FINANCIALS: Deutsche Bank Results 24-Jul: High Hopes vs. Reality

Deutsche Bank (DB: Baa1/BBB/A-) results are due 24-Jul. Mgmt has been talking numbers down recently and indications from US IB results were muted, at best. That said, spreads have been strong, so expectations are relatively high, especially in light of the potential Postbank litigation update.

• Last time around (25-Apr) saw a net profit beat, driven by revenues within the investment bank (both FICC and primary). The real equity kicker on the day was the CFO comments on the call about being able to enter new buyback discussions with the regulator.
• A court ruling over Postbank’s legal liabilities (on 26-Apr) is likely to drive a charge in these figures and an update here appears likely – it could even stymie the above buyback discussions. On 31-May, the CFO went on the record indicating FICC revenues may be weaker this quarter and has, more recently, talked down loan growth expectations, too. Recent US bank results have indicated equities as much stronger than FICC – a negative for “equity light” DB.
• DB spreads have tightened meaningfully since last results (-24bp, €IG banks -3bp) but the equity is flat (SX7P +5%).
• Revenue estimates have drifted up very slightly (<1%) but earnings for this year have been cut (3%) and are only marginally ahead for next year.

Results are due pre-market with conf call at 1000 (London time) at: https://services.choruscall.eu/links/deutschebank1.html