Business Analysis Of Deutsche Bank - Research Paper Example

On the other hand, Wall Street's S&P 500 index rose only 3%. (Deutsche Bank Group Annual Report, 2005). The value of the bank therefore rose by 10 billion to 45.42 billion. (Deutsche Bank Group Annual Report, 2005) Increase firm value and increase dividends is reflecting good performance during the year 2004. The increase in stock price might also be as a result of the announcement of the higher dividends, thus signalling some positive information about the profitability of the company to potential investors who increase their bids for the stock thereby causing the rise in its price.

Basic Earnings per share, the portion of the bank's profit allocated to each outstanding shareholder and which serves as an indicator of profitability also witnessed an increase from 5.02 in 2004 to 7.62 in 2005. This represents a percentage increase of The diluted earnings per share represents the earnings per share, including common stock, preference shares, unexercised stock options, unexercised warrants, and some convertible bonds. The figures for Deutsche Bank during the periods 2004 and 2005 were 4.53 and 6.95 respectively.

This translates to a percentage increase from 2004 to 2005 of: The average equity shares outstanding in 2004 and 2005 were 493 and 463 respectively. This reflects a decrease in the number of shares by 493million-463million = 30million. This decrease might be attributed to redemption of shares through share repurchases. For example the company completed its share buy bank program in 2005. (Deutsche Bank Annual Report, 2005).The average shares outstanding for diluted shares, that is, taking into account preference shares and the number of shares that will be outstanding after all stock options, warrants, and convertible bonds would have been exercised in addition to ordinary shares amounted to 532million and 509million respectively.

This also represents a drop in the number by 532million - 509 million = 23million. This drop might also be attributed to a redemption of some of the convertible issues such as bonds and warrants and as a result of out-of-the-money stock options at the maturity date. Deutsche Bank had a post-tax return on average shareholders equity of 9.1% and 12.5% in 2004 and 2005 respectively. This represents an increase by 3.4 which represents a percentage increase of:More revenue was generated to for shareholders, that is after paying off preference shareholders, bond holders and warrant holders in 2005 than in 2004.

the company had a post-tax return on active equity of 14.8% and 21.7% for 2004 and 2005 respectively this also represents a very high percentage increase and also goes a long way to conclude that more shareholder value was created in 2005 as opposed to 2006 as can be