Should I buy Deutsche Bank shares after strong Q4 results?

By: Stanko Iliev
Stanko Iliev
Stanko dedicates himself to providing investors with relevant information they can use to make investment decisions. He loves the… read more.
on Jan 27, 2022
  • Deutsche Bank reported strong Q4 results
  • Total revenue has increased by 8.3% Y/Y
  • Deutsche Bank increased its outlook for 2022

Deutsche Bank Aktiengesellschaft shares continue to trade in a buy zone after the bank reported strong fourth-quarter results.

Deutsche Bank entered 2022 ahead of a plan which is the result of consistent and focused execution and restructuring initiatives.

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Deutsche Bank increased its outlook for 2022

This Thursday, Deutsche Bank reported strong fourth-quarter results; total revenue has increased by 8.3% Y/Y to €5.9 billion, while the GAAP earnings per share were €0.12.

The net interest margin remained broadly flat at 1.2%, and the bank generated a profit before tax of €82 million or €527 million on an adjusted basis.

Provision for credit losses in the fourth quarter was 22 bps of average loans, and the bank reported that provisions for credit losses should reach a more normalized level of 20 basis points in 2022.

The last quarter of 2021 marked Deutsche Bank’s transition to its post-restructuring era, and according to the board of directors, all transformation-related effects are now behind Deutsche Bank.

Deutsche Bank is focused on capturing benefits through further cost-saving measures, and its management remains confident that the bank is on the right path to a 70% cost to income ratio.

Revenues for the full year of 2021 totaled €25.4 billion, which represents an increase of 6% compared with the prior year. Deutsche Bank reported a net profit of €2.5 billion for 2021, a more than fourfold increase compared to 2020 and the bank’s highest full-year profit since 2011.

All four core businesses performed at or ahead of plan in the whole 2021 year, and Germany’s largest lender increased its outlook for 2022.

Strong performance during the last year provided a strong step-off point to achieve Deutsche Bank’s target of a return on tangible equity of 8% in 2022. Christian Sewing, CEO of Deutsche Bank, added:

In 2021, we increased our net profit fourfold and delivered our best result in ten years while putting almost all of our expected transformation costs behind us. All four core businesses performed at or ahead of our plan, and our reduction of legacy assets progressed faster than expected.

CEO Christian Sewing said that he expects that revenue could reach €26 billion in 2022, which represents an increase from the prior guidance of €25 billion.

Technical analysis

Deutsche Bank shares have advanced more than 10% since the beginning of December 2021, and the current share price stands at €11.9.

Data source: tradingview.com

Rising above €13 supports the positive trend, and the next price target could be resistance at €15.

Deutsche Bank shares remain in a buy zone; still, if the price falls below the €10 support level, it would be a strong “sell” signal.

Summary

Deutsche Bank reported strong fourth-quarter results this Thursday and increased its outlook for 2022. Deutsche Bank entered 2022 ahead of a plan which is the result of consistent and focused execution and restructuring initiatives.

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