FT : Deutsche Bank to resume share buybacks after record third-quarter profit

Deutsche Bank to resume share buybacks after record third-quarter profit
Investment bank revenues rise 11% on strong fixed-income trading

Deutsche Bank is resuming share buybacks after the financial hit from a long-running shareholder litigation case proved smaller than feared and as the lender reported higher than expected profits in the three months to the end of September.

“We have now sought authorisation for further share repurchases,” chief executive Christian Sewing said in a statement on Wednesday morning, when Germany’s largest lender announced the highest third-quarter pre-tax profit in its 154-year history and confirmed it was on track to meet its guidance for 2024 revenues of “around €30bn”.

But Deutsche disclosed that credit losses in 2024 would be worse than it had warned in July, when it said provisions for sour loans for the full year would be “slightly above” 30 basis points of its loan book. It warned on Wednesday that loan loss provisions would rise to €1.8bn in 2024, compared with €1.5bn last year and equivalent to almost 38bp of its current loan book.

Deutsche in July halted plans for more share buybacks after taking a €1.3bn litigation charge tied to its botched acquisition of German retail lender Postbank more than a decade ago.

That move created temporary doubts among investors over the bank’s ability to meet a long-standing promise to pay out at least €8bn through dividends and buybacks between 2022 and 2026, 41 per cent of which has been delivered so far.

But after settling the case with 60 per cent of claimants over the summer, the bank disclosed on Wednesday that it had cut the Postbank litigation charges by €440mn. Sewing stressed that the lender remained confident it could “exceed” its €8bn capital redistribution goal.

Pre-tax profits in the third quarter surged 31 per cent year on year to €2.3bn. Investment bank revenue was up 11 per cent, driven by strong fixed-income trading operations and a 24 per cent jump in origination and advisory revenues.

Deutsche’s post-tax return on average tangible shareholders’ equity in the third quarter rose 0.3 percentage points to 7.6 per cent when excluding the one-off cut to the Postbank hit, still below its medium target of more than 10 per cent.

Excluding one-offs, Deutsche’s cost to income ratio stood at 69 per cent in the third quarter, against 72 per cent last year. The lender wants to bring down that ratio to below 62.5 per cent by 2025.

The bank’s common equity tier 1 ratio — a key benchmark for its balance sheet strength — was 13.8 per cent, up from 13.5 per cent in the previous quarter and well above the lender’s target of more than 12.5 per cent.

>>> Stoxx 600 Pre-Market Indications

  • DSV (DS81 TH) +3.1%
    • DSV Maintains FY Ebit Before Significant Items Forecast
  • Porsche (P911 TH) +1.6%
    • Porsche Offers Positive Earnings Story, Raised to Buy at Citi
  • Infineon (IFX TH) +1.4%
  • Evolution (E3G1 TH) +1.2%
  • STMicroelectronics (SGM TH) +1.1%
  • Wolters Kluwer (WOSB TH) +1%
  • Beiersdorf (BEI TH) -1%
  • Heineken (HNK1 TH) -1%
    • Heineken Third-Quarter Beer Volume Hit by Weak Americas Sales
  • Boliden (BWJ TH) -1.1%
  • Nokia (NOA3 TH) -1.1%
  • Frontline PLC (HF6 TH) -1.3%
  • Italgas (I10 TH) -1.7%
  • Deutsche Boerse (DB1 TH) -2.1%
  • L’Oreal (LOR TH) -3.6%

>>> TradeGate Pre-Market Indications

DAX:
  • Porsche (P911 TH) +1.6%
    • Porsche Offers Positive Earnings Story, Raised to Buy at Citi
  • Infineon (IFX TH) +1.2%
  • Porsche SE (PAH3 TH) +1.2%
  • Deutsche Boerse (DB1 TH) -2.1%
    • Deutsche Boerse FY Net Revenue Forecast Meets Estimates
MDAX:
  • Stabilus (STM TH) +1.9%
SDAX:
  • Evotec SE (EVT TH) +4.3%
    • Evotec and Bristol Myers Squibb Expand Proteomics Partnership
  • Mutares (MUX TH) +2.4%
    • Mutares Buys Business of Buderus Edelstahl From Voestalpine
  • Atoss Software SE (AOF TH) +2.1%
    • Atoss Software SE 9M Ebit EU45.7M Vs. EU36.7M Y/y
  • Schaeffler (SHA0 TH) +1.6%
  • SUSS MicroTec (SMHN TH) +1.4%
  • MLP (MLP TH) -1.1%
  • SMA Solar (S92 TH) -1.6%
  • flatexDEGIRO (FTK TH) -3%
    • FlatexDEGIRO’s Guidance Sits Below Consensus: Street Wrap

