Deutsche Bank will not pay dividends for two years
Germany-based Deutsche Bank (DB) cut its dividend payments for 2015 and 2016 as part of its plans to strengthen the bank’s capital. The bank noted that it would continue to pay dividends from 2017 onward at a “competitive payout ratio.”
Since its establishment in 1952, Deutsche Bank has regularly been paying dividends. Since 2009, Deutsche Bank has consistently paid annual dividends of 0.75 euros per share.
Rationale for the dividend cut
Deutsche Bank (DB) outlined its company-wide financial targets aimed at cost cutting, reduction of debt, and lowering the amount of assets exposed to potential losses. Deutsche’s cost-to-income ratio has soared to 180%. This is partly due to the exceptional loss, but its costs are generally high compared to competitors—even in divisions not affected by the loss.
John Cryan, CEO of Deutsche Bank, has been under tremendous pressure to reduce expenses, strengthen capital, and drive value for shareholders. European banks (EUFN) like UBS, Credit Suisse (CS), and Royal Bank of Scotland (RBS) have been grappling with high costs and tougher regulatory requirements in the wake of the sovereign debt crisis.
Deutsche Bank’s (DB) shares are currently trading at distressed valuations. The bank’s shares are trading at the steepest discount to its book value, worse than the 2008 financial crisis.
JCPenney (JCP) is slated to announce its results for the first quarter of fiscal 2019, which ended on May 4, on May 21.
The key point of contention in the US-China trade dispute is the large trade deficit the United States runs against China.
On May 16, the Labor Department reported jobless claims for last week. Initial jobless claims fell by 16,000 to 212,000 for the week ended May 11.
Jeffrey Gundlach recommended investors take advantage of the volatility in interest rates at the recent Sohn Conference.
Tesla (TSLA) has fallen 4.2% as of 11:55 AM EDT on May 17. While US equity markets opened in the red today, they've recouped their losses.
According to Reuters, on May 16, Vale (VALE) told prosecutors that a dam was at risk of rupturing at its Gongo Soco mine.