit: losses were 41bp of lending, up from 28bp a year ago but only marginally higher than 3Q23 excl. some model adjustments. Non-performers rose to 2.8% (from 2.6% at Sep-23). CET1 capital was 13.7% (in line with consensus) and total capital was 18.6% (both broadly flat).
• Outlook: mgmt were more bullish that we’ve seen in some time, talking of EUR30bn revenue expectations for FY24 (cons: 29.3bn), a restart to M&A activity and, importantly, a big lift in equity holder payout (+50% in FY24 in total, after 50% hike in FY23).

So, a good day for equity holders (revenue expectations, payout) but credit on the balance sheet has weakened (not much outside of expectations) and mgmt is reported as looking at “bolt-on acquisitions”.

Conf call 1000 London time on https://event.choruscall.com/mediaframe/webcast.html?webcastid=Qi11Dvly