>>> What to look at today - 23rd of October 2024

The dollar rose, weighing on Asian shares as risk appetite stayed subdued given the prospect of less aggressive Federal Reserve interest rate cuts.  The greenback strengthened against all Group-of-10 currencies, as 10-year Treasury yields extended gains after topping 4.2% for the first time since July earlier this week. Joining a global bond selloff, yields on Japan’s 40-year sovereign notes also rose to the highest in 16 years. The yen fell as much as 0.8% against the dollar. A gauge of Asian equities was flat, amid declines in Japan and gains in South Korea. US futures edged lower. Hong Kong and mainland Chinese shares were outliers, rising after a top government-linked think tank called on authorities to issue 2 trillion yuan ($281 billion) of special government bonds to help create a market stabilization fund.  The broader lackluster performance of equities comes as investors have pared back bets on rapid policy easing, on signs that the US economy remains robust and concerns about wider fiscal deficits after the presidential election. Most Fed officials speaking earlier this week signaled they favor a slower tempo of rate reductions.  Bank of America Corp. Chief Executive Officer Brian Moynihan was among the latest to join the monetary policy debate, urging Fed policymakers to be measured in the magnitude of interest-rate reductions.  The International Monetary Fund lowered its global growth forecast for next year and warned of accelerating risks from wars to trade protectionism, even as it credited central banks for taming inflation without sending nations into recession. Back in Asia, two stock listings were in the spotlight. Tokyo Metro Co.’s shares rose as much as 47% in their debut, after the company raised 348.6 billion yen ($2.3 billion) in the country’s largest initial public offering since mobile carrier SoftBank Corp. listed in 2018. In Hong Kong, China Resources Beverage Holdings Co. gained 14%, showing strong response to one of the city’s biggest initial public offerings this year. Meanwhile, Goldman Sachs Group Inc. tactically lowered Indian equities to neutral from overweight as slowing economic growth dents the outlook for corporate earnings. Oil fell as a US industry group signaled a rise in nationwide crude inventories, and the Biden administration renewed efforts to secure a cease-fire in the Middle East. Gold dropped after climbing to a fresh record. Elsewhere, options traders are increasing bets that Bitcoin will reach $80,000 by the end of November no matter who wins the US election.  In corporate news, Jio Financial Services Ltd., controlled by billionaire Mukesh Ambani, has held talks with Allianz SE to set up an insurance partnership in India as the German firm seeks to scrap two existing joint ventures in the country, according to people familiar with the matter. Texas Instruments Inc. gave a downbeat outlook for the current period even after topping estimates. Starbucks Corp. pulled guidance for 2025 after sales plunged for a third consecutive quarter. McDonald’s Corp. slumped as its Quarter Pounders were linked to an E. Coli outbreak in the western part of the US. US After Hours SBUX -4.3% lower on weak guidance; MCD -6.6% as CDC confirms E. coli outbreak; LRN +22.8%, JBT +11.4%, TXN +3.5% higher on earnings; ENPH -9.6%, RHI -5.5% lower on earnings; ANRO -64% as Phase 2b study did not meet primary endpoint.

