Rating Rationale
December 18, 2024 | Mumbai
Deutsche Bank A. G.
Rating reaffirmed at 'CRISIL A1+'
 
Rating Action
Rs.5000 Crore Certificate of DepositsCRISIL A1+ (Reaffirmed)
Note: None of the Directors on CRISIL Ratings Limited’s Board are members of rating committee and thus do not participate in discussion or assignment of any ratings. The Board of Directors also does not discuss any ratings at its meetings.
1 crore = 10 million
Refer to Annexure for Details of Instruments & Bank Facilities

Detailed Rationale

CRISIL Ratings has reaffirmed its 'CRISIL A1+' rating on the certificates of deposit programme of Deutsche Bank A. G. (India Operations).

 

The rating continues to be based on the issuer credit rating of ‘A/Stable/A-1’ by S&P Global Ratings (S&P Global) on Deutsche Bank AG (Deutsche Bank). The rating on Deutsche Bank AG (India) also reflects its strong capital position, evidenced by networth of Rs 25,807 crore and capital adequacy ratio (CAR) of 15.30% as on September 30, 2024, and its comfortable asset quality. These rating strengths are partially offset by the modest scale of lending operations and moderate earnings profile.

Analytical Approach

For arriving at the ratings, CRISIL Ratings has mapped the rating on Deutsche Bank (India) to S&P Global’s rating on Deutsche Bank AG., translated to the CRISIL Ratings’ scale

Key Rating Drivers & Detailed Description

Strengths:

  • Strategic importance to, and strong support from Deutsche Bank A.G.: The rating on Deutsche Bank AG (India) is primarily based on the issuer credit rating of ‘A/Stable/A-1, issued by S&P Global Ratings on Deutsche Bank AG. India remains of high importance to the global operations of Deutsche Bank AG. Over the years, Deutsche Bank (India) has been focusing on deepening and expanding its coverage of Indian corporates; a large part of the customer base of Indian operations also includes global clients of Deutsche Bank AG whose affiliates/subsidiaries are operating in India. Over the years, Deutsche Bank AG has regularly infused equity aggregating to around Rs 3,946 crore during 2018-2021 in the Indian operations. In 2024, Deutsche Bank AG has further infused capital in its India branch operations of Rs 5,113 crore to fund its growth plans in the country. Deutsche Bank (India) is expected to remain strategically important and receive strong operational and managerial support from its parent, Deutsche Bank AG.

 

  • Strong capitalisation: Deutsche Bank (India) has strong capitalisation, backed by continued support from Deutsche Bank. As on September 30, 2024, the networth for Deutsche Bank (India) stood at Rs 25,807 crore (Rs 23,430 as on March 31, 2024) with overall CAR at 15.30% (16.26% as on March 31, 2024). With recent capital infusion of Rs 5,113 crore by Deutsche Bank AG in India branch operations, the capitalization of the Deutsche Bank AG (India) has further improved.

 

  • Comfortable asset quality: The asset quality metrics for the bank have remained comfortable with GNPA and NNPA for the bank at 1.2% and 0.3% respectively, as on September 30, 2024, as against 1.3% and 0.3% respectively, as on March 31, 2024, and 3.0% and 0.9% respectively as on March 31, 2023. Even in terms of restructuring, the bank has done very limited restructuring in its portfolio. CRISIL Ratings expects asset quality metrics to remain comfortable over the medium term owing to global risk management standards and dedicated credit team in India.

 

Weakness:

  • Strong presence in wholesale banking activities, yet modest scale of lending operations and moderate earnings profile: Gross advances stood at Rs 60,983 crore as on September 30, 2024 (Rs 60,812 crore as on March 31, 2024). However, the bank has maintained strong focus on wholesale banking activities, such as corporate finance, investment banking, treasury and derivatives operations, wealth management business and transaction banking, and is a leading player in many of these segments. Even in terms of the deposit profile, the bank had a deposit base of around Rs 88,454 crore as on September 30, 2024 (Rs 76,993 crore as on March 31, 2024). As on September 30, 2024, bank’s CASA ratio stood at ~52% as compared to ~54% as on March 31, 2024.

