Deutsche Bank Shares Hit Six-Year High

Deutsche Bank shares surged to a six-year high on Thursday afternoon following the German lender’s report of a 10% increase in first-quarter profit, beating analyst expectations. The bank attributed its performance to a rebound in its investment banking division and a steady recovery across other business segments.

Shares rose 7.2% by early afternoon in London, reaