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4-Traders Homepage  >  Equities  >  Xetra  >  Deutsche Bank AG    DBK   DE0005140008

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Deutsche Bank : kicks off capital hike with steady 2017 forecast

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03/20/2017 | 01:07pm CEST
FILE PHOTO: Scratches are seen on the logo of Germany's Deutsche Bank in Frankfurt

Deutsche Bank (>> Deutsche Bank AG), which is seeking to raise 8 billion euro (7 billion pounds) from shareholders, predicted on Monday that group revenues would be steady in 2017 as it reported a strong start to the year in bond trading.

Deutsche Bank (>> Deutsche Bank AG), which is seeking to raise 8 billion euro (7 billion pounds) from shareholders, predicted on Monday that group revenues would be steady in 2017 as it reported a strong start to the year in bond trading.

However, shares in Germany's largest bank fell by more than 3.2 percent to 17.29 euros after it gave details of its capital increase on Sunday and followed up with its annual report showing that while it has brought down compensation levels, staff numbers have fallen little since 2010.

Shareholders have been frustrated by the pace of cost reductions at Deutsche Bank, which said in the report that the number of staff to earn more than a million euros dropped by more than half to 316 in 2016, a turbulent year during which it had to counter speculation it would need a state bailout.

And just four Deutsche Bank employees received more than 4 million euros, after the bank sought to cut costs following heavy losses and multi-billion dollar legal penalties last year.

However, Deutsche Bank chief executive John Cryan said the future looked brighter, with economic recovery in Europe and higher interest rates on the horizon.

"We currently see a better outlook for revenues," Deutsche's chief executive, John Cryan, said in the report, summing up a year he described as "very challenging".

With the global economy on a steadier footing, the U.S. Federal Reserve raising interest rates and political rhetoric pointing to a pause on new regulation, growth beckons for the world's top banks which are expected to make more profit from bond trading this year, with U.S. lenders remaining strong and typically weaker European lenders catching up.

Deutsche Bank has so far lagged rivals, although it said bond trading had enjoyed a good start to 2017.

COST FRUSTRATION

Investors in Deutsche Bank have long expressed frustration with it for being slow in getting to grips with costs, most of which relate to pay. The annual report showed the lender's total headcount fell by 1.3 to 99,700 year-on-year in 2016.

And total compensation for employees fell by 11 percent to 11.9 billion euros in 2016, when it had a net loss of 1.4 billion euros. This compared to 2014 when Deutsche Bank posted net income of 1.7 billion and compensation fell by 5 percent.

The annual report revealed that Cryan, who took home a total of 3.8 million euros last year, will receive a salary of 3.4 million euros in 2017, while other board members will get between 2.4 million and 3 million euros.

The maximum pay for an executive board member in 2017, including bonus, is 9.85 million euros.

Most staff faced bonus cuts while fixed salaries edged up, in line with rules imposed by European regulators following the financial crisis in an effort to reduce excessive risk-taking.

Deutsche Bank on Sunday gave details of its latest capital raising, which involves it selling new shares at a discount of 26 percent to the price of the stock when excluding subscription rights. This compares with a 38 percent discount for a similar capital raising by Italy's UniCredit (>> UniCredit SpA) last month.

The subscription price for new Deutsche Bank shares has been set at 11.65 euros per share and the subscription period will run from March 21 until April 6.

The rights issue represents a hike of about 50 percent to Deutsche Bank's current shares in issue and puts the bank on course to have raised about 30 billion in the last seven years, more than its entire current 25 billion euro market value.

(Editing by John O'Donnell and Alexander Smith)

By Arno Schuetze

Stocks treated in this article : Deutsche Bank AG, UniCredit SpA
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Financials (€)
Sales 2017 29 239 M
EBIT 2017 3 214 M
Net income 2017 1 195 M
Debt 2017 -
Yield 2017 0,72%
P/E ratio 2017 24,03
P/E ratio 2018 11,38
Capi. / Sales 2017 1,17x
Capi. / Sales 2018 1,14x
Capitalization 34 081 M
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Mean consensus HOLD
Number of Analysts 31
Average target price 15,8 €
Spread / Average Target -4,0%
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Managers
NameTitle
John Cryan Chief Executive Officer
Paul Achleitner Chairman-Supervisory Board
Kimberly L. Hammonds Chief Operations Officer
Marcus Schenck Chief Financial Officer & Deputy CEO
Pascal Boillat Group Chief Information Officer
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