EU FINANCIALS: Deutsche Bank - Q4 - Reaction, call & targets
The equity is declining on the earnings miss, cost targets revised higher, lower shareholder returns than some were anticipating. The IB did really well, and NII was above expectations, but interest income will continue to fall and what is a relatively disappointing lack of growth in the private bank and asset management is in focus.
The bonds look fine on the news, which is not surprising, around the edges disappointment for equity holders doesn’t change the slow recovery theme. Disappointing shareholder rewards also help. The 7.375 Perps are up 0.4% today, and 5% since their 14 November announce date. This makes it one of the best performing RT1/AT1's issued recently.
Earnings call & targets
As expected the call clarified future litigation expense expectations, no improvement to revenue growth target.
- Target 5.5% revenue growth in 2025
- Litigation expense is expected to be closer to €400m in 2025, down from the €1.7bn mentioned in our results summary
- Other costs however were guided up by as much as €700m for 2025
- Management thinks this could boost RoTE to >10% in 2025.
Link to results post from earlier this morning - https://mni.marketnews.com/3Eed7KN
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