Tuesday, July 27, 2010

Deutsche Bank $DB $UBS -strong set of earnings

·         Deutsche Bank - we get to clean pretax of E1,666m vs. JPMCe E1,425m and consensus of E1.53bn. Assuming tax rate of 37%, we get to clean net income of E1,050m vs. JPMCe E898m and consensus E1,020m. Clean EPS was E1.58 vs. JPMCe E1.35.  DB weathered the IB volatility relatively well, with revenue declines in FI and Equities in-line with peers. Cost/Income in IB also relatively well managed.   We estimate DB has E14bn of capital deficit based on half on business mix (i.e. IB businesses need to operate at 10% T1) and other half on our Market RWAs adjustments as discussed in our report.  
·         UBS - v strong set of earnings from UBS - clean pretax amounted to SF1,575m compared to JPMe and consensus (source: Company) expectation of SF1.3bn. Clean EPS was cSF31 vs. JPMCe cSF27.  Wealth management: new money flows - all positive against expectation JPM and consensus. In addition, top-line margins were also solid.  Solid #s from the IB - Investment Bank pretax clean of SF367m adjusted for DVA of SF280m in FICC and own debt gains of SF595m, vs. JPMCe SF351m and consensus of SF244m (adjusted for own debt).  

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