Nikkei -0.75% Hang Seng +1.68% CSI +0.87% Shanghai +0.94% Shenzen +0.87%

Eur$ 1.0803 CNH 7.1383 CNY 7.1280 JPY 152.10 GBP 1.29990 CHF 0.8672 RUB 95.8876 TRY 34.2485 WTI$ 71.66 -0.11% Gold 7,753 +0.15% BTC 67,050 -0.65% ETH 2,613 -0.77%

S&P -0.09% Nasdaq -0.12% EuroStoxx +0.10% FTSE -0.02% Dax +0.16% SMI +0.16%

Macro :
- China May Plan Up to 11T Yuan Govt Bonds if Trump Wins: Evercore
- Schwarzman Says US to Avoid Recession No Matter Who’s President
- EY Sees IPO Recovery Next Year as Sponsors Plot Exits: ECM Watch
- *SPAIN STUDIES REDUCTION OF ENERGY WINDFALL TAX: EXPANSION

Keep an eye on :
- AI FP : Air Liquide 3Q Revenue Misses Estimates
- AKZA NA : Paintmaker Akzo Nobel Cuts 2024 Earnings Target on Softer Demand
- ALTR US : Altair Engineering Explores Sale After Receiving Interest: Rtrs
- ALV GY : Ambani’s Jio in Talks With Allianz for Insurance JVs in India
- ACHR US : FAA Air-Taxi Rule Removes ‘Overhang’ for Joby, Archer: JPMorgan
- ASSAB SS : Assa Abloy 3Q Sales Meets Estimates
- ATEA NO : Atea 3Q Ebitda Beats Estimates
- Applied Nutrition IPO : Applied Nutrition’s London IPO Said Likely to Price Near Low End
- AOF GY : Atoss Software SE 9M Ebit EU45.7M Vs. EU36.7M Y/y
- CA FP : Carrefour Negotiates Sale of Nacional and Bompreço: Valor
- CTM SS : Catena Media Prelim 3Q Total Revenue EU10.5M to EU11.0M
- COV FP : Covivio 9M Rental Income EU508.8M Vs. EU484.9M Y/y
- DBK GY : Deutsche Bank 3Q FIC Sales & Trading Revenue Beats Estimates
- DBK GY : Deutsche Bank CFO: Domestic M&A Is Option But Time Not Right
- DB1 GY : Deutsche Boerse FY Net Revenue Forecast Meets Estimates
- DOM SS : Dometic 3Q Net Sales Misses Estimates
- DSV DC : DSV Maintains FY Ebit Before Significant Items Forecast
- DWS GY : DWS Sees €18.3 Billion Net Inflows, Improves 2024 Cost Guidance
- EMSN SW : EMS-Chemie 9M Net Sales CHF1.59B Vs. CHF1.70B Y/y
- ENPH US : Enphase Energy 4Q Revenue Forecast Misses Estimates
- EVT GY : Evotec and Bristol Myers Squibb Expand Proteomics Partnership
- FCT IM : Fincantieri Radars Production for Qatar to Start in 2026
- FTK GY : flatexDEGIRO 3Q Ebitda Misses Estimates Frontier, Spirit Airlines Renew Merger Talks, WSJ Reports
- FTRE US : Corvex Takes Fortrea Stake Following Activist Starboard (1)
- SHBA SS : Handelsbanken’s Lending Profit Beats on Higher Volumes (Correct)
- HEIA NA : Heineken 3Q Total Beer Volume Misses Estimates
- HUSQB SS : Husqvarna 3Q Adjusted Operating Profit Misses Estimates
- INTRUM SS : Intrum 3Q Adjusted Ebit SEK951M Vs. SEK1.00B Y/y
- IPN FP : Ipsen Boosts FY Core Op. Margin Forecast
- JOBY US : FAA Air-Taxi Rule Removes ‘Overhang’ for Joby, Archer: JPMorgan
- LI FP : Klepierre Boosts FY Group NCCF/Shr Forecast
- KNIN SW : Kuehne + Nagel 3Q Net Revenue Beats Estimates
- MCD US : McDonald’s Burgers Linked to E. Coli Outbreak, CDC Says
- NOVOB DC : Novo Asks US Regulators to Restrict Compounded Weight-Loss Drugs
- REGN US : Amgen Launches Pavblu Biosimilar as Rival to Regeneron’s Eylea
- OR FP : L’Oreal ADRs Drop After 3Q Like-for-Like Sales Miss Estimates
- QCOM US : *QUALCOMM CEO SAYS EVERYONE WILL HAVE AI SMARTPHONE IN 5 YEARS
- RKT LN : Reckitt 3Q Like-for-Like Sales Beats Estimates
- RHM GY : Rheinmetall to Make Gun Barrels in UK: FT
- RIEN SW : Rieter 9M Orders CHF629.8M Vs. CHF452.2M Y/y
- RILBA DC : Ringkjoebing Landbobank Forecasts FY Results
- ROG SW : Roche 3Q Sales Beats Estimates
- STX US : Seagate Sees 2Q Adjusted EPS $1.65 to $2.05, Est. $1.70
- SAVE US : Frontier, Spirit Airlines Renew Merger Talks, WSJ Reports
- SBUX US : Starbucks Prelim 4Q Comparable Sales Misses Estimates: Snapshot
- SF SS : Stillfront 3Q Sales Misses Estimates
- STB NO : Storebrand 3Q Pretax Profit Beats Estimates
- SSABA SS : SSAB 3Q Sales Meets Estimates
- SWEDA SS : Swedbank 3Q Net Income Beats Estimates
- TAP PL : TAP Says Government Sets Maximum Limit for Bond Issuance in 2024
- TXN US : Texas Instruments 4Q Revenue Forecast Misses Estimates: Snapshot
- HO FP : Thales 3Q Organic Sales Beats Estimates
- UBXN SW : U-Blox Sees Revenue of CHF 60M–70M in 4Q of 2024
- UCB BB : Voyager Therapeutics Drops; Analyst Touts Roche-UCB Pact End
- VRLA FP : Verallia 3Q Adjusted Ebitda Misses Estimates
- VIV FP : Vivendi 3Q Revenue Meets Estimates
- VOE AV : Voestalpine AG: voestalpine sells Buderus Edelstahl to Mutares
- VOLCARB SS : Volvo Car Cuts FY Retail Sales Forecast
- VYGR US : Voyager Therapeutics Drops; Analyst Touts Roche-UCB Pact End
- WFRD US : Weatherford 3Q EPS Beats Estimates
- WITH FH : WithSecure 3Q Revenue Misses Estimates
- WOSG LN : Gatemore Pushes Watches for Buyback, US Listing
- WPP LN : WPP 3Q Revenue Less Pass-Through Costs Meets Estimates
- WBD IM :

