Tuesday 25 March 2014

Deutsche Bank (DB) annual report 2013

Deutsche Bank, DB, front, annual, report, 2013

My biggest bank, Deutsche Bank, arrived some days ago with their annual report which can be found here. The markets response was swift and they made the thumbs down already then and it has continued on a slow slope downhill in the days after the publication of the report.

The things that they were bringing up as great things were for instance that they have decreased their costs, that they have two large litigations behind them. They also attempted to push how profitable their core business were and that they have decreased their risk significantly. Nothing that impress me much there. Especially since they remain with their silly high amount of employees as if they were a governmental institute. I recently read the Cost / Income value for a Swedish bank that is doing very well and it was down at around 36%. For a complete and excellent walk through of the annual report from Handelsbanken, which has this excellent C/I value, then please take a look here at Lundaluppens blog (it is however in Swedish but there are Google translation at the bottom of the page). In the annual report of DB they are padding themselves on the should for bringing the C/I value down from 92.5% to 89%. I for one are not impressed!

In the table below we see something that is disturbing me more and more and that is that they are loosing customers! Their interest income is down a full 19% in comparison to 2012. That is a lot! The overall salary + compensation is simply far too high for what we shareholders are getting back and they must put in second gear soon because this starts to be silly. As an additional point here I would say that one of the possible reasons for why the result in 2013 is "better" than in 2012 is because they back then added too much money to the litigation account and in 2013 maybe even too little which would in that case hit us in 2014 because they will be forced to push in more money again. I am still waiting to see some managers in Deutsche Bank being prosecuted for illegal activities.

DB, consolidated, income, 2013

The table below is just to show how quickly apparently it is possible to make 412 billion euro disappear on the assets as well as the liabilities part in a banks balance sheet. One year! 412 billion euro! When I see things like that I just shake my head and wonder what the magic wand will do next.

DB, Balance sheet, 2013

Conclusion: Deutsche Bank is far, far from being a healthy bank. They still have litigations on their backs which most likely will costs some billions more. They have not yet managed to decrease their work force even though they have cut their office space by many square meters and I also see it here in Berlin and I wonder were are all the people working now? Home-office? They are still not making any money and the bread and butter for banks which is the interest income has dropped by almost 20% from 2012. This is bad news! I will of course not sell my shares and will keep waiting for DB to become a healthy bank once again. 

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