Deutsche Bank: Financial Analysis and Strategic Business Overview

This report provides a comprehensive analysis of Deutsche Bank's financial performance and strategic transformation. It begins by outlining the bank's shift from traditional retail banking to investment banking, detailing the expansion of its operations across multiple countries. The report then examin...Read More

Question-1
Deutsche bank's fundamental focus was on traditional retail banking. Nevertheless, to
accomplish an overall landing in the bank stretched out to twelve countries situated in the Asia-
Pacific region and into countries such as Brazil, , Canada and the Netherlands. (Spinassou, 2013)
The bank's statue stated, "Banking business of various sorts was the main objective of this
association, specifically to progress and empower trade relations between Germany, other
European countries, and overseas markets." Investment and business banking needs were the
main goal of its establishment. After World War I, because of the political and money related
instability expanded all through Germany. The Bank expected to sell almost all of its remote
assets as the lenders couldn't handle their debts. Even in the 1930's, at the Great Depression,
Germany assaulted countries that the Bank wasn't far behind. All the cash and holdings were
transferred, before the end of World War II, from the Jews to the German government. After
World War II, Deutsche Bank was split into 10 interesting banks and the name was denied.
Previous parts of Frankfurt, Dusseldorf and Munich were consolidated and allowed to work
under the old name. The bank (Deutsche Bank) changed its business strategy to accomplish its
overall goal, from traditional retail banking t.o an overall investment banking. (Deutsche Bank
Freezes North Carolina Expansion, in Protest of Bias Law, 2020)
So as a worldwide Investment banking the bank will encounter an extraordinary transformation
because prior as a retail banker the bank primary focus was on individuals yet now as an
investment bank they have to focus on selling securities to companies and government.
Retail banks usually manage the customers straightforwardly and the customers are commonly
served in the neighbourhood market. At the point the bank concentrated on corporate banking
that focuses on institutional clients instead of individuals from Investment banking. It offers

advisory types of assistance to clients concerning mergers and acquisitions (M&As), capital
market conditions and trends, and corporate money and also serves corporate and institutional
entities' capital market needs. From a retail bank to an Investment bank, the bank will confront
gigantic challenges on the off chance that they are not prepared well.
The expansion plans of the bank and its operations outside countries as the monetary situation
recouped across the world. The count raised to 70 countries by 2001. The revenues of the
traditional business banking were published, Deutsche Bank focused on Investment Banking
activities. investment banking activities created roughly 62% of the bank's revenue in 2007.
Question 2)
There are at any rate two points that the information told.
Assets = liabilities + shareholder equity
The increase is derived more by its debts. ROE became higher than ROA during 2002 and 2007.
Secondly Debt to Equity ratio somewhere in the range of 2002 and 2008, which we can discover
in the equation beneath:
The Bank utilizes substantially less equity comparative with its debt, compared to the previous
year D/E increased significantly from 34 X in the year 2002 to 71 X in the year 2008 (Table 1.).
(Yahoo is now a part of Verizon Media, 2020)
Table 1. Deutsche Bank ROA, ROE, DER
Year ROA ROE DER delta ROA delta ROE
2002 0.05% 1.75% 34
2003 0.17% 6.15% 35 0.12% 4.40%
2004 0.30% 12.25% 40 0.13% 6.10%

2005 0.39% 17.37% 44 0.09% 5.12%
2006 0.47% 26.72% 56 0.08% 9.35%
2007 0.36% 24.97% 68 -0.11% -1.75%
2008 -0.18%
-
12.91% 71 -0.54% -37.88%
2009 0.27% 15.18% 55 0.45% 28.09%
2010 0.14% 6.00% 42 -0.13% -9.18%
2011 0.20% 9.02% 44 0.06% 3.02%
Source: Db.com. 2020. SEC Filings For Financial Results – Deutsche Bank
Based on my sentiment, the budgetary standpoint for Deutsche Bank remains great. There are
two reasons, firstly as indicated by BASEL III, The Bank had kept up its capital adequacy ratio.
Since 2002, the diversification business strategy has improved by The Bank.
First, the Bank had kept up its capital prerequisite implied by Deutsche Bank historical money
related between 2008 to 2012 (table 2) as indicated by BASEL III.
Center level 1: Capital to RWA ratio = increased to 10.15% in 2012 from 7% in 2008
Total level : 1 capital to RWA ratio = increased to 13.58% in 2012 from 10.10% in 2008
Total capital to RWA ratio became 15.03% in 2012 from 12.15% in 2008.
Consequently, The Bank capital adequacy ratio is more than sufficient.
Table 2. Deutsche Bank Core Tier 1 Capital, Tier 1 Capital and Total Capital

Year
Core
Tier 1
Capital
(A)
Tier 1
Capital (B)
Total
Capital (C) RWA (D)
A/D
(Req.
4.5%)
B/D
(Req.
6%)
C/D
(Req.
8%)
2008 21,472 31,094 37,396 307,732 6.98% 10.10% 12.15%
2009 23,790 34,406 37,929 273,476 8.70% 12.58% 13.87%
2010 29,972 42,565 48,688 346,204 8.66% 12.29% 14.06%
2011 36,313 49,047 55,226 381,246 9.52% 12.86% 14.49%
2012 37,833 50,618 56,024 372,635 10.15% 13.58% 15.03%
Source: Db.com. 2020. SEC Filings For Financial Results – Deutsche Bank
Secondly, domestic business still made a significant part though most of Deutsche Bank revenue
was accumulated abroad. The USA, EMEA and the Asia Pacific except for Japan, investment
banking business resulted in 56-73% of total revenue from 2002 to 2007. Deutsche Bank has a
predominant position. Domestically The Bank made a major acquisition to a nearby bank, not
just in overseas business, for example, Postbank, for EUR 9.8billion in late 2010. (Rutkowska-
Ziarko, 2015) In the domestic market it became much stronger after the acquisition of Postbank
and also gave a solid subsidizing for Deutsche Bank loaning business.
Deutsche Bank's great business diversification strategy geologically and the capital adequacy
ratio was sufficient based on BASEL III necessity. (Orgeldinger, 2017) I trust Deutsche Bank
based on these two facts, and will stay stable to confront monetary catastrophic such European

debt crises later on. The primary businesses of Deutsche Bank usually dove, even during
monetary crises, bargain making business. (like in 2008-2009 by 25%).
References
Spinassou, K., 2013. Basel III Capital Requirements and Regulatory Power: The Impact on Bank
Risk-Taking and Credit Supply. SSRN Electronic Journal,.
Nytimes.com. 2020. Deutsche Bank Freezes North Carolina Expansion, In Protest Of Bias Law.
[online] Available at: <https://www.nytimes.com/2016/04/13/business/dealbook/deutsche-bank-
freezes-north-carolina-expansion-in-protest-of-bias-law.html> [Accessed 16 April 2020].
Finance.yahoo.com. 2020. Yahoo Is Now A Part Of Verizon Media. [online] Available at:
<https://finance.yahoo.com/quote/DB/financials> [Accessed 16 April 2020].
Db.com. 2020. SEC Filings For Financial Results – Deutsche Bank. [online] Available at:
<https://www.db.com/ir/en/sec-filings-for-financial-results.htm> [Accessed 16 April 2020].
Rutkowska-Ziarko, A., 2015. The Influence of Profitability Ratios and Company Size on
Profitability and Investment Risk in the Capital Market. Folia Oeconomica Stetinensia, 15(1),
pp.151-161.
Orgeldinger, J., 2017. Critical Analysis of the New Basel Minimum Capital Requirements for
Market Risk. Emerging Science Journal, 1(1), p.1.