The money house can report the ninth quarterly profit in a row.
(Photo: dpa)
Frankfurt Despite the energy crisis and the threat of recession, Deutsche Bank made surprisingly good earnings in the third quarter. The net profit of the institute to 1.2 billion euros and was four times as high as in the previous year.
On average, analysts had only expected a net profit of 835 million euros. Net income after interest payments on certain bonds was 1.1 billion euros.
The institute’s gross income increased by 15 percent to 6.9 billion euros. All the important divisions of the institute contributed to this, but above all the corporate customer business.
“We have significantly improved Deutsche Bank’s earning power and are right on track to achieve our goals for 2022,” commented CEO Christian Sewing on the result. The bank had sI set myself the goal of a return on tangible equity of eight percent and income of 26 to 27 billion euros. In the first nine months of 2022, the institute was also successful with 8.1 percent.
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In its quarterly report, however, the institute adopted a more cautious tone when looking to the future. Due to the “continued good business development”, the bank sees the possibility of exceeding its earnings forecast “for the full year 2022”. achieve financial goals.
This seems to be becoming increasingly difficult: the current environment is “increasingly characterized by challenges, and cost pressure has increased,” writes the institute. In the second quarter, the institute reaffirmed its earnings and return targets without any major explanations.
Corporate and retail clients balance investment banking
However, there is still little to be seen of these growing challenges in the Institute’s figures. Pre-tax profits in investment banking and wealth management shrank. However, significantly higher profits in the corporate and private customer business were able to more than compensate for this dip.
risk provision
350
Million Euros
Deutsche Bank set aside for bad loans in the third quarter – three times as much as before.
Risk provisions for bad loans tripled to EUR 350 million. However, the bank stuck to its forecast that risk provisions for the year as a whole will amount to no more than 0.25 percentage points of the bank’s loan book, which continues to grow.
On the one hand, the bank benefited from interest rate hikes by the central banks and, on the other hand, from the continued growth in the lending business. Both ensured a significant increase in net interest income, which was a third higher than in the previous year and nine percent higher than the result in the second quarter.
The weakness in investment banking was triggered by a sharp decline in underwriting and advisory businesses. Because of the turbulence on the financial markets, it was practically impossible to earn anything with the support of stock and bond issues, and significantly less than before with the advice on IPOs and other capital market issues. According to insiders, Deutsche Bank recently fired several dozen investment bankers in London and New York in these areas.
On the other hand, the institute’s bond and foreign exchange trading proved to be a stable source of income, with income well above the previous year’s figure. Compared to the second quarter, however, the bank also received less in this segment.
The costs of the institute fell by eight percent to five billion euros. However, the expenses adjusted for conversion costs and bank levies increased by four percent to 4.8 billion euros compared to the previous year. According to the bank, this was primarily due to exchange rate effects. The cost/income ratio was 72 percent, which means the bank spent 72 cents to earn one euro.
More: Investor Davide Serra: “Germany should build a statue of Christian Sewing”