Mit einer spektakulären Senkung des Kursziels auf nur noch 8 Euro hat Barclays in dieser Woche die Aktie der Deutschen Bank unter Druck gesetzt. Mit (zugegeben) leichter Verspätung hat „Finanz-Szene.de“ die Studie in die Hände bekommen. Hier dokumentieren wir die beiden Kernaussagen:
1. We think the group will continue to lose market share
This is a function of (i) the restructuring measures announced to the CIB businesses in the US and Asia, (ii) a consequence of potential ratings actions (we highlight S&P in particular), and (iii) higher funding costs than peers.
The group is looking to scale back in US rates, US and Asia corporate cinance, and Global Prime Finance. There appears to be a clear focus on reducing leverage exposure. We think these measures will make it harder for the group to compete with peers and will come with significant cost.
The group’s counterparty ratings are on credit watch negative with S&P, and a cut could make it less attractive for clients to do business with the group. According to company presentations, these ratings are relevant for >95% of the group’s clients.
Last but not least, funding costs for the group remain above those for peers, making it hard for the group to compete effectively in the market place. From our analysis, we see limited scope for cost reduction in the next few years.
2. We think the updated cost target is still tough to achieve
The group has a target to reduce costs to Eur23bn in 2018. This is a key part of improving profitability, as the group’s cost base has not reduced as quickly as revenues.
In 2018 we have already seen disappointment in Q1, where costs increased 4% YoY on a constant FX basis, partly driven by higher levies, and partly due to it costs. Also there was little change in personnel costs.
Press reports (Handelsblatt) suggest that the labour unions in Germany have negotiated c.3% pay increases in 2018 and 2019, and their agreement precludes compulsory redundancies until 2021. As such, the only real flexibility may be in CIB costs and some general and administrative expenses.
We think that to achieve the revised target the group may need to repeat the retention award program (from 2016) and cut variable compensation again significantly. This could have further consequences on the business.