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April 15th, 2022 | 12:11 CEST

Deutsche Bank, wallstreet:online, Commerzbank - Financial stocks about to jump

  • Investments
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Rising and longer-lasting inflation is worrying market participants. The central banks, which held on to their ultra-loose monetary policy for too long in favor of possible economic growth, must act now. While the ECB is still in a deep sleep, the US Federal Reserve started with the first interest rate hikes, and more will follow. The beneficiaries of the interest rate turnaround are financial institutions, which also performed after the announcements. However, the war in Ukraine knocked them back. A possible second chance to invest in attractive financial service providers.

time to read: 3 minutes | Author: Stefan Feulner

Table of contents:

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    Full interview


    Inflation is considerably too high

    The ECB's inflation target is 2%. For March, the Federal Statistical Office has now put it at 7.3%. Inflation was influenced by supply bottlenecks and significant price increases at upstream economic stages. Energy products, in particular, and other goods and services, became more expensive due to the current crises. "In addition to the Corona pandemic, Russia's war against Ukraine is now having a significant impact on inflation in Germany, particularly for heating oil, fuels and natural gas, as well as individual foodstuffs," says Dr. Georg Thiel, President of the Federal Statistical Office. Not only economists are now calling on the ECB to raise interest rates quickly and significantly.

    In contrast, the key interest rate remains at 0%. Only the volume of the APP bond-buying program will be capped again at EUR 20 billion at the end of June after a temporary increase. ECB President Christine Lagarde said that an interest rate hike could come "some time" after the expiration of bond purchases in the third quarter. The US is at least a step ahead here and has already announced further steps after the first interest rate hike. Shares of banks and financial service providers such as Deutsche Bank and Commerzbank were able to profit significantly since the beginning of the year, when the change in strategy became clear, and marked new 4-year highs until mid-February. However, the positive run was then abruptly halted by the Russian invasion.

    Investors press "sell"

    Fears of high credit exposure from Russia and Ukraine destroyed the positive chart picture. Deutsche Bank fell by around 44% from EUR 14.63 to EUR 8.16 within days, while Commerzbank lost roughly the same amount in market capitalization. The exaggerated correction was partially made up, but at the beginning of this week, the next bad news came at the same time for both financial institutions.

    Capital Group, one of the major shareholders along with BlackRock, is believed to have placed 116 million Deutsche Bank shares through the US investment bank Morgan Stanley, at a price of EUR 10.08, which is almost 8% below the current share price at the time. These figures were reported by the news channel Bloomberg. At the same time, 72.5 million Commerzbank shares changed hands at EUR 6.65, almost 7% below the price. The total proceeds amounted to EUR 1.75 billion. Due to the substantial price losses, both banks offer attractive long-term entry opportunities. However, the shares could come under renewed pressure in the short term due to the uncertain geopolitical situation. The respective annual lows could be considered as the target.

    Bullish indicators

    The Berlin wallstreet:online Group could already have a sell-off behind it. After the stock had already started its correction last year in the course of the weakening general market, Russia's invasion of Ukraine prompted what was probably the final sell-off with a low of EUR 14.30, around 50% off from the all-time high. Since then, the share price has gradually recovered, and a significant buy signal would be generated if the resistance at EUR 18.20 were exceeded.

    In contrast to the share price performance, wallstreet:online AG, which owns 100% of the operating company of the successful Smartbroker, is running like clockwork. Thus, the operating company w:o Capital is the largest neobroker operating company in Germany with more than EUR 8.8 billion in "assets under custody". In addition, the Group achieved a new revenue record of EUR 51.4 million, up 82% YOY. Preliminary adjusted EBITDA before customer acquisition costs for Smartbroker grew by 45% to EUR 17.5 million. The Group's net cash position at year-end 2021 was approximately EUR 20 million.

    Keeping on the gas pedal

    The current fiscal year 2022 will be crucial for the Capitals. Thus, the focus is on the implementation of its "Smartbroker Cloud Platform" and the acceleration of the new "Smartbroker 2.0". On the figures side, wallstreet:online expects revenues of between EUR 62 million and EUR 67 million, which would mean an increase of around 25% YOY. Adjusted EBITDA after customer acquisition costs is expected to be between EUR 10 million and EUR 12 million. The analyst firm GBC AG sees an acceleration of the growth rate and a significant increase in profitability due to the planned optimization of the brokerage business model with the help of its Smartbroker Cloud Platform. The study, published at the end of March, was rated "buy," and the price target was raised to EUR 38.60.

    Banks and financial service providers should benefit in the long term from the change in monetary policy strategy. Both Commerzbank and Deutsche Bank are still in the midst of their, so far successful, restructuring process. wallstreet:online has enormous potential due to "Smartbroker 2.0."

    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") may hold shares or other financial instruments of the aforementioned companies in the future or may bet on rising or falling prices and thus a conflict of interest may arise in the future. The Relevant Persons reserve the right to buy or sell shares or other financial instruments of the Company at any time (hereinafter each a "Transaction"). Transactions may, under certain circumstances, influence the respective price of the shares or other financial instruments of the Company.

    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 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

    Stefan Feulner

    The native Franconian has more than 20 years of stock exchange experience and a broadly diversified network.
    He is passionate about analyzing a wide variety of business models and investigating new trends.

    About the author

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