The brokers were in ‘sit-on-the-fence mode’ in the wake of the Deutsche Bank’s (ETR:DBK) highly-anticipated quarterly figures.
The two issues were the robustness (or otherwise) of the balance sheet and the legal wrangle with the US Department of Justice (DoJ), which could result in a €13bn fine.
According Citi, updating its coverage after a conference call with management, the litigation issue may take months to resolve.
Questions also remain over how well capitalised the German bank is – it points out there was €3bn shortfall between its current core tier-one ratio and the target figure.
Citi rates the shares ‘neutral-high risk’ with a €13 price target.
According to Morgan Stanley, Thursday’s numbers were “all pointing in the right direction”.
In a note to clients it added: “Top down, revenues were stronger and the bank is delivering on costs with this quarter being a fourth consecutive one of declining opex.
“Provisions were higher again a function shipping and oil and gas exposure. We believe the stock price should react well given low expectations into the quarter.”
Like Citi, Morgan Stanley has rates the Deutsche ‘neutral, although its price target is slightly higher at €13.30.
Earlier the lender said it returned to the black in the third-quarter as it posted a €278mln profit – a vast improvement on the loss of €6bn at the same point last year.
The gripe for investors was the lack of clarity over its negotiations with the DoJ, which is investigating the company’s role mis-selling toxic mortgage-backed securities in the run up to the financial crisis.
According to Citi, management said it would like to resolve all outstanding litigation by the end of the year.
However it was pointed out on the conference call “the time-table is controlled by the regulators” so the process is not in Deutsche’s hands.