>>> Europe : Brokers Upgrades & Downgrades - 23rd of October 2024

>>> Up
* Forterra Raised to Buy at Jefferies; PT 235 pence
* Freelance.com Raised to Buy at Stifel; PT 3.80 euros
* Munters Raised to Buy at Nordea
* Porsche Raised to Buy at Citi; PT 85 euros
* Texas Instruments Raised to Buy at Summit Insights

>>> Down
* Adidas Cut to Hold at HSBC; PT 260 euros
* Corticeira Amorim Cut to Neutral at Grupo Santander
* DNB Bank Cut to Hold at Arctic Securities; PT 250 kroner
* JM Cut to Sell at SEB Equities; PT 167 kronor
* Kempower Cut to Sell at SEB Equities; PT 9.50 euros
* KGHM Cut to Sell at Erste Group; PT 122.40 zloty
* McDonald's Cut to Neutral at Baird; PT $290
* Pierer Mobility Cut to Sell at Stifel; PT 12.81 euros
* Starbucks Cut to Hold at Punto Casa de Bolsa; PT $98

>>> Initiation
* Comet Rated New Buy at Berenberg; PT 400 Swiss francs
* Meta Platforms Rated New Buy at Founder Securities; PT $640
* Oracle Rated New Sector Perform at RBC; PT $165
* SAP Rated New Outperform at CICC; PT 230 euros

>>> Call
* Comet Set for Strong Margin Expansion, New Buy at Berenberg
* Porsche Offers Positive Earnings Story, Raised to Buy at Citi

>>> US After Hours Summary: SBUX -4.3% lower on weak guidance; MCD -6.6% as CDC

After Hours Summary: SBUX -4.3% lower on weak guidance; MCD -6.6% as CDC confirms E. coli outbreak; LRN +22.8%, JBT +11.4%, TXN +3.5% higher on earnings; ENPH -9.6%, RHI -5.5% lower on earnings; ANRO -64% as Phase 2b study did not meet primary endpoint

