Wednesday 30 July 2014

Deutsche Bank (DB) report Q2 2014


DB, Q2, 2014, report, front page

The second quarter report from DB came out recently and the market did not respond much to it. Initially the share price jumped up but then it went quickly down again and start to fluctuate around the zero change from the previous trading day. What was then in the report?


If you want to read the full Q2 2014 report from DB then click on this link. If you want to see my previous report on Deutsche Banks first quarter then please see DB report Q2 2014.

Below we can see Deutsche Bank at a glance and there we see how one can have so much fun playing with number to make things look slightly better. In this case they are playing with the outstanding shares for the six months period. Even though they have increased it by over 30% (the actual number is: 1379.27 million shares outstanding)  they bring in an average value so that the earnings per share can look much nicer! And please observe how they continue the beautiful game of painting a nicer picture by speaking of average this and average that. Bad things here is that the book value has dropped a lot and this is most likely calculated on their fantasy average shares outstanding which means that the real figure with the current outstanding shares should be around -20%. I also do not like that the Tier 1 has dropped from 16.9% to 15.5% according to themselves...

DB, Q2, 2014, at a glance

When we look at the income statement then the downslope trend continues and the interest income has dropped by an additional -5%. What is good is that they have managed to decrease the costs there slightly. It is also interesting to see how they in 2013 for the six months running was on a tax rate around 30% and this time on the running six months have 50% tax rate (the last 3 months even around 70%).

DB, Q2, 2014, income statement

Besides from this it was highly disturbing to read all the pages with the litigations that are either finished or currently running. Even when I read the quarter report of the oil giant BP do I see so many criminal litigations and other offenses running and I guess most people would consider the oil and gas industry to be more "ugly" than the financial world.

Conclusion: Deutsche Bank is still looking bad. I doubt that it will be enough for them to sail out this self made storm with the last cash that they brought in and it would not surprise me if they will ask for even more and this also explains all the sales that took place by the inside traders during last autumn/spring. I will keep my shares for the long run. For more information see analysis of DB 2014.

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