Deutsche Bank Earnings: Investment Bank Returns and Capital Intensity Are Difficult To Justify

Deutsche Bank reported second-quarter profit before tax of EUR 1,405 million, slightly behind the same quarter a year ago (EUR 1,547 million). The quarter was good, nonetheless. Deutsche Bank showed good growth in the corporate and private bank, two segments that are core to Deutsche's strategy if it wants to reduce its exposure to the often volatile investment banking business. The latter saw revenues decline 11% in the quarter, largely driven by lower revenues in rates, foreign exchange, and emerging markets. We maintain our EUR 12.90 per share fair value estimate and no-moat rating for Deutsche Bank.