Samuel Weber presented his in-depth investment thesis on Deutsche Bank (Germany: DBK, NYSE: DB) at European Investing Summit 2017.

Deutsche Bank: New CEO John Cryan is transforming Deutsche into a “safe” bank that focuses on providing value-added products and services to a diversified client base. The bank’s recent market capitalization does not reflect its potential future performance. Cryan is a credible, capable, and humble CEO with high integrity, a focus on value creation, shareholder orientation, and a long-term business outlook. He wants to make the bank simpler and more efficient, less risky, and better capitalized, with more disciplined execution. He has replaced one-half of the top 200 managers and reassigned another 20% to new positions. He stopped business with high-risk clients and has continued to strengthen internal controls. He has resolved nine of the top twenty litigation issues, comprising 90% of litigation provisions. He has also aligned compensation with performance. In 2016, Cryan earned €3.8 million in total compensation; no manager was paid a bonus, and variable compensation was reduced by 77%. In 2Q17, Deutsche’s liquidity coverage ratio of 144% was higher than that of most peers. If Deutsche generates revenue of €30 billion in 2018, it should earn €8 billion in income before income taxes. This figure should increase to €11+ billion by 2021. Net income should therefore be around €4 billion in 2018 and €5.5+ billion in 2021. Applying a P/E ratio of 15x suggests intrinsic value of €60 billion in 2018 and €82 billion in 2021, compared to a recent equity market quotation of less than €30 billion.

Read an article that outlines Sam’s thesis on Deutsche Bank.

About the instructor:

Samuel S. Weber is an independent wealth manager based in Zug, Switzerland. He is a passionate value investor, who is focused on generating long-term, market beating returns by investing in high-quality opportunities in the stock market and providing patient capital to SMEs with the overall aim of fostering productive investments in Switzerland and Europe. To achieve the latter, he founded the SW Kapitalpartner GmbH ( Samuel holds a master’s degree in strategy and international management from the University of St. Gallen.

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