By Cristina Roca
Deutsche Bank AG is due to release its second-quarter results on Wednesday. Here’s what you need to know:
AFTER-TAX PROFIT FORECAST: Deutsche Bank’s closely watched after-tax profit is expected to reach 950 million euros ($970.9 million), according to a consensus estimate provided by the company. In the second quarter of 2021, profit after tax was 828 million euros.
REVENUE FORECAST: The German bank is expected to post revenues of 6.42 billion euros, according to the same estimate, against 6.24 billion euros a year earlier.
WHAT TO WATCH:
-STRENGTHENING BACKGROUND: Peers in Europe and the US that have already released Q2 numbers said they experienced a slowdown in parts of their franchises. Revenue at Morgan Stanley’s investment bank, for example, more than halved as weak stock and bond markets and high inflation forced companies to pause plans to strike deals or go public. . Swiss-based UBS Group AG reported a decline of about $12 billion in net new funds in its asset management unit. Investors will want to see how Deutsche Bank franchises have weathered these harsh conditions.
-PROVISIONS: Macroeconomic and geopolitical risks could lead to more provisioning and dampen earnings at Deutsche Bank, Morgan Stanley analysts said in a research note. They see a growing likelihood that Russia will cut gas supplies to Europe, with Germany being the most affected in such a scenario.
– NET INTEREST INCOME: The main bright spot among the various headwinds posed by deteriorating sentiment, volatile markets and high inflation is the fact that interest rates are rising, which means net interest income Banks’ net interest — the difference between what they pay for deposits and what they earn from loans, a base income line — is expected to rise. The question now is to what extent each bank will benefit and how quickly it will experience full tailwind. German banks are leading in terms of higher rates on new mortgages, which could be an encouraging sign for Deutsche Bank, Morgan Stanley analysts said in a research note.
Write to Cristina Roca at [email protected]