Deutsche Bank (DBKGn.DE): 2Q26 - Broad Based Beat and New Buyback

Research evidence excerpt

Deutsche Bank (DBKGn.DE): 2Q26 - Broad Based Beat and New Buyback

suitable for asset manager gatherers like DWS, which we estimate has historically traded in a

7-11x range (excl. surplus capital) and then add on the value of estimated surplus capital vs pillar 2 requirement. We use a

multiple at the top end of this range (despite structural de-rating of the sector) to reflect DWS's relatively faster growth outlook

vs peers, given its gearing to high-growth passive and alternatives, its strong earnings momentum, supported by well-

executed self-help.

Risks

The following risks could prevent the shares achieving our target price:

Parent risk. DWS has cited parent troubles as a key driver for significant net outflows from funds, particularly in the US, in

2016. High-profile DOJ sanctions and fines for Deutsche Bank led to outflows for DWS. Parent risk today looks different, with

uncertainty surrounding M&A activity, money laundering investigations and debates over its capital position, liquidity

resources and profitability. With DB owning the majority of DWS (79.5%), we see potential risk from future share sales and/or

change in ownership.

Corporate governance. DWS's KGaA structure means Deutsche Bank will retain operational and strategic control of DWS even

down to 40% share ownership, and DB decides on the appointment and dismissal of senior management at DWS.

Execution risk. As DWS focuses on swift execution of targeted cost savings, bringing some functions in-house, renegotiating

service agreements, reducing headcount, the scope for error during transition periods increases.

Flow risk. Like all asset managers, a key risk for DWS is withdrawal of significant AuM by its clients due to poor performance,

asset allocation / style shifts, or other issues.