Talking Point
Memories of Sisyphus: European banks are back where they started
European banks have enjoyed a good start to the year. Revenues have risen, much more than costs. Loan loss provisions have remained low. Bottom-line profit has jumped by more than 40% compared with 12 months ago. However, the rebound has followed what was a weak period in the previous year – in fact, the industry is in many ways just back where it was in Q1 2015. What is more, judging only by the P&L, there has been relatively little change since the European debt crisis erupted in Greece seven years ago. The industry has more or less been treading water ever since, a frustrating experience after decades of strong growth and massive recent restructuring efforts. However, other performance indicators clearly show major improvements, not least with regard to banks’ de-risking and buildup of capital. [more]
Talking Point
Fewer crisis spots on the euro-area housing market
The massive overvaluations on the euro-area market for residential real estate (as measured by the price-income ratios for 2007 and 2008) are a thing of the past. Currently, house prices are excessive only in several smaller countries. However, this situation is likely to change towards the end of the decade if the dynamic uptrend in German house prices continues as expected. [more]
Germany
Focus Germany: Strong economy supports Merkel’s re-election chances
After Q1’s sturdy 0.6% qoq GDP growth, soft indicators do not signal any moderation of the growth momentum. Employment in 2017 so far, has been expanding at similar clip as in 2016, making our 1% consumption forecast for 2017 quite conservative. Exports have rebounded in the winter half – in line with global trade. The growth momentum of global trade seems to have peaked; therefore, we remain cautious, predicting 3.6% German export growth in 2017 after 2.7% last year. In combination with lingering geo-political uncertainty this will weigh on investment spending, where a utilization rate of 2pp above its long-term average suggests a still limited necessity to invest. Following Q1 GDP growth of 0.6% we have revised our 2017 GDP forecast to 1.3% (1.1%). Latest confidence surveys, however, hint at further upside potential and increasing risks of over-heating for 2018. Political observers in Germany have recently been focusing on the SPD’s ups and downs in the polls and the CDU’s reverse showing while smaller parties are fighting for public attention. From the present point of view (polls) a Jamaica coalition is the sole arithmetically feasible alternative to a renewed grand coalition after the September election. (Further topics: German industrial output – forecast for 2017; Corporate funding in Q1 – lending)  [more]
Germany
Large or small? How to measure bank size
Policymakers, clients and bankers themselves wish to know what constitutes a large bank. What is the right indicator to look at if a supervisor is interested in systemic importance and risks to financial stability? What is the right indicator to look at if a company needs a bank that can provide large-scale financing and take on substantial hedging risks? Various measures are currently in use, each with strengths and shortcomings. Regulators and academics mostly look at total assets, an accounting figure. Others reach conclusions from Tier 1 capital or market cap, two regulation- and market-based indicators. This study discusses these and other measures in detail. It draws quantitative comparisons, including across countries and different financial systems, and proposes one indicator that is best suited to measure bank size. [more]
 
 
Bundestagswahl 2017
Brexit
Interactive maps
Copyright © 2017 Deutsche Bank AG, Frankfurt am Main