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Deutsche Bank AG WACC %

:2.83% (As of Today)
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As of today (2022-05-22), Deutsche Bank AG's weighted average cost of capital is 2.83%. Deutsche Bank AG's ROIC % is 0.00% (calculated using TTM income statement data). Deutsche Bank AG earns returns that do not match up to its cost of capital. It will destroy value as it grows.


Deutsche Bank AG WACC % Historical Data

The historical data trend for Deutsche Bank AG's WACC % can be seen below:

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.

* Premium members only.

Deutsche Bank AG Annual Data
Trend Dec12 Dec13 Dec14 Dec15 Dec16 Dec17 Dec18 Dec19 Dec20 Dec21
WACC %
Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 4.70 5.28 6.97 4.36 3.84

Deutsche Bank AG Quarterly Data
Jun17 Sep17 Dec17 Mar18 Jun18 Sep18 Dec18 Mar19 Jun19 Sep19 Dec19 Mar20 Jun20 Sep20 Dec20 Mar21 Jun21 Sep21 Dec21 Mar22
WACC % Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 4.04 3.17 2.85 3.84 3.99

Competitive Comparison

For the Banks - Regional subindustry, Deutsche Bank AG's WACC %, along with its competitors' market caps and WACC % data, can be viewed below:

* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.

   

Deutsche Bank AG WACC % Distribution

For the Banks industry and Financial Services sector, Deutsche Bank AG's WACC % distribution charts can be found below:

* The bar in red indicates where Deutsche Bank AG's WACC % falls into.



Deutsche Bank AG WACC % Calculation

The weighted average cost of capital (WACC) is the rate that a company is expected to pay on average to all its security holders to finance its assets. The WACC is commonly referred to as the firm's cost of capital. Generally speaking, a company's assets are financed by debt and equity. WACC is the average of the costs of these sources of financing, each of which is weighted by its respective use in the given situation. By taking a weighted average, we can see how much interest the company has to pay for every dollar it finances.

WACC=E/(E + D)*Cost of Equity+D/(E + D)*Cost of Debt*(1 - Tax Rate)

1. Weights:
Generally speaking, a company's assets are financed by debt and equity. We need to calculate the weight of equity and the weight of debt.
The market value of equity (E) is also called "Market Cap". As of today, Deutsche Bank AG's market capitalization (E) is $20467.516 Mil.
The market value of debt is typically difficult to calculate, therefore, GuruFocus uses book value of debt (D) to do the calculation. It is simplified by adding the latest two-year average Short-Term Debt & Capital Lease Obligation and Long-Term Debt & Capital Lease Obligation together. As of Mar. 2022, Deutsche Bank AG's latest two-year average Short-Term Debt & Capital Lease Obligation was $4439.6799868036 Mil and its latest two-year average Long-Term Debt & Capital Lease Obligation was $181165.83158068 Mil. The total Book Value of Debt (D) is $185605.51156749 Mil.
a) weight of equity = E / (E + D) = 20467.516 / (20467.516 + 185605.51156749) = 0.0993
b) weight of debt = D / (E + D) = 185605.51156749 / (20467.516 + 185605.51156749) = 0.9007

2. Cost of Equity:
GuruFocus uses Capital Asset Pricing Model (CAPM) to calculate the required rate of return. The formula is:
Cost of Equity = Risk-Free Rate of Return + Beta of Asset * (Expected Return of the Market - Risk-Free Rate of Return)
a) GuruFocus uses 10-Year Treasury Constant Maturity Rate as the risk-free rate. It is updated daily. The current risk-free rate is 0.75000000%. Please go to Economic Indicators page for more information. Please note that we use the 10-Year Treasury Constant Maturity Rate of the country/region where the company is headquartered. If the data for that country/region is not available, then we will use the 10-Year Treasury Constant Maturity Rate of the United States as default.
b) Beta is the sensitivity of the expected excess asset returns to the expected excess market returns. Deutsche Bank AG's beta is 1.23.
c) (Expected Return of the Market - Risk-Free Rate of Return) is also called market premium. GuruFocus requires market premium to be 6%.
Cost of Equity = 0.75000000% + 1.23 * 6% = 8.13%

3. Cost of Debt:
GuruFocus uses last fiscal year end Interest Expense divided by the latest two-year average debt to get the simplified cost of debt.
As of Dec. 2021, Deutsche Bank AG's interest expense (positive number) was $6152.5423728814 Mil. Its total Book Value of Debt (D) is $185605.51156749 Mil.
Cost of Debt = 6152.5423728814 / 185605.51156749 = 3.3148%.

4. Multiply by one minus Average Tax Rate:
GuruFocus uses the latest two-year average tax rate to do the calculation. The calculated average tax rate is limited to between 0% and 100%. If the calculated average tax rate is higher than 100%, it is set to 100%. If the calculated average tax rate is less than 0%, it is set to 0%.
The latest Two-year Average Tax Rate is 32.42%.

Deutsche Bank AG's Weighted Average Cost Of Capital (WACC) for Today is calculated as:

WACC=E / (E + D)*Cost of Equity+D / (E + D)*Cost of Debt*(1 - Tax Rate)
=0.0993*8.13%+0.9007*3.3148%*(1 - 32.42%)
=2.83%

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.


Deutsche Bank AG  (NYSE:DB) WACC % Explanation

Because it costs money to raise capital. A firm that generates higher ROIC % than it costs the company to raise the capital needed for that investment is earning excess returns. A firm that expects to continue generating positive excess returns on new investments in the future will see its value increase as growth increases, whereas a firm that earns returns that do not match up to its cost of capital will destroy value as it grows.

As of today, Deutsche Bank AG's weighted average cost of capital is 2.83%. Deutsche Bank AG's ROIC % is 0.00% (calculated using TTM income statement data). Deutsche Bank AG earns returns that do not match up to its cost of capital. It will destroy value as it grows.


Be Aware

1. GuruFocus uses book value of debt (D) to do the calculation. It is simplified by adding latest two-year average Short-Term Debt & Capital Lease Obligation and Long-Term Debt & Capital Lease Obligation together.

2. The WACC formula discussed above does not include Preferred Stock. Please adjust if preferred stock is considered.

3. (Expected Return of the Market - Risk-Free Rate of Return) is also called market premium. GuruFocus requires market premium to be 6%.

4. GuruFocus uses last fiscal year end Interest Expense divided by the latest two-year average debt to get the simplified cost of debt.


Related Terms

Deutsche Bank AG Business Description

Deutsche Bank AG logo
Industry
Financial Services » Banks NAICS : 522110 SIC : 0
Address
Taunusanlage 12, Frankfurt am Main, HE, DEU, 60325
In July 2019, Deutsche Bank announced another restructuring plan hoping to revitalize revenue, reduce costs, and return to profitability. The largest moving pieces of the new plan is the full exit of global equity sales & trading, the scaling back of its fixed income business, as well as 18,000 FTE reductions until 2022. The remaining core business segments include private banking, corporate banking, asset management, and investment banking.

Deutsche Bank AG Headlines

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