Deutsche Bank Profits rise, shares spike 7%

Deutsche Bank achieved a thirteenth consecutive profitable quarter, slightly exceeding analysts’ expectations with a net profit of 1.031 billion euros in the third quarter. Following this positive financial report, the bank’s shares surged by 7% during early morning trading in London.

In a year-on-year comparison, the third-quarter net profit was 8% lower, but there was a substantial 35% increase when compared to the previous quarter. The bank’s investment unit continued to face challenges, with net revenues falling by 4% year-on-year and experiencing a 12% decrease over the first nine months of the year. This decline was attributed to the normalisation of fixed income and currency revenues, as well as a strategic shift towards other products like credit and financing.

In contrast, Deutsche Bank’s corporate banking business performed strongly, boasting a 21% year-on-year increase in revenues due to the higher interest rate environment. The bank reported total revenues of 7.13 billion euros for the quarter and revealed the potential to release up to 3 billion euros in capital, signalling its financial resilience.

The provision for credit losses decreased to 200 million euros during the quarter, down from 350 million in the same quarter the previous year. The Common Equity Tier 1 (CET1) capital ratio, a measure of financial strength, improved to 13.9%, compared to 13.8% at the end of the second quarter and 13.3% in the third quarter of the previous year. Return on tangible equity increased to 7.3%, a notable improvement from the previous quarter.

Analysts from UBS recognised Deutsche Bank’s “major improvement in capital” and “robust operational performance,” with pre-tax profit surpassing consensus by 9%. However, Deutsche Bank still faces challenges, including a weakening European business environment, macroeconomic uncertainty, and IT issues affecting two of its retail units.

In summary, Deutsche Bank’s financial performance in the third quarter exhibited both positive outcomes and ongoing challenges. It’s important to consider these results within the broader context of the financial industry and economic conditions.