Deutsche Bank's Latest Balance Sheet Just Made A Laughing-Stock Of The Bears

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Deutsche Bank reported its second quarter earnings today and markets seem to like the latest disclosure thus far, given that Deutsche Bank shares are rising in Germany.

The key take-aways are that 1) the company reported $1.2 billion euros vs. $1.1 billion euros in the year-ago quarter, 2) the company’s tier 1 ratio rose to 11.3% from 11.2% year-over-year, indicating a stronger balance sheet position which continues to be in excess of the company’s 10% target. (Tier 1 ratios are basically a bank’s equity capital as a percentage of its ‘risk-weighted assets’, RWA, whereby RWA is the sum of all loan assets, each weighted according to each loan’s riskiness)

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The third key take-away is that they provided detail about the bank’s exposure to sovereign debt:

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Return on equity (ROE) lower, but this is a function of the firm's strengthening balance sheet

Revenue still decent

Income before taxes higher year over year, first half of 2010 looking good

Corporate banking & securities (CB&S), global transaction banking (GTB), and private & business clients (PBC) driving earnings

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