Credit: Shutterstock photoSummary:
We have upgraded our long-term recommendation on Deutsche Bank to Neutral based on the company's efforts to record top-line growth and lower provisions as reflected in the third-quarter 2014 results. However, overall the company reported loss due to non-tax deductibility of certain litigation charges. Amid the worldwide economic volatility and the continuing Eurozone crisis, the company is focused on building its capital level. Strategy 2015+ efforts are encouraging and we expect the initiative to help improve operating efficiency. However, the related costs could weigh on the profitability. Moreover, given the stressed operating environment and ongoing litigation issues, we do not expect any significant improvement in earnings.
Overview:
Headquartered in Frankfurt am Main, Deutsche Bank is the largest bank in Germany and one of the largest financial institutions in Europe and the world, as measured by total assets ( 1.71 trillion as of Sep 30, 2014). As of that date, the company had 97,762 full-time employees and operated in 72 countries with 2,833 branches, of which about 66% were in Germany. It offers a wide variety of investment, financial and related products and services to private individuals, corporate entities and institutional clients around the world.
Following a comprehensive strategic review, Deutsche Bank realigned its organizational structure in fourth-quarter 2012. The company is currently organized into the following five corporate divisions:
Corporate Banking & Securities Corporate Division (CB&S) (accounting for 42% of 2013 management net revenue): CB&S is made up of Corporate Finance and Markets business divisions. These businesses offer financial products worldwide including the underwriting of stocks and bonds, trading services for investors and the tailoring of solutions for companies' financial requirements.
Global Transaction Banking Corporate Division (GTB) (12%): GTB delivers commercial banking products and services to corporate clients and financial institutions, including domestic and cross-border payments, financing for international trade, as well as the provision of trust, agency, depositary, custody and related services.
Deutsche Asset & Wealth Management Division (DeAWM) (14%): Deutsche Bank AWM is one of the world's leading investment organizations. AWM helps individuals and institutions worldwide to protect and increase their wealth, offering traditional and alternative investments across all major asset classes. AWM also provides customized wealth management solutions and private banking services to high-net-worth and ultra-high-net-worth individuals and family offices.
Private & Business Clients Corporate Division (PBC) (29%): PBC operates under a single business model across Europe and select Asian markets. PBC serves retail and affluent clients as well as small and medium sized business customers. The division offers a similar range of banking products and services with some variations among countries that are driven by local market, regulatory and customer requirements.
Non-Core Operations Unit Corporate Division (NCOU) (3%): In Nov 2012, Deutsche Bank established the NCOU. The NCOU operates as a separate corporate division alongside Deutsche Bank's core businesses. As outlined in Strategy 2015+, the company's objectives in setting up the NCOU are to improve external transparency of non-core positions, to increase management's focus on the core operating businesses by separating the non-core activities and to facilitate targeted accelerated de-risking.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
