(Finance) – Fitch Ratings has confirmed the Long-Term Issuer Default Rating (IDR) by Deutsche Bank to “TO-” with a stable outlook.
The rating agency predicts that the profitability will continue to improve thanks to consistent strategic execution over the next two years, but will remain below peer average in the near term. Weaker, albeit improving, internal capital generation and tighter buffers to regulatory requirements than most large European banks mean capitalization is only adequate.
It is pointed out that Deutsche Bank has a quite diversified business model focused on four businesses: investment bank (IB), which usually remains the largest contributor of revenues and profits, corporate bank (CB), private bank (PB) and asset management (AM). The revenue contribution and cost/income ratios of CB and PB have substantially improved. Together with AM, they have accounted for on average around two-thirds of total revenue over the past two years.
Fitch Ratings believes that predictable revenues from these businesses and the implementation of planned cost savings are critical to mitigate the inherent volatility of earnings in the IB. The latter holds leading global positions in fixed income and currency trading and has strengthened its market position in recent quarters.