Deutsche Bank Closes Good 2021, Announces Shareholder Distributions

No-moat Deutsche Bank closed a good 2021 with an operating profit before tax of EUR 3.4 billion for the full year. Revenue growth of 6% combined with solid cost control (up 1%) lifted returns on equity to 3.8% versus 0.2% a year ago. The bank also announced a share-repurchase and dividend program to the tune of EUR 700 million in a sign of regained balance sheet strength. Expectations for 2022 are high. Transformation costs should drop to a barely mentionable amount, boosting performance further. However, an 8% return on tangible equity remains an ambitious goal, in our view. That being said, the bank is on the way up and management remains focused. We plan to update our assumptions and model shortly, primarily our revenue and cost growth outlook, which we expect to result in a fair value estimate increase of about 10%.