DEUTSCHE BANK AKTIENGESELLSCHAFT (DB): what the price assumes

Generated: 2026-07-24 · Exported: 2026-07-25 · Source: https://boothcheck.com/report/DB

Headline

Field	Value
Ticker	DB
Company	DEUTSCHE BANK AKTIENGESELLSCHAFT
Sector / Industry	Financial Services
Current price	$34.81/sh

What The Price Assumes (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

Field	Value
Inversion basis	financials
Return on equity needed	9.5%
Return on equity now	11.0%
ROE gap	-1.5pp
Price-to-book	0.77x

Solve inputs: computed at a 11.1% cost of equity with 4% terminal growth over a 5-year stage, on common book equity (FY2025); each 1pp of cost of equity moves the implied ROE ~0.8pp.

Reconcile: at the x-ray's 9.3% required return this reads ~8%; the models below use their own rates.

How unusual the bet is: within-range

Reference	Value
vs own history	+1.30σ
cohort percentile (of 162 peers)	4
sustained it ~10 years at this level	78%
implied end-window share	0%

Valuation X-Ray

The price is supported by asset-based and earnings-power and relative-multiple and growth-DCF value. A value/asset-supported name, not a pure growth bet.

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

Family	Median price/FV	Models	Reads
Asset	0.95x	3	justifies
Earnings	0.70x	2	justifies
Relative	0.94x	3	justifies
Growth	0.35x	3	justifies

Families that justify the price: Asset, Earnings, Relative, Growth

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 9.3%); the inversion above states its own rate.

Per-Model Detail (n=11)

Model	Family	FV	Price/FV	Applicable	Methodology
DCF Perpetual Growth	Growth	—	—	no	—
Bank Fair Value (P/TBV)	—	$28.00	1.24x	yes	TBVPS $41.89 × 0.67x (ROE (TTM) 7.8% / CoE 9.3%, g=5.0% (sustainable: 65% retention × ROE, 5% cap; not the terminal-growth assumption))
Relative Valuation	Relative	$36.60	0.95x	yes	P/E 10x (static sector reference · 2026-04), scenarios: 8.3x / 10.0x / 11.7x (bear / base = reference held flat / bull), EV/EBITDA N/Ax
Simple DDM	Growth	$212.01	0.16x	yes	DPS $2.77, g=7.8% (sustainable: ROE (TTM) × retention; not the terminal-growth assumption), ke=9.3%
Two-Stage DDM	Growth	$98.23	0.35x	yes	Stage 1: 20% for 5yr, Stage 2: 3.5% perpetual
Simple Excess Return	Asset	$36.73	0.95x	yes	BV/sh $43.33, ROE (TTM) 7.8%, ke 9.3%
Two-Stage Excess Return	Asset	$33.75	1.03x	yes	5yr excess ROE then converge to ke=9.3%
Discounted Future Market Cap	Growth	$28.83	1.21x	yes	Rev $33.9B, growth 8% (input: historical growth; tapered), Terminal P/S: 1.8x / 2.1x / 2.5x (bear / base = today's held flat / bull, cap 8x)
Peter Lynch Fair Value	Relative	$36.91	0.94x	yes	EPS $3.08, growth 2% (input: historical EPS growth), PEG=5.12 (Overvalued)
Margin Trajectory	Growth	—	—	no	—
Earnings Power Value	Earnings	—	—	no	—
Residual Income	Asset	—	—	no	—
Graham Number	Asset	$54.76	0.64x	yes	√(22.5 × EPS $3.08 × BVPS $43.33) — Graham's conservative floor
EV/EBITDA Relative	Relative	—	—	no	—
FCF Yield	Earnings	—	—	no	—
SBC-Adj FCF Yield	Earnings	—	—	no	—
Ben Graham Formula	Earnings	$99.26	0.35x	yes	EPS $3.08 × (8.5 + 2×15.0%) × (4.4 / 5.3%)
ROIC-Justified P/B	Asset	—	—	no	—
P/Sales Sector	Relative	—	—	no	—
PEG Fair Value	Relative	$115.35	0.30x	yes	EPS $3.08 × (PEG 1.5 × growth 25.0% (input: historical EPS growth)) → PE 37.5x
Earnings Yield	Earnings	$33.25	1.05x	yes	EPS $3.08 / required return 9.3% (Rf 4.3% + ERP 5.0%)
Funds From Operations Multiple	Relative	—	—	no	—
Clinical Phase NPV	Growth	—	—	no	—
Merton	Asset	—	—	no	—
V5 Mechanical	—	—	—	no	—

Solvency

Deposit/float-funded balance sheet: debt is funding, not corporate leverage, and GAAP operating cash flow follows loan flows. Net-debt, interest-coverage, and cash-burn lenses do not apply. The solvency frame for a financial is regulatory capital and payout capacity (CET1, stress buffer, dividends plus buybacks against earnings).

