Deutsche Bank (DB) Under Plans and Announcements

The co-CEO of Deutsche Bank (DB), John Cryan, plans to reorganize the bank and has ordered the downsizing of the entity. The method involves cutting about 23,000 jobs, around 25% of its workforce, Reuters reported the past week.

Mr. Cryan has focused on boosting returns by lowering expenses. That´s the reason the bank is planning to cut costs in several areas, including tech and administrative operations or transaction processing.

The bank employed 98,647 at the end of June. A great question is whether Mr. Cryan will make further deeper cuts to execute his plan.

The past days, the bank made another significant announced, it would close (by the end of the year) it's Corporate Banking and Securities business in Russia. The company said its “Russian Corporate Finance and Markets businesses will now operate from international hubs. The Bank will continue to offer prices in Russian securities to clients, using third parties for local execution, as well as banking services to core Russian clients”.

Now turning our attention to valuation metrics, I will cover P/E, P/B, and P/S. I select the following companies to make the comparison: JPMorgan Chase & Co. (JPM) and Citigroup Inc. (C).

CompanyDeutsche Bank JPMorgan ChaseCitigroup
52-Week Range27.81 - 36.2950.07 - 70.6146.60 - 60.95
Market Cap (Billions)39.23225.36151.37
Trailing P/E24.61112.5
Forward P/E7.89.448.46
Div. Yield2.932.690.24

The P/E ratio shows that the bank is overvalued. However, P/B and P/S are lower than its competitors. The company's annual dividend yield of 2.93% is higher than its peers, and it is close to 5-year high.

Although Crispin Odey´s Odey Asset Management Group has opened a new position in the second quarter with 1.74 million shares, David Dreman has decreased his position by 8.1% to 67,980 shares.

Published on Sep 24, 2015
By Omar Venerio
Capital Markets, Derivatives and Financial Management Professor, Master in Finance and CFA candidate. I am an independent trader of stocks and options and passionate about the stock market.

Copyrighted 2016. Content published with author's permission.

Posted in ...