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What Do the Historical Financials Tell Us About Deutsche Bank’s Profitability Ratios in Terms of Roa/roe?

Autor:   •  August 14, 2016  •  Case Study  •  345 Words (2 Pages)  •  2,290 Views

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What do the historical financials tell us about Deutsche Bank’s profitability ratios in terms of ROA/ROE?

From the historical financial of Deutsche Bank it showed from 2002- 2007, their profitability of share earning basis on increasing ROE and also there is a comparison between ROA and ROE.Deutsche bank has the highest ROE compared to the other bank at that time.The graph illustrated the ROE increased rapidly each year which can show to the investor they are worthy to invest, but the ROA did not increase much even decrease in some year. According to theses financial data , it showed that the Deutsche bank mainly gain profit by increasing ROE without increasing ROA which means the leverage increase, the risk will also increase. Because they borrow more money instead of use their own capital asset. As the ROA/ROA as the part measuring of the profitability. However, the bank or company can not just increasing only one of them. For this case, Deutsche Bank need to gain more total asset /capital asset in order to reduce the leverage risk.

 What is the financial outlook for Deutsche Bank in view of Basel III and the euro zone debt crisis?

Because of the euro zone debt crisis as a background , the Basel III came out replaced BaselI.During euro zone debt, Deutsche bank’s profit decreased a lot.  And the Basel III enhanced the  requirement of equity capital. It is more harder for Deutsche, we know they have very high leverage, and this new regulation control the risk but also revenue will be lower for the bank., By decrease leverage, they either raised equity capital or get money from the investor. Both of the also are high risk method. As we know it is not easy to get money directly from the investor . So recent year Deutsche bank raised capital by consolidated Germany post bank. And they reduce the staff and downsize of their bank.


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