Why Is Deutsche Bank Stock Surging Premarket Thursday?

Deutsche Bank AG DB shares are trading higher after it reported fourth quarter FY23 results. 

The bank reported revenue growth of 5% Y/Y to €6.66 billion. In USD terms, revenue of $7.17 billion missed the consensus of $7.39 billion.

Corporate Bank net revenues increased 9% Y/Y to €1.9 billion, reflecting a continued favorable interest rate environment and pricing discipline, thanks to a strong deposit base and higher fee and commission income.

Private Bank revenues fell 4% Y/Y to €2.4 billion as Private Bank Germany revenues rose 10% Y/Y while revenues in the International Private Bank declined 21% Y/Y.

Investment Bank net revenues rose 10% Y/Y to €1.84 billion in the quarter. Asset Management revenues were down 5% Y/Y to €580 million, reflecting lower management fees (-3% Y/Y) on a decline in fees in Alternatives.

Noninterest expense grew 5% Y/Y to €5.5 billion on restructuring and severance costs and Numis-related goodwill impairment.

Provision for credit losses stood at €488 million (up from €245 million in the third quarter of FY23). EPS stood at €0.67, down 27% Y/Y. In USD terms, EPS of $0.72 beat the consensus of $0.34.

Common Equity Tier 1 capital ratio was 13.7%, down from 13.9% at the end of the third quarter. At the end of the fourth quarter, liquidity reserves stood at €261 billion, up from €245 billion at the end of the third quarter, including high-quality assets of €219 billion.

Cost saving: Deutsche Bank continues to be on track with an incremental operational efficiencies target of €2.5 billion annually by 2025 and saved around €1.3 billion by end-2023.

The remaining cost savings of €1.6 billion reflect approximately 3,500 job cuts, mainly in non-client-facing areas. 

The bank targets a quarterly run-rate of adjusted costs of €5 billion and aims to operate with total costs of around €20 billion in 2025.

Shares Repurchase & Dividend: Deutsche Bank plans to increase share repurchases and dividends by at least 50% Y/Y in 2024. The bank has received supervisory approval for a further share repurchase of €675 million, expected to be completed in the first half of 2024, and completed €450 million in share repurchases in 2023.

The bank proposed dividend per share of €1.00 for the financial year 2025, subject to delivery of financial targets and a 50% payout ratio.

The bank achieved around €13 billion of its 2025 RWA optimization target of €25 billion-€30 billion. Deutsche Bank expects capital distributions of €1.6 billion in the first half of 2024 and now projects to exceed its goal of €8 billion in capital distributions to shareholders paid in 2022-26.

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Price Action: DB shares are up 6.61% at $13.70 premarket on the last check Thursday.

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