German Bank Commends Remarkable Quarterly Performance
Deutsche Bank surpassed expectations in terms of earnings during the summer, primarily due to the dismissal of a provision from the Postbank settlement and an improvement in day-to-day operations. The bank also benefited financially from robust investment banking. "During the recently concluded quarter, we made substantial strides in leaving behind legal heritage issues," remarked Deutsche Bank CEO Christian Sewing. "Simultaneously, we recorded a record profit for a third quarter in our operational business." As a result, pre-tax earnings increased from 1.7 billion euros to roughly 2.3 billion euros year-on-year. Although pre-tax earnings for the first nine months are still five percent lower than the previous year, shareholders can anticipate additional share buybacks.
Initially, Deutsche Bank set aside 1.3 billion euros for the litigation against former Postbank shareholders in April, but did not require the full amount for the subsequent settlement. Consequently, profit attributable to the bank's shareholders climbed to approximately 1.5 billion euros. However, the bank reported a loss in the second quarter.
Revenues increased by five percent for the quarter, surpassing expectations, to reach 7.5 billion euros. Investment banking contributed 2.5 billion euros, representing an eleven percent increase from the previous year. Equity capital markets and investment banking services experienced a disproportionately high growth of 24 percent, while revenues from fixed-income products and securities (FIC) rose by eleven percent to 2.1 billion euros. The corporate bank struggled with a weaker interest environment, resulting in a three percent revenue decline. Revenues in the private and commercial bank remained stable. Asset management with the subsidiary DWS saw a significant increase of eleven percent.
Thousands of job losses by year-end
Furthermore, Sewing announced that the bank had "submitted an application for additional share buybacks." Deutsche Bank executed a share buyback program to the tune of 675 million euros in July. In addition, the board continued its cost-cutting measures. The bank has successfully accomplished more than 90 percent of its goal of eliminating around 3,300 jobs by the year-end, with around 600 jobs being cut in the third quarter.
The risk provision acted as a burden on the quarterly results, experiencing a doubling to 494 million euros compared to the previous year. Sewing attributed this to "exceptional circumstances with a small number of borrowers" and late effects of Postbank integration backlogs. However, the increase is likely to be temporary due to the strong quality of the credit portfolio.
Deutsche Bank continues to strive for an annual revenue increase to around 30 billion euros. Targets for the following year have also been endorsed. "Thanks to the continued growth in earnings, our cost savings, our financial strength, and the expected decline in risk provisions, we remain on track to achieve our 2025 targets," stated CFO James von Moltke. Then, the return on equity is expected to surpass ten percent.
In relation to the quarterly financial report, Deutsche Bank revealed a significant improvement, with profits increasing from 1.7 billion euros to 2.3 billion euros due to the reduction in the Postbank settlement provision. Furthermore, the CEO announced plans for additional share buybacks, following the successful completion of 90% of the job-cutting goal, with around 600 jobs eliminated in the third quarter.
