Deutsche Bank's stock, currently valued at $11 per share, has seen a 7% decrease year-to-date (YTD), underperforming the S&P 500 index which has experienced a 15% increase over the same timeframe. This places the bank's stock 17% below its estimated fair value of $13, as of Monday.
The bank's Sharpe Ratio, a measure of return per unit of risk, has remained nearly zero since early 2017. This figure is notably lower than the S&P 500 Index's ratio for the same period and significantly less than the Sharpe Ratio of 1.27 for the Trefis Reinforced Value portfolio.
Deutsche Bank reported a net profit of $7.7 billion in Q2 2023, surpassing consensus profit estimates. Despite this, the figure represents a 6% year-on-year decrease, attributed to lower revenues in the investment bank and corporate & other divisions. The decline was somewhat offset by growth in corporate banks and private bank units due to an increase in net interest income, which rose by 27% year-on-year to reach $4.6 billion. However, non-interest expenses as a percentage of revenues saw an unfavorable increase in the quarter, causing a substantial 72% reduction in the adjusted net income to $562 million.
In H1 FY2023, Deutsche Bank reported a modest top line growth of 2% year-on-year to $16.2 billion. However, non-interest expenses during this period rose by 10%, leading to a significant 37% decrease in the adjusted net income to $1.9 billion.
Looking ahead to Q3 results, net interest income is expected to be a key driver for performance. Overall, Deutsche Bank's revenues are projected to stabilize around $31.1 billion for FY2023. The bank's adjusted net income is also expected to settle around $4.38 billion. These figures, combined with a GAAP EPS of $2.15 and a P/E multiple of 6x, suggest a potential valuation of $13 for the bank's stock.
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