Deutsche Bank Understandably Excited To Give You News That Isn’t Totally Bad, But Count Everyone Skeptical

When it comes to Deutsche Bank and their never-ending quest to “turn it around”, any good news is welcome even if there are a lot of caveats and fine print.

To be clear, I’m not keen on beating this dead horse, primarily because it’s the same story quarter after quarter after quarter. I remember when it was possible to decompose the phrase “turn it around” into specific areas that investors expected Deutsche to focus on in a given quarter, but eventually, the “it” in “turn it around” came to mean “everything”, as the bad news continued to pile up.

Christian Sewing thinks maybe he can do what no one else in recent memory has been able to accomplish and so far, he’s done his best Oppenheimer impression: “Now I am become pink slip, the destroyer of jobs”.

In any event, Deutsche issued preliminary results on Monday, more than a week ahead of the official date and the news was positive – or what counts as “positive” in this context.

When you read the press release, you almost feel bad for them because they’re clearly excited about this. But a quick skim of the available information is all you need to know why there’s not actually much here.

Short story short (that’s “short” two ways), the bank is tipping net income of €400 million for Q2 on IBIT of €700 million, numbers management describes as “considerably above the average consensus estimate”. Here’s their assessment of their own quarter:

[We] believe that these results demonstrate the resilience of the franchise.

Shares were up more than 9% at one point in Frankfurt, and they’ve largely held gains, rising the most since April of last year.

 

Again, any news is good news here, but do note this line in the release:

Within CIB, revenues include approximately 100 million euros from a gain on an asset sale and debt valuation adjustments reflecting a widening of Deutsche Bank’s credit spreads during the quarter.