1. Compare Deutsche Bank in 2002 to Deutsche Bank in 2012. How has the orientation of Deutsche Bank changed over time, in terms of business segments and global nature?
To compare Deutsche Bank in 2002 to 2012 the factors that will be examine are:
C -Capital adequacy
A - Asset quality
M - Management quality
E - Earnings
L - Liquidity
S - Sensitivity to Market Risk
Capital adequacy ratios (CARs) are a measure of the amount of a bank's core capital expressed as a percentage of its risk-weighted asset.
Capital adequacy ratio is define as:
In other words capital adequacy is the percentage ratio of a financial institution to measure its strength and stability.
In 2002 ...view middle of the document...
Money, or cash, is the most liquid asset, because it can be "sold" for goods and services instantly with no loss of value.
2002: In 2002 the net income was a total of 397 EUR.
2012: In the annual report Deutsche published for 2012 it reported that they had an income total of EUR 729 million. This was a major decrease from the previous year in which the total net income was 1.4 Billion EUR. The net income however was a total of 291 EUR
Sensitivity to Market Risk: In 2002 the bank started off with a promising start. Economic recovery appeared to be good, in January the share reached its peak €82.65 but eventually reached its lowest point in October due to deterioration in international investor’s confidence. In 2002 share prices decreased significantly on the worst most important stock exchanges. Prices fell particularly dramatically in Germany. Ended the year at €43.90.
In 2012 the global economy continued to recover at the beginning of 2012, raising investors’ expectations. In a supportive market environment, Deutsche Bank’s share reached its peak for the year in March at €39.50, up 34% of the previous year. Then in the same month the Euro zone debt fears resurfaced, leading to substantial outflows and a broad decline in share prices, especially in Europe. Deutsche Bank’s share price closed at €32.95 on December 28, 2012. Deutsche Bank market was more profitable in 2002 than in 2012.
Below is a spread sheet showing the difference between 2002 and 2012.
FINANCIALS 2012 2002
Share price high € 39.51 € 82.65
Share price low € 22.11 € 35.60
Dividend per share (proposed for 2002) € 0.75 € 1.30
Basic earnings per share € 0.25 € 0.64
Return on average total shareholders’ equity (ROE) 1.3 1.10%
Cost/income ratio 92.60% 78.80%
Total revenues 33,741 26,547
Provision for loan losses 1,721 2,091
Total noninterest expenses 31,236 20,907
Income before income tax expense (benefit)
and cumulative effect of accounting changes 784 3,549
Net income 291 397
Total assets 2,012 758,355
Loans (before allowance for loan losses) 397,279 171,620
Shareholders’ equity 54 29,991
BIS core capital ratio 11.40% 9.60%
Branches 2,984 1,711
thereof in Germany 1,944 936
Employees (full-time equivalent) 98,219 77,442
thereof in Germany 46,308 33,807
Moody’s Investors Service, A2 Aa3
Standard & Poor’s, New York A+ AA–
Fitch Ratings, A+ AA–
MANAGEMENT 2012 2002
Josef Ackermann - Chairman Single
Anshu Jain & Juergen Fitschen - Co-Chairmen Dual
International Capital Adequacy Basel 2.5 Basel 2