 

Further, the earnings profile of the bank has improved, though remains modest with RoA of around 1.9% (annualised) in the first half of fiscal 2025 (1.4% for fiscal 2024). This is supported by improvement in NIM (based on total income) to around 5.4% in first half of fiscal 2025 from 5.2% in fiscal 2024, while operating expense and credit costs stood largely stable at 2.0% and 0.1% respectively, as on September 30, 2024 (2.3% and 0.3% respectively, as on March 31, 2024).

Liquidity: Strong

Liquidity is comfortable, with Liquidity Coverage Ratio at 252% as on March 31, 2024. The bank benefits from access to systemic sources of funds, such as the liquidity adjustment facility from Reserve Bank of India, access to the call money market, access to repo market and borrowings from the parent also support Deutsche Bank (India).

Rating sensitivity factors

Downward Factors:

  • Downward revision in the S&P Global rating of Deutsche Bank A.G. by 6 notches or higher
  • Significant diminution in the stake held by, or the support expected from, Deutsche Bank A.G.

About the Company

Deutsche Bank, founded in 1870 in Berlin, is one of the world's leading providers of international financial services. The bank focuses on three main businesses: corporate and investment banking, private clients, and asset management and corporate investments. It had 1,443 branches across the world, and total asset base of over EUR 1358 billion as on September 30, 2023. Deutsche Bank commenced operations in India in 1980. Its focus has been on investment banking, corporate and transaction banking, treasury and derivatives operations, and private wealth management. The bank launched retail-banking services near the end of 2005. For the first half of fiscal 2024, Deutsche Bank (India) had a profit after tax (PAT) of Rs 856 crore on a total income (net of interest expense) of Rs 3,088 crore, against Rs 1,467 crore and Rs 5577 crore, respectively, reported for the fiscal 2023. It had a total asset base of Rs 1,33,588 crore and net worth of Rs 23,168 crore as on September 30, 2023.

Key Financial Indicators

As on /for the period ended

 

Sep-24

Mar-24

Mar-23

Mar-22

Total Assets

Rs. Crore

1,47,215

1,45,235

1,31,841

1,47,955

Total income (net of interest expense)

Rs. Crore

3,973

7,236

5,577

6,002

Profit after tax

Rs. Crore

1,410

1,977

1,467

1,474

Gross NPA

%

1.2

1.3

3.0

4.6

Overall capital adequacy ratio 

%

15.30

16.26

15.41

16.18

Return on assets

%

1.9*

1.4

1.0

1.1

*Annualized

Any other information: Not Applicable

Note on complexity levels of the rated instrument:
CRISIL Ratings` complexity levels are assigned to various types of financial instruments and are included (where applicable) in the 'Annexure - Details of Instrument' in this Rating Rationale.

CRISIL Ratings will disclose complexity level for all securities - including those that are yet to be placed - based on available information. The complexity level for instruments may be updated, where required, in the rating rationale published subsequent to the issuance of the instrument when details on such features are available.

For more details on the CRISIL Ratings` complexity levels please visit www.crisilratings.com. Users may also call the Customer Service Helpdesk with queries on specific instruments.

Annexure - Details of Instrument(s)

ISIN Name Of Instrument Date Of Allotment Coupon Rate (%) Maturity Date Issue Size (Rs.Crore) Complexity Levels Rating Outstanding with Outlook
NA Certificate of Deposits NA NA 7-365 days 1000.00 Simple CRISIL A1+
NA Certificate of Deposits NA NA 7-365 days 4000.00 Simple CRISIL A1+
Annexure - Rating History for last 3 Years
  Current 2024 (History) 2023  2022  2021  Start of 2021
Instrument Type Outstanding Amount Rating Date Rating Date Rating Date Rating Date Rating Rating
Certificate of Deposits ST 5000.0 CRISIL A1+   -- 19-12-23 CRISIL A1+ 23-03-22 CRISIL A1+ 18-11-21 CRISIL A1+ CRISIL A1+
      --   -- 23-06-23 CRISIL A1+   -- 08-03-21 CRISIL A1+ --
      --   -- 25-05-23 CRISIL A1+   --   -- --
      --   -- 22-03-23 CRISIL A1+   --   -- --
All amounts are in Rs.Cr.
Criteria Details
Links to related criteria
Rating Criteria for Banks and Financial Institutions
Criteria for Notching up Stand Alone Ratings of Companies based on Parent Support

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