Bullet Takeaways

• Deutsche Bank came out of its long restructuring earning roughly an 11% return on equity, and today's quote asks it to keep delivering only about 9.5%.

• The cushion here is regulatory capital rather than cash: a CET1 ratio of 13.8% at the end of the first quarter of 2026, inside a stated operating range of 13.5% to 14.0%, with a 60% payout ratio and a buyback programme running.

• Second-quarter figures are published on July 29, 2026, the first check on whether a quarter that put every division near a 13% return on tangible equity was a turn or a peak.

Bull Case

For most of the last decade the interesting question about this bank was whether it would stop shrinking. The first quarter of 2026 answered a different one. Net revenues of €8.7 billion produced profit before tax of €3.0 billion and post-tax profit of €2.2 billion, a record for a first quarter, with a cost/income ratio of 58.9% and a post-tax return on tangible equity of 12.7%. Every operating division landed near a 13% return on tangible equity in the same quarter. A German universal bank posting that across corporate banking, the investment bank, private banking and asset management at the same time is not the institution the market spent years discounting.

The cost line is the part that took longest and matters most. A cost/income ratio of 58.9% already sits inside the target the group set for 2028, which is below 60%. Efficiency is what separates a bank that can pay its shareholders from one that spends its returns on itself, and this one has crossed the line rather than approaching it.

Capital is the second leg. The CET1 ratio stood at 13.8% at quarter end against a stated operating range of 13.5% to 14.0%, and the distribution policy is a 60% total payout ratio from 2026 with additional distribution of excess capital once CET1 sits sustainably above 14%. That is an unusually mechanical promise: the shareholder does not have to guess what happens to surplus capital, only whether it is generated.

Now the arithmetic that makes those two facts interesting together. The shares change hands at about 0.77 times book value while the bank earns roughly an 11% return on equity. When a bank retains a euro of profit, that euro joins book value at full price and compounds at the rate the bank earns on equity. When it buys a share back below book, it retires more book value than it spends. Both routes lift book value per share for whoever stays, and neither requires the market to change its mind. The buyback is not a signal here; it is the return.

Credit has behaved. Provision for credit losses ran at €519 million in the quarter, and management described asset quality as strong with year-on-year improvement expected in a normalised environment. The bull case does not need heroic assumptions about capital markets revenue, which is the most volatile part of the mix. It needs the cost base to stay where it is, credit to stay ordinary, and the payout policy to be honoured. On present evidence all three are happening, and the price is asking for less than the bank is currently producing.

Bear Case

Start where the bear case cannot start, and the shape of the argument becomes clearer. There is no valuation gap to point at. Book-value-and-profitability methods, peer multiples and earnings-power frames all land at or above this price. So the bear is not arguing that the shares are expensive. It is arguing that the discount is a judgment about durability, and that the judgment is reasonable.

The judgment is legible in the arithmetic. The price asks for a sustained return on equity of about 9.5% from a bank currently earning about 11%. Markets do not usually pay less than a business earns unless they doubt the earning lasts. Here the doubt has a specific address: a large share of group revenue comes from trading and investment banking, which is the most cyclical revenue any bank carries. Fixed income trading revenue is a function of client activity and market volatility, and neither is something management controls. A quarter in which capital markets are quiet does not reduce the cost base by the same proportion.

The cost base is itself tighter than it looks. A cost/income ratio of 58.9% clears the sub-60% target with very little room. Ratios of that kind improve when revenue rises and deteriorate quickly when it does not, because most of a bank's expense is people and technology on multi-year commitments. The same figure that reads as an achievement in a strong quarter reads as a warning in a weak one.

Credit is the other place where a bank surprises its owners. Provision for credit losses was €519 million in the first quarter of 2026. That is a normal-looking number, and normal-looking numbers are what precede abnormal ones, because provisions are estimates of losses that have not happened yet. A European corporate lender with a global investment bank attached carries commercial real estate, leveraged finance and counterparty exposures that are marked on judgment rather than observed prices.

Capital constrains the return story more than the headline suggests. CET1 at 13.8% sits inside the 13.5% to 14.0% operating range rather than above it, and the promised distribution of excess capital is conditioned on the ratio sitting sustainably above 14%. Until then the base case is the 60% payout, and risk-weighted asset growth competes with buybacks for the same capital. A bank cannot grow its balance sheet and shrink its share count at full speed simultaneously.

