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Can Deutsche Bank’s 3Q Earnings Boost Sentiment amid Turmoil?

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Aug. 18 2020, Updated 5:20 a.m. ET

Upcoming earnings announcement

Deutsche Bank (DB) is expected to report its third quarter earnings on October 27 after markets closed. Wall Street analysts expect the company to post EPS (earnings per share) of 0.34 euros, or $0.38. In 3Q15, the bank reported losses of 0.69 euros, or $0.76.

Deutsche Bank has been the focus of anxiety and health of the European banking system (XLF). Chief Executive Officer John Cryan’s efforts to turnaround the bank are not working out well. In 2015, the company announced its first full-year loss since the 2008 recession, and the bank has a slew of litigation costs to settle. Cryan has been shrinking risky businesses, cutting down on staff-related costs and dividend payments to boost capital levels.

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Earnings in the European banking sector have remained generally weak, hurt by negative interest rates during the past year. Deutsche Bank expects European banks’ third quarter earnings to grow, not because of strong operational performance but due to base effects. In a note to clients, Deutsche Bank analysts said a rebound in the energy sector, and fewer earnings downgrades are the primary drivers for third quarter earnings. The note stated: “even if earnings were to stay flat at Q2 2016 levels, they would be 7% above Q3 2015 levels.”

In a note to shareholders earlier in the year, the company provided grim guidance for 2016 for the entire industry. Cryan has said the bank may not be profitable in 2016. The worsening economic outlook and a difficult operating environment may add to its woes. European banks like Credit Suisse (CS), UBS, and RBS have also been suffering, but Deutsche Bank seems to be in the deepest trouble.

Series overview

In this series, we’ll explore analysts’ expectations for Deutsche Bank’s 3Q16 earnings. We’ll also look at valuations and analysts ratings on the stock.

Let’s start by looking at what analysts forecast for Deutsche Bank’s 3Q16 earnings.

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