A few days ago, the international rating agency S&P Global Ratings (hereinafter referred to as "S&P") announced the upgrade of the credit rating of Deutsche Bank shares***Deutsche Bank" or "Deutsche Bank"), which is also the third consecutive rating upgrade of Deutsche Bank by leading international rating agencies in 2023.
Standard & Poor's upgraded Deutsche Bank's long-term and short-term entity credit ratings to A and A-1 from A- and A-2, respectively, with a stable outlook, upgraded its long-term clearing counterparty rating (RCR) to A+ from A, and upgraded its long-term debt rating by one notch to senior senior debt, senior non-preferred debt, subordinated debt and AT1 bonds.
According to S&P, Deutsche Bank's success in expanding its network, improving profitability and maintaining sound capital and liquidity is key to the upgrade. S&P believes that "Deutsche Bank will continue to implement its growth strategy, improve its performance and make steady progress towards its 2025 target", while S&P has revised its rating outlook to "stable".
Christian Sewing, CEO of Deutsche Bank, said: "It is great to see that Deutsche Bank's strength and progress have once again been recognised by leading rating agencies. Behind this upgrade is the hard work of each and every one of our employees, which has enabled Deutsche Bank to transform into a globally responsible and resilient global lead bank with a focus on its core business. Going forward, we will continue to grow our businesses to serve our customers in an uncertain market and improve shareholder returns." ”
James von Moltke, Chief Financial Officer of Deutsche Bank, said: "Deutsche Bank has demonstrated a number of key strengths: a focused and balanced business model, continued revenue growth and expansion, a high-quality loan portfolio, strong capital strength combined with strong liquidity and a solid capital base. We are encouraged by the fact that Deutsche Bank's strength and resilience have once again been recognized by S&P. ”
Key factors in S&P's upgrade
The transformation has paid off: "This upgrade reflects Deutsche Bank's continued improvement in performance and resilience. The transformation from 2019 to 2022 has allowed Deutsche Bank to focus more on its core business and become more profitable, and the management is now working on its goals in terms of business development and operating leverage. According to S&P, "Deutsche Bank has achieved structural optimization, tighter strategy execution, and a greater focus on cost efficiency." ”
High-Quality Loan Portfolio: S&P noted that "Deutsche Bank's loans are sector-diversified and well-collateralized, and despite weak economic growth, they remain solid, particularly in the German home market." Even under simulated stress scenarios, fluctuations in the loan mix are unlikely to affect the bank's capital base. ”
Robust Liquidity and Funding Basis: As of September 30, 2023, "Deutsche Bank's 132% liquidity coverage ratio and 121% net stable funding ratio are in line with its internal targets," S&P said, "We are optimistic that 71% of Deutsche Bank's deposit base comes from Deutsche Bank's domestic market and 39% of its deposit base is insured, which excludes bank deposits." ”
Resilience to Market Volatility: S&P noted that Deutsche Bank demonstrated strong balance sheet management capabilities in the face of market turmoil in early 2023. "Deutsche Bank's liquidity position withstood the test after its ** was shorted in March 2023 and successfully weathered the storm. ”
Strong capital base provides room to expand and accelerate shareholder returns: S&P said: "We believe Deutsche Bank has the supporting capital. Its regulatory metrics and earnings guidance surprisingly met its target cap in the third quarter of 2023. In addition, "the common equity tier 1 capital ratio increased to 13At 9%, Deutsche Bank's management said it expects to release around 3 billion euros of additional capital, so it is expected to raise the target of 8 billion euros for shareholder distribution from 2021 to 2025. ”
The following is the current rating of Deutsche Bank by leading international rating agencies: