Tuesday 28 January 2014

Deutsche Bank preliminary report Q4 2013

DB, Q4, 2013, report

DB felt forced to do two things that are of little interest to investors.
1. Make a warning about their loss since it deviated so much from the analysts expectations
2. They decided to publish their preliminary report more than a week before what was previously announced.

The stock directly after the publication dropped with around 5%. Funny how 5% seems to be the common drop of share value when a negative earnings announcement appears. Was it justified?

The report that I have taken all the details from can be found here.

As can be seen in the table below the results were not good at all. They had in comparison to Q4 in 2013 a total of -17% less revenue and looking at the full year even though it is better in %-age still they are down by -6%. Due to litigations they also ended up with a big chunky loss during the quarter. In numbers to go minus 1.1 billion euro is just bad and worse is that it comes from litigations.

DB, Full Year, Q4, 2013, result

Still, they expect the year in total to show 1 billion in profit which is indeed much better than 2012 when they only made 300 millions so a step in the good direction? Or are we so far from seeing the end of the litigations that more money will be sent that way? I bet that it is not over yet and there most be an even bigger reason for why there were so much inside trading going on with DB as I have previously reported.

When reading the report I also managed to come over this little neat table.

DB, 2013, NCOU

This I find very funny! So Deutsche Banks Non-Core Operating Unit caused in full year 2012 a loss of -2.9 billion and in 2013 a total of -3.2 billion with -1.1 billion only in Q4 2013. The reason as it is written is due to de-risking and litigations to this unit. Did Deutsche Bank create a bad bank within themselves? That they all of a sudden start calling NCOU so that I as a shareholder do not have to feel as if it belongs to DB any longer?

An interesting thing is what exactly is the NCOU? I tried to dig around a little and this is one of the few indications that I did find. Not really much there but at least a little. Personally I find it ugly business to create a new business unit where they dump all the problems so that they can still claim that their "core" business units are healthy and doing well. It is pure and simply just BS and lack of a sturdy backbone. Admit and accept your mistakes how can you otherwise move on and improve?

Conclusion: I expect much more to go bad for DB and many more litigation costs to arrive on the table. Will I leave as a shareholder due to this? No. I bought this company because it was contrarian and it is still down there in the dirt trying to wash itself but doing a pretty bad job of it and once they are clean, fresh and smell like roses then it is maybe time to sell them.

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