- Germany’s largest lender had posted a 143-million-euro loss in the second quarter, at the time announcing it would not embark on a second share buyback program this year and factoring in a provision for its long-running lawsuit over its acquisition of its Postbank division.
- Some 60% of plaintiffs in the litigation, pillared on allegations that Deutsche Bank underpaid for its purchase, have since settled with the German bank in August.
- Deutsche Bank in February embarked on a sweeping cost-saving push set to lighten the lender’s headcount by 3,500 roles by 2025 — a figure that includes 800 cuts announced in the previous year.
Deutsche Bank shares dipped on Wednesday, as the lender’s return to profit in the third quarter failed to impress.
Net profit attributable to shareholders came in at 1.461 billion euros ($1.58 billion) over the third quarter, compared with the 1.047 billion euros anticipated in a LSEG poll of analysts.
Revenue hit 7.5 billion euros, against a LSEG analyst forecast of 7.338 billion euros.
Other third-quarter highlights included:
- Profit before tax of 2.26 billion euros, up 31% year-on-year.
- Provision for credit losses of 494 million euros, up from 245 million euros in same quarter of last year.
- CET 1 capital ratio, a measure of bank solvency, was 13.8%, up from 13.5% in the second quarter.
- Return on tangible equity reached 10.2% (or 7.6% if adjusted for the lender’s litigation provisions), up from 7.3% year-over-year.
In a note, RBC analysts said that the increase in provisions for credit losses was “disappointing although not totally unexpected,” describing revenues in the bank’s core divisions as “slightly soft,” with the performance in investment banking standing out as “stronger.”
“Given the relatively strong run into numbers, the shares might see some weakness on the back of the Q3 update,” RBC said.
Deutsche Bank shares were down 3.3% by 08:57 a.m. London time.
Germany’s largest lender had posted a 143-million-euro loss in the second quarter, at the time announcing it would not embark on a second share buyback program this year and factoring in a provision for its long-running lawsuit over its acquisition of its Postbank division. Some 60% of plaintiffs in the litigation, pillared on allegations that Deutsche Bank underpaid for its purchase, have since settled with the German bank in August.
“We’re looking to turn the page really this year on all of the legacy items that we’ve had over time, because we don’t want to be surprising investors with the type of provision that we had to build in the second quarter,” Deutsche Bank Chief Financial Officer James von Moltke told CNBC’s Carolin Roth on Wednesday.
Content retrieved from: https://www.cnbc.com/2024/10/23/deutsche-bank-dbk-q3-earnings.html.
