Deutsche Bank expects results for Q2 2020 to be ahead of consensus estimates

Maria Nikolova

The bank has confirmed an increase in the CET1 ratio in the second quarter thanks to lower than anticipated credit risk weighted assets.

Deutsche Bank AG (ETR:DBK) today published an updated estimate for its Common Equity Tier 1 (CET1) ratio. The bank said that, as of June 30, 2020, its Common Equity Tier 1 (CET1) ratio is approximately 13.3% compared to 12.8% at March 31, 2020. This is above market expectations and prior management guidance.

The increase in the CET1 ratio in the second quarter is principally driven by lower than anticipated credit risk weighted assets (RWAs). The lower RWAs reflect lower loan balances driven by higher than expected repayments of credit facilities by clients, notably in the later part of the quarter, and a reduction of derivative volumes. The client facilities were initially drawn in reaction to the COVID-19 pandemic economic challenges and subsequently repaid or refinanced.

Deutsche Bank expects results for the second quarter of 2020 to be slightly above average consensus estimates as compiled by the company on July 21, 2020.

Let’s recall that, when Deutsche Bank posted its results for the first quarter of 2020, the bank said the CET1 capital ratio was 12.8% at quarter-end, compared to 13.6% at the end of 2019, and approximately 240 basis points above regulatory requirements.

Provision for credit losses was 44 basis points of loans, reflecting conservative underwriting standards, strong risk management and a low-risk, well-diversified loan portfolio but higher year on year driven by the aforementioned impact of COVID-19.

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