After Hours Gainers:

Companies trading higher in after hours in reaction to earnings/guidance: LRN +22.8%, JBT +11.4%, VICR +10.5%, EWBC +3.8%, PKG +3.8%, WFRD +3.6%, TXN +3.5%, ENVA +3.3%, RRC +2.2%, CNI +2.1%, TRMK +1.5%, MTDR +1.4%, BKR +0.5%, HIW +0.1%, RNST +0.1%

Companies trading higher in after hours in reaction to news: HRTG +2.2% (estimates Q3 catastrophe losses), QSR +2.2% (in sympathy with E. coli outbreak at MCD), WEN +1.7% (in sympathy with E. coli outbreak at MCD), BYON +0.4% (to reduce workforce by 20%), GOGO +0.4% (UP selects Gogo Galileo HDX fleetwide), SIRI +0.3% (increases dividend), PFE +0.2% (FDA approves ABRYSVO), UP +0.2% (UP selects Gogo Galileo HDX fleetwide), OMI +0.1% (enters into receivables purchase agreement), FBMS +0.1% (shareholders approve merger with RNST)

After Hours Losers:

Companies trading lower in after hours in reaction to earnings/guidance: ENPH -9.6%, RHI -5.5%, SBUX -4.3% (guides SepQ below consensus; global comps fell -7%; suspends FY25 guidance; increases dividend), MANH -4.2%, CSGP -3.8% (also to acquire Visual Lease), STX -3.5% (also increases dividend), PFSI -3.4%, BDN -1.8%, ADC -1.1%, VMI -0.5%, AGR -0.1%, NBR -0.1%, NTB -0.1%

Companies trading lower in after hours in reaction to news: ANRO -64% (Phase 2b study of ALTO-100 did not meet primary endpoint), MCD -6.6% (CDC confirms E. coli Outbreak), PRQR -5.5% (commences stock offering), SEDG -4.2% (in sympathy with weak ENPH earnings), LW -3.2% (in sympathy with E. coli outbreak at MCD), TSN -2.8% (in sympathy with E. coli outbreak at MCD), CYBR -2.5% (stock offering by selling shareholder), RUN -2.1% (in sympathy with weak ENPH earnings), DOUG -0.3% (CEO to retire, names new CEO), CAPR -0.2% (stock offering by selling shareholder), CX -0.1% (consortium comprised of Cemex and Linde to receive €157 mln in funding from the EU Innovation Fund), LLY -0.1% (Alzheimer's drug donanemab facing NHS block over cost, according to The Telegraph)

>>> Texas Instruments conference call update: Results continue to reflect asynch

Texas Instruments conference call update: Results continue to reflect asynchronous market behavior (193.97 -1.80)
  • Results continue to reflect the asynchronous market behavior seen throughout this cycle.
  • Industrial market was down low single digits as customers continued to reduce their inventory levels. The automotive market increased upper single digits, primarily due to strength in China. Personal electronics grew about 30%. Enterprise systems was up about 20%, and communication equipment was up about 25%.
  • Personal electronics, enterprise systems, and communication systems already in the midst of a cyclical recovery; not done yet, but are pointing in the right direction.
  • Industrial inventory correction is still ongoing but do not think much is left. Expect recovery but cannot predict the quarter.
  • In automotive, outside of China, automotive, other geographies are still searching for that bottom.

>>> Notable earnings/guidance movers: LRN +23.3%, VICR +12.7%, MTDR +4.6% on ups

Notable earnings/guidance movers: LRN +23.3%, VICR +12.7%, MTDR +4.6% on upside; MANH -8.7%, ENPH -7.9%, PFSI -4.9%, SBUX -3.6%, RHI -3.3%, STX -2.7% on downside
  • Earnings/guidance gainers: LRN +23.3%, VICR +12.7%, MTDR +4.6%, PKG +2.5%, WFRD +2.4%, RRC +2.2%, CNI +2.1%, TRMK +1.4%, AGR +1.3%
  • Earnings/guidance losers: MANH -8.7%, ENPH -7.9%, PFSI -4.9%, SBUX -3.6%, RHI -3.3%, STX -2.7%, CSGP -2.4%