04. Deutsche Bank Aktiengesellschaft (NYSE:DB)
Number of Hedge Fund Holders: 13
At number four on our list of seven best European bank stocks to invest in is Deutsche Bank Aktiengesellschaft (NYSE:DB). Deutsche Bank Aktiengesellschaft (NYSE:DB) delivered a robust Q2 2024 performance, significantly surpassing earnings expectations with an EPS of $0.76, compared to the anticipated $0.49. The bank reported strong revenue growth across its business segments, driven by capital-light businesses like Corporate Banking and Origination & Advisory, which gained market share. Despite a substantial litigation provision of EUR1.3 billion related to the Postbank acquisition, Deutsche Bank Aktiengesellschaft (NYSE:DB) underlying operational performance remained strong. Excluding this provision, the bank’s post-tax return on tangible equity was 7.8%, an improvement from 6.8% in the previous year, marking its best first half since 2011.
The bank’s cost-to-income ratio improved to 69% from 73% year-on-year, and its CET1 ratio remained solid at 13.5%, reflecting strong capital strength. Deutsche Bank Aktiengesellschaft (NYSE:DB) also made significant progress in operational efficiency, realizing substantial cost savings and achieving a 17% increase in pre-provision profit year-on-year. Notably, the Corporate Bank saw a 16% increase in incremental deals, while the Private Bank reported EUR19 billion in net inflows, contributing to growth in assets under management. Deutsche Bank Aktiengesellschaft (NYSE:DB) strategy to enhance its global market presence and strengthen client relationships is clearly paying off. With EUR30 billion in revenue within reach for 2024 and ongoing cost reductions, the bank is well-positioned to achieve its 2025 targets, including a return on tangible equity of over 10%. The strong performance across various segments and continued focus on operational efficiency underscore Deutsche Bank Aktiengesellschaft (NYSE:DB) resilience and growth potential, making it a compelling investment opportunity.
The number of hedge funds in Insider Monkey’s database owning stakes in Deutsche Bank Aktiengesellschaft (NYSE:DB) fell to 13 in Q2 2024, from 14 in the preceding quarter. The consolidated value of these stakes is nearly $0.45 billion. Among these hedge funds, Douglas Braunstein And James Woolery’s Hudson Executive Capital was the company’s leading stakeholder in Q2.
Third Avenue Value Fund stated the following regarding Deutsche Bank Aktiengesellschaft (NYSE:DB) in its first quarter 2024 investor letter:
“Idiosyncratic as the details of Bank of Ireland’s progress may be, many of the underlying principles are surprisingly common today. Deutsche Bank Aktiengesellschaft (NYSE:DB) (“Deutsche”) shares many similarities. Its capital base and balance sheet have improved dramatically in recent years. Management changes in 2018 precipitated sweeping changes in the way the bank is run, which, when combined with an improved interest rate environment, have led to Deutsche Bank’s greatly improved operating results. During 2023, Deutsche produced a return on tangible equity of roughly 7%, and it presently trades at roughly 51% of tangible book value, which marries with a price-to-earnings3 multiple of roughly 7x. Similar to Bank of Ireland, there is little incentive for Deutsche Bank to retain much of its earnings and continue to grow its capital base, unless compelled by regulators to do so, as long as each Euro of retained capital is being valued at roughly 50 cents. Deutsche recently announced that it will increase its dividend 5 materially in 2024, and plans to make additional, successive, 50% dividend increases in each of the next two years. The company also implemented a substantial share buyback, which is highly attractive from our long-term shareholder perspective, given that the shares are presently valued at roughly 50% of tangible book value and offer an earnings yield nearly twice the bank’s return on equity.”