One practical point for a holder of the New York line. Results are reported in euros under international accounting standards, so the dollar value of both the earnings and the dividend moves with the exchange rate before the bank has done anything. That is not a risk to the business. It is a risk to the return, and it is the sort that gets ignored until it is not.

If the return on equity does not hold near current levels, the arithmetic runs in reverse. The multiple of book that a bank supports is set by what it earns on that book against what its owners require. Fade the earned return and the multiple compresses with it, and a stock already trading below book has less distance to fall than a growth name but no valuation floor beneath it either. The methods that look supportive today are supportive because they capitalise a return the market is not sure will repeat.

Valuation

At $34.81 on July 24, 2026, the price works out to about 0.77 times book value, and the assumption embedded in it is a sustained return on equity of roughly 9.5%. The bank has recently been earning a return on equity of about 11%. That is the entire valuation story in two numbers: the market is paying for less than the business currently delivers, and the gap is the discount for doubt rather than a mistake in the arithmetic. Among institutions that reached this level of return, roughly four in five were still delivering it a decade later, which is why the assumption reads as ordinary rather than heroic.

The methods line up on the same side, unusually. Book-value-and-profitability methods leave the price about 5% below where they land, and peer-multiple methods about 6% below. Earnings-power methods sit further away, with the price roughly 30% below their centre. The dividend-discount frames land furthest of all, but they get there by projecting a growth rate in distributions that no large bank sustains, so the distance they report is a statement about their assumptions rather than about the shares.

One frame disagrees, and it is the one built specifically for banks. It values book equity by scaling it to the ratio between what the bank earns on that equity and what its owners require, and on that construction the shares are not cheap. The difference comes from which stretch of history is used to measure the earned return: the generic frames read the recent, stronger record, while the bank-specific one runs on a longer and slower average. Both are defensible. Together they say the shares are somewhere between fairly priced and modestly cheap, which is a duller conclusion than either frame reaches alone and a more honest one.

The balance-sheet question for a bank is not leverage or interest cover. Deposits are funding, not debt, and the meaningful test is capital and credit. On that test the position is comfortable rather than commanding: CET1 at 13.8% at the end of the first quarter, within a 13.5% to 14.0% operating range, a cost/income ratio of 58.9%, and provision for credit losses of €519 million in the quarter. Capital return runs on a 60% payout ratio from 2026, with distribution of excess capital where the ratio sits sustainably above 14%. Buying below book turns each of those buybacks into an increase in book value per share, which is the mechanism that makes the discount self-correcting if profitability holds.

Two measurement notes belong in any read of this stock. The accounts are prepared in euros under international standards, so the dollar figures a US holder experiences carry a currency translation the business does not control. And the return on equity quoted against book equity is not the same figure as the return on tangible equity management reports, which strips goodwill and intangibles from the denominator and therefore reads higher. Compare like with like or the bank looks better or worse than it is, depending on which one you picked up.

Catalysts

The interim report for the second quarter of 2026 is published on July 29, 2026, and it is a genuine test rather than a formality. The first quarter delivered a record post-tax profit of €2.2 billion with every division near a 13% return on tangible equity, and the question is whether that reflected market conditions or a changed cost base.

The full-year revenue ambition of €33 billion is the running check on the same question, and the first quarter was described as a solid step-off point toward it. Revenue at a bank of this shape is not a smooth series, so the useful reading is cumulative rather than quarterly.

Capital is the catalyst most directly tied to shareholder cash. The distribution policy pays 60% of earnings from 2026 and adds excess capital once CET1 sits sustainably above 14%, against 13.8% at the end of the first quarter. The gap between those two numbers is small, which makes each quarter's capital generation, and each incremental increase in risk-weighted assets, a live input into how much cash reaches owners.

Credit provisions are the third thing to watch and the least predictable. The first quarter carried €519 million, with management pointing to strong overall asset quality and expecting year-on-year improvement in a normalised environment. Provisions move on judgment about the future rather than on losses already taken, so a change in tone there tends to arrive before a change in the numbers.

Methodology Note

• Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
• Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
• Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
• Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.

Sources

Deutsche Bank Q1 2026 results release · Deutsche Bank Q1 2026 results release and financial calendar · Deutsche Bank Q1 2026 results release, April 29, 2026 · Deutsche Bank Q1 2026 results presentation · Deutsche Bank financial calendar