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June 23rd, 2022 | 14:06 CEST

Deutsche Bank, Commerzbank, wallstreet:online, Allianz - High turnover, wild prices - what are brokers and financial stocks doing?

  • Investments
  • Inflation
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In addition to the high price increases and the permanently rising interest rates, the highest volatility has now broken out on the stock exchanges. Investors have to adjust to new scenarios almost every day, especially the timing of the news about the state of the international economy is causing more and more headaches for economists. That is because the increased prices of raw materials are now considered standard and put a strain on the purchase prices of intermediate products and the calculation of the Company's own supply list. In some cases, this leads to dramatic adjustments, as impressively demonstrated by the manufacturer price index with +33.6% in May. How are the financial and broker stocks doing in this swing market?

time to read: 5 minutes | Author: André Will-Laudien

Table of contents:

    Allianz - The mother of all financial stocks in the DAX

    The insurance giant Allianz surprised rather positively in its last quarterly reports and was able to perform very well in the insurance business despite all the catastrophes. The increase in the share price reached a solid 15% by mid-February, and it was not until the start of the crisis that the performance slumped into the red, currently at 13%. However, after the Annual General Meeting, a dividend of EUR 10.80 or a good 5%, was paid out as a consolation.

    At present, we need to broaden our perspective somewhat and take a closer look at the Group's assets. The money of policyholders in the capital provision area is spread across all possible asset classes in the extensive portfolio of Allianz and its subsidiaries. There are currently strong devaluations in both the bond and equity segments. Not to mention real estate, which is, of course, spread across the globe. Many real estate markets have turned on the high valuations in 2021 and are now in a difficult condition. This primarily affects new construction but also increasingly the market prices of existing properties. Initially, the upcoming revaluation of assets will first hit the intrinsic value of the assets, but later it will hit the yield of the underlying insurance contracts. Following the financial crisis, the guaranteed interest rate of all insurance providers, which used to be 4%, has already been successively lowered to 0.25%. The current year is likely to be disappointing in terms of earnings.

    The US asset management subsidiary AllianzGI US had already set aside EUR 5.6 billion this year due to internal controlling problems and now has to withdraw from the business with US funds for ten years. The current mixed situation indicates that 2022 will be a challenging year for the Munich-based company. Currently, at EUR 184, the valuation of the share is approaching its estimated book value of around EUR 179, but from a chart perspective, the traffic light is still red. Wait for the continuation of the current sell-off phase. Below EUR 170 is possible in the current environment. In our opinion, this would be the first fundamental incentive for a buy limit.

    wallstreet:online - Smartbroker grows, the AGM will be exciting

    On June 24, 2022, the annual general meeting of wallstreet:online AG is coming up. The Berliners have been able to point to strong growth for several years. They have done everything right with the docking of the neobroker "Smartbroker" because for brokers, the capital market turnover, which has risen sharply in recent years, has come at the right time. The number of active young investors appears important and has already exceeded the 50,000 mark in 2022. Around 12 million people in Germany are shareholders, and the trend is rising. In just a few minutes, one can get started with an online broker such as Smartbroker, and the long wait in telephone loops at banks will come to an end.

    A wide variety of digital trading platforms offer different services - Smartbroker customers rate this very positively in standard financial tests. The neobroker usually lands in the top positions and can regularly leave the top dogs Consors, Comdirect and Trade Republic behind. Most brokers operate as subsidiaries of financial groups, as with Consors, Comdirect and ING. Trade Republic is still entirely in the hands of private equity companies, but the valuation was recently set at a high EUR 5 billion. By comparison, the entire wallstreet:online Group is valued at only EUR 255 million on the stock market. It is a long-standing professional in the online business and, in addition to a large number of info channels and forums, also offers access to the markets with its Smartbroker. It now manages customer assets of just under EUR 9 billion, and the average custody account volume of around EUR 36,000 is significantly higher than that of well-known competitors. A powerful app is to be available in the course of the year.

    In the current year, the Berliners want to grow significantly. The Company expects sales of EUR 62 to 67 million, up from EUR 48.2 million in 2021. Adjusted EBITDA is expected to be EUR 10 to 12 million, compared with EUR 3.65 million most recently. As before, a major cost item is the marketing expenses for Smartbroker, which are expected to be around EUR 6 million. The analysts at GBC regularly evaluate the Company and confirm their buy recommendation for the shares of wallstreet:online AG. The price target drops slightly from EUR 38.60 to EUR 37.55 due to higher capital costs. On a twelve-month horizon, a 125% chance.

    Deutsche Bank and Commerzbank - No more negative interest rates for private customers

    The ECB is still waiting but is in the starting blocks, and the FED has now really let it rip with +0.75%. We are talking about the key interest rate, which in Europe is still very low at 0%, but in America is being raised rapidly due to high inflation. The US Federal Reserve is aiming for a key interest rate of more than 3% by the end of the year. However, for the upcoming meeting in July, there are no preliminary discussions yet, according to Patrick Harker, head of the FED's Philadelphia district.

    By raising key interest rates, central banks are attempting to restore monetary stability, but they are also making it more difficult to refinance the entire economy. Bank customers in Germany can hope for an end to negative interest rates on checking or call money accounts in the wake of the ECB's interest rate hike, which has already been announced for July. If the ECB raises the deposit facility rate by 0.25 percentage points in line with its latest announcement, Deutsche Bank and its subsidiary Postbank will pass this adjustment on to retail customers. However, it is still too early for it to be eliminated entirely. New customers at Commerzbank have already been paying a custody fee of 0.5% for holding liquidity in excess of EUR 50,000 since mid-2021, and it too will pass on adjustments by the ECB to its customers without delay.

    Significantly rising earnings for financial institutions due to higher interest rates are not yet expected in the eurozone overall. Still, the margin on new financing should nevertheless increase. It remains to be seen whether this will be the starting signal for a higher valuation of the entire financial sector. In the race for investor attention, Commerzbank has already gained 35% in the last 12 months, while Deutsche Bank's balance sheet still shows a loss of almost 12%. In a resurgence of the sector, the industry leader is the first choice.

    The financial sector must integrate the higher capital market interest rates into its business models. Since 2016, they had to live with an absolute low-interest rate environment, but now there are first signs of life for the interest rate markets again. The higher activity on the capital markets primarily benefits brokerage houses and service providers such as wallstreet:online, because they have active customers who regularly adjust their portfolios.

    Conflict of interest

    Pursuant to §85 of the German Securities Trading Act (WpHG), we point out that Apaton Finance GmbH as well as partners, authors or employees of Apaton Finance GmbH (hereinafter referred to as "Relevant Persons") currently hold or hold shares or other financial instruments of the aforementioned companies and speculate on their price developments. In this respect, they intend to sell or acquire shares or other financial instruments of the companies (hereinafter each referred to as a "Transaction"). Transactions may thereby influence the respective price of the shares or other financial instruments of the Company.
    In this respect, there is a concrete conflict of interest in the reporting on the companies.

    In addition, Apaton Finance GmbH is active in the context of the preparation and publication of the reporting in paid contractual relationships.
    For this reason, there is also a concrete conflict of interest.
    The above information on existing conflicts of interest applies to all types and forms of publication used by Apaton Finance GmbH for publications on companies.

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    Der Autor

    André Will-Laudien

    Born in Munich, he first studied economics and graduated in business administration at the Ludwig-Maximilians-University in 1995. As he was involved with the stock market at a very early stage, he now has more than 30 years of experience in the capital markets.

    About the author

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