German bank Deutsche Bank AG (DE:DBK) posted bigger revenues in its half-yearly earnings report published yesterday. Nonetheless, the net profit was down by 27% as compared to the previous year, pulled down by higher costs during the period.
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The market reacted positively to the results, and the bank’s shares traded up by 1.36% on Wednesday. Over the past three months, the stock has surged by 11.25%, effectively reversing the losses experienced in the previous months.
Highlights of the Results
The bank reported net revenues of €15 billion for the first half, which is 8% higher as compared to prior year numbers. The profit before tax reached €3.3 billion, marking a mere 2% increase compared to the previous year due to higher non-operating costs. The profit attributable to shareholders was down by a huge 27% in Q2, to €763 million.
The higher costs were a pain point in the earnings report, hurting investors’ sentiments. The bank’s non-interest expense jumped by 8% to €11.1 billion in the first six months of 2023. For the second quarter, non-interest expenses increased by 15% to €5.6 billion. Moving ahead, the bank has increased its cost-saving target from €2 billion to €2.5 billion, in an effort to counteract the impact of inflation.
Among its divisions, the bank’s investment banking division’s revenues declined by 11% to €2.4 billion in the quarter as it faced challenges in closing deals. Meanwhile, higher interest rates are proving advantageous for other divisions.
Analysts’ View
Following the release of the results, many analysts have expressed their bullish opinion on the results, confirming their ratings on the stock.
Analysts at RBC Capital, J.P. Morgan, and Goldman Sachs have anticipated higher growth in share price, at 42%, 32%, and 71%, respectively. These analysts reiterated their Buy ratings yesterday.
On the contrary, Bank of America analyst Rohith Chandrarajan confirmed his Sell rating on the stock and also predicted a downside of 3% in the share price.
Deutsche Bank Share Price Forecast
According to TipRanks’ analyst consensus, DBK stock has a Moderate Buy rating backed by eight Buy, six Hold, and two Sell recommendations.
The average share price forecast is €13.62 which is 29% higher than the current price level.
