Deutsche Bank Results: FICC, CRE To The Fore

Deutsche Bank’s results are due 25-Apr. US bank results look to be positive for its IB but it’s the CRE exposure that’s likely to be more interesting for credit watchers… and a good indication for DePfa, Aareal, Commerzbank and peers.

• FY23 results (1-Feb) beat expectations but on a low tax rate. It included some credit deterioration but a positive outlook narrative on revenues and equity payouts. DB is obviously under scrutiny over CRE lending in the light of DePfa and Aareal’s recent travails. Mgmt comments at a conference (12-Mar) did appear more positive on CRE losses, however.
• Recent US bank results have been good in FICC and DCM particularly, which are positive laterals for Deutsche’s IB. These results will likely give some indications for DePfa, Aareal, BAWAG and Commerzbank, all reporting in the next three weeks.
• DB did a benchmark senior non-preferred issue on 26-Mar which priced at MS+150bp, tight of our fair value of MS+160bp and has then underperformed banks by 3-4bp.
• DB spreads, more widely, are c.36bp tighter YTD (€IG banks -37bp) so roughly in line with the market. The equity is up 27% since results but that’s only 5pp more than the SX7P (+22%).
• Earnings estimates are up: FY25 earnings are up 11% since results (FY24 +4%) driven by 3% revenue upgrades for next year (flat this year).

Results due 0600 (London time), conf call is 1000 at https://event.choruscall.com/mediaframe/webcast.html?webcastid=bAQCLgmI