Shares of German lender Deutsche Bank (DE:DBK) are up 6.5% today, as of the last check, on news of a third-quarter beat and the potential for higher capital returns. Deutsche Bank reported diluted earnings per share (EPS) of €0.56, better than the analysts’ consensus estimate of €0.52. In the year-ago period, the bank reported a diluted EPS of €0.57. Similarly, net revenues came in at €7.13 billion, mostly in line with the analysts’ consensus of €7.12 billion. The top line reflected a year-over-year increase of 3%.
The quarterly performance was boosted by a 21% year-over-year rise in Corporate Bank revenues. This was aided in part by the high interest rate environment and continued pricing discipline. Meanwhile, Deutsche Bank’s most lucrative business, the Investment Bank arm, registered a 4% decline in revenues as trading and deal-making activity remained slow in the quarter.
On the positive side, the German bank promised to initiate more share buybacks next year and return more capital to shareholders through dividends. The bank seeks to reach a 50% payout ratio from 2025 onwards, including dividends and buybacks. Deutsche Bank’s CFO James von Moltke told journalists in a post-earnings call that the bank expects to return more capital to shareholders than the €8 billion it previously projected through 2025.
Is Deutsche Bank Stock a Good Buy?
Analysts remain cautious about the European banking industry’s future owing to the slump in M&A activity and overall negative investor sentiment. Following the bank’s Q3 print, Bank of America Securities analyst Rohith Chandrarajan maintained a Sell rating on DBK stock with a price target of €10.90 (7.4% upside).
At the same time, RBC Capital analyst Anke Reingen reiterated a Buy rating and a price target of €15 (47.8% upside).
On TipRanks, DBK stock has a Moderate Buy consensus rating based on eight Buys, three Holds, and three Sell ratings. The average Deutsche Bank price target of €14.35 implies 41.5% upside potential from current levels. Year to date, DBK stock is down 4.4%.
