Deutsche Bank Set For Success – US-FOREX.US
Goldman Sachs and JPMorgan, riding the tailwind of government support and record-low interest rates, reported solid quarters. Germany’s Deutsche Bank, which benefited from the U.S. bailout efforts by taking government money through AIG, is also looking at a strong quarter.The figures suggest that “Deutsche Bank will report the strongest second-quarter results,” wrote Nomura European banking analyst Jon Peace in a note to clients, after JPMorgan reported a second-quarter profit of 28 cents a share-seven times the consensus call-and Goldman’s net rose 30%. Peace’s logic is that while both American banks showed strong growth in their fixed-income business, Goldman Sachs’ equities performance was better than JPMorgan’s. So big fixed-income players will benefit the most, putting Deutsche in the lead in Europe. Though the bank has been making more of a move into equities, it’s still outstripped by its fixed-income business. In the first quarter, while equities sales and trading revenues totaled 275 million euros , revenues were 13 times higher from sales and trading of debt products, or 3.8 billion euros .”What we have heard from JPMorgan and Goldman Sachs
suggest fixed income performed very well in the second quarter, even after performing well in the first,” said Konrad Becker of Merck Finck in Munich, who has a “buy” rating on Deutsche.
On Thursday, JPMorgan
reported that
fixed-income trading revenues grew 1% from the first quarter while equity trading revenues fell 60%.
The strong performance of debt products mirrors last quarter’s performance across the banking sector as a bonanza of government and corporate bond issuance helped banks offset credit-market-related writedowns. It’s still likely going to be the biggest contributor to investment banking earning.
Deutsche Bank
shares dipped 0.9%, to 47.98 euros , on Thursday at the end of trading in Frankfurt.