With banking behemoths UBS and Deutsche Bank announcing strong quarterly profit growth Tuesday, strategists face off on which bank is likely to trump its rivals over the long term in the volatile banking sector.
Deutsche Bank announced a 2.8 billion euros capital hike as well as preliminary first-quarter earnings late on Monday showing an increase in net profits to1.65 billion euros. The capital hike has come as a surprise to many analysts after the bank consistently insisted it had plenty of capital. The bank's share price was up over 6 percent in early trading on Tuesday.
Credit Suisse lifted its rating on the stock to "neutral" from "underperform" and raised its price target to 35 euros from 32, arguing that the strengthened capital position should put the group in a better position to deal with regulatory challenges, a weak economy and any litigation.
The bank, Europe's second-largest by assets, underwent a high-profile reshuffle of its chief executives last year with Anshu Jain and Jurgen Fitschen taking the helm, but the new management's strategic vision received a muted reaction by investors.
Simon Maughan, financials sector strategist at Olivetree Securities told CNBC Deutsche Bank "is one of those stocks people love to hate" but insisted the Bank had a strong core which would hold it in good stead in the longer term.
"There are three strong positives and revenues overall are up 2 percent driven by asset and wealth management business which shows that Deutsche has other strings to its bow. Costs are down 5 percent and thirdly they've solved the capital problem. Deutsche has an efficiency ratio of 71 percent and UBS on an underlying basis has 76. Deutsche is doing better," Maughan said.