Deutsche Bank Q3 Core Bank Profit Edges Down, Says Confident Of FY22 View; Stock Down

German banking major Deutsche Bank AG reported Wednesday higher profit in its third quarter with sharp drop in provision for credit losses and higher revenues. Meanwhile, Core Bank profit before tax was slightly down amid flat Corporate Bank revenues and weakness in Investment Bank and Private Bank segments, despite a growth in Asset Management revenues. The shares were losing around 5 percent in German trading, and around 4 percent in pre-market activity on the NYSE.

Looking ahead, Christian Sewing, Chief Executive Officer, said, “We are focused on driving efficiencies while maintaining strong controls, and we are confident of achieving Deutsche Bank’s 2022 targets.”

For the third quarter, net income attributable to shareholders rose 7 percent to 194 million euros from last year’s 182 million euros.

Profit before tax grew 15 percent from last year to 554 million euros after recognising a further 583 million euros in transformation charges. Adjusted profit before tax was 1.2 billion euros, up 39 percent.

In the Core Bank, which excludes the Capital Release Unit, profit before tax was 898 million euros, slightly lower than last year’s 909 million euros. The Capital Release Unit reported a loss before tax of 344 million euros, a loss reduction of 19 percent compared to last year.

In the quarter, provision for credit losses declined 57 percent year-on-year to 117 million euros, reflecting a supportive credit environment, high quality loan book and strict risk discipline.

Group net revenues were 6.04 billion euros in the third quarter, up 2 percent from the prior year’s 5.94 billion euros, despite continued normalising markets, low interest rates and foregone revenues from the BGH ruling.

Core Bank net revenues grew 2 percent to 6.1 billion euros. In Deutsche Bank’s core businesses, Corporate Bank net revenues were stable at 1.3 billion euros, while Investment Bank net revenues fell 6 percent with 12 percent drop in Fixed Income & Currencies. Private Bank net revenues also was down 2 percent.

However, Asset Management recorded 17 percent rise in net revenues, the highest for seven quarters, driven primarily by a rise in management fees to the highest level for over six years.

The company noted that 90 percent of the total transformation-related effects anticipated through year-end 2022 are now fully recognised.

Deutsche Bank reaffirmed its intention to recognise most of the remaining transformation-related effects by year-end 2021.

In Germany, Deutsche Bank shares were trading at 11.34 euros, down 4.71 percent.

In pre-market activity on the NYSE, the shares were trading at $13.28, down 3.8 percent.

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