Deutsche Bank AG (DB) stock prices were up 1.73% as of market close on April 27th, 2021, bringing the price per share up to USD$12.35 as of the end of the trading day. Subsequent market fluctuations have seen the stock price climb by 8.99% to hit a comfortable USD$13.46.
Historic Success for DB
Reports for the first quarter of 2021 were hugely successful for DB, indicating profit reports not seen in seven years. The bank has exceeded expectations for three straight quarters now, reflecting a success on the part of the CEOs’ ongoing efforts to restructure DB. The success came during a quarter that saw widespread devastation following the collapse of Archegos Capital Management, making the blockbuster financial reports all the more impressive.
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DB Leading the Sector
While the average increase in income from the trading of debt securities for the largest U.S. investment banks was 17%, DB reported an increase in equity trading income of 34%. In light of this stellar performance, the company anticipates a lucrative 2021 that will be able to match the outstanding revenues reported for the fiscal year 2020. Despite lending businesses that the company had hoped to consolidate suffering from negative interest rates, increased demand for corporate bonds, and hedges responsible for the investment banking boom, maintained the momentum of DB CEO’s turnaround plan.
DB’s Cool-Headed Approach
With DB having exceeded expectations in all divisions of its report and having had the best reported performance results of any global investment bank competing in their coverage, the company has set lofty guidance and targets for 2021 that it is confident it can attain. Their hopeful optimism is tempered by a rational approach wherein they do expect trading business support to dwindle down from the heights seen in the first quarter of 2021. Furthermore, 2021 expenses will be inflated by USD$482.74 million as a result of the consequences of Greensill Capitals collapse, as well as from the higher levies imposed for winding down failed lenders.
Avoiding Fallout from Archegos Collapse
Following the collapse of Archegos Capital, Nomura Holding Inc. reported a USD$2.9 billion loss as a direct consequence of Archegos going under. Credit Suisse Group AG suffered the most among global banks, with its relationship with Archegos having cost Credit Suisse USD$.5 billion. DB managed to come out unscathed with no losses reported. The company praised its risk management functions that saw the liquidation through in an effective and timely manner.
Future Outlook for DB
With such stellar financial reports compared to its own financial track record and the current performance of its competitors in a pandemic context, DB has inspired large-scale investor confidence. Having managed to circumvent the effects of Archegos Capital’s collapse further consolidates the bank’s position as a powerhouse in the industry, with high hopes for significant and sustained growth in shareholder value.
