Deutsche Bank ended a 15-quarter winning streak on Wednesday with a smaller-than-expected loss as the corporate put aside a provision for an ongoing legal dispute over its Postbank division.
Although analysts described the outcomes as solid overall, shares fell 7.7 percent in early trading. The European banking sector as a complete recorded a lack of 0.87 percent.
The net loss attributable to shareholders was 143 million euros ($155.1 million), in comparison with a LSEG survey of analysts that had forecast a lack of 145 million euros.
Germany’s largest bank had previously indicated that it might have to simply accept a loss within the quarter resulting from the availability for Postbank. As it confirmed on Wednesday, the availability amounts to 1.3 billion euros. The long-running lawsuit by investors claims that Deutsche Bank underpaid when it took over the retail banking giant in 2010.
The bank reported a 2% increase in net sales to EUR 7.6 billion within the second quarter, while efficiency savings reached EUR 1.5 billion.
Deutsche Bank share price.
Sales figures varied across the person business areas. In investment banking, a recently strong area, sales rose by 10% year-on-year to EUR 2.6 billion – but in fixed-interest and foreign exchange business they fell by 3% to EUR 2.1 billion. In the company customer business, sales remained almost unchanged at EUR 1.9 billion.
Further highlights:
- Profit before tax excluding the Postbank provision amounted to 1.7 billion euros, in comparison with 1.4 billion euros within the second quarter of 2023.
- Provisions for credit losses amounted to EUR 476 million, a rise from EUR 401 million within the previous 12 months.
- The common equity tier 1 (CET 1) ratio, a measure of banks’ solvency, rose barely from 13.4% to 13.5% in the primary quarter of the 12 months.
In an announcement on Wednesday, Deutsche Bank CEO Christian Sewing said the bank remained on the right track to fulfill its dividend payment commitment to shareholders, which it said would amount to greater than 8 billion euros in share buybacks within the 2021-2025 financial 12 months. Earlier this month, the bank announced that distributions to this point had amounted to three.3 billion euros.
In a note, Citi analysts called it a “solid quarter.” Some business areas were above consensus, net interest margins declined more slowly than originally expected, and the outlook for 2024 and 2025 remained largely unchanged.
RBC analysts described the outcomes as “good”, particularly in investment banking, but said that loan losses were higher than expected.
Chief Financial Officer James von Moltke told CNBC’s Caroline Roth in an interview on Wednesday that Deutsche Bank saw several positive growth impulses within the second half of the 12 months, including net interest income, which fell 2 percent within the second quarter in the company banking business, in keeping with earnings figures released on Wednesday.
“We had already seen a decline in net interest income at the beginning of the year compared to [20]23, we actually think that the banking book segments could remain stable, essentially unchanged from last year, and that is actually very encouraging as it reflects lower funding costs and better spreads on both the deposit and loan side. Loan growth, while still sluggish than we would like to see, is an encouraging picture overall,” Von Moltke said.
“On the financial markets and corporate finance side, we are seeing the momentum we had hoped for,” he added, pointing to revenues within the origination and advisory business doubling year-on-year.
The second-quarter result confirms the recent trend of the bank beating its profit forecasts. In April, the bank reported a ten% increase in profit, its best quarterly result since 2013.
The day also coincides with the earnings situation of European banks, because the Italian UniCredit 14 quarters of winning streak Spain’s Santander reported a 20% increase Jump in net profit.
— CNBC’s Ganesh Rao contributed to this story.
