By Steve Goldstein
Deutsche Bank shares rallied Thursday after the German lender reported a surprisingly strong fourth-quarter profit, driven by asset management and corporate banking units.
Deutsche Bank /zigman2/quotes/207242873/delayed XE:DBK +6.05% share rose 5% as earnings rose to €315 million from €189 million, which will well ahead of the €26 million that analysts had forecast. Revenue also topped expectations, and Deutsche Bank said it would resume payouts with a €300 million stock buyback and a 20 eurocent dividend.
The banking sector more broadly benefited from rising bond yields in the wake of the hawkish press conference from Fed Chair Jerome Powell, with HSBC /zigman2/quotes/203901799/delayed UK:HSBA +2.27% and Banco Santander /zigman2/quotes/205677933/delayed ES:SAN +4.67% also gaining ground.
The Stoxx Europe 600 /zigman2/quotes/210599654/delayed XX:SXXP +1.33% rose just 0.1% to 467.53, as banking stock strength was countered by weakness in the technology sector as bond yields rose.
SAP /zigman2/quotes/202053813/delayed XE:SAP +0.80% struggled, as the German software company had already preannounced fourth-quarter results, and reiterated 2022 guidance.
Of the major regional indexes, the German DAX /zigman2/quotes/210597999/delayed DX:DAX +1.75% declined 0.2%, the French CAC 40 /zigman2/quotes/210597958/delayed FR:PX1 +1.42% declined 0.1% and the U.K. FTSE 100 /zigman2/quotes/210598409/delayed UK:UKX +1.79% increased 0.7%.
Orpea /zigman2/quotes/204431094/delayed FR:ORP -2.28% shares dropped 9%, sliding for a fourth straight session, as investors analyzed a book alleging misconduct at the nursing home operator.
Louise Boyer Grabeldinger, an analyst at Stifel, said some of the accusations could lead to legal action and fines, and the brand image impact may hurt occupancy rates. Longer term, there could be a major group reorganization and higher structural costs. Depending on the assumed multiple, the market is forecasting a drop in earnings this year between 40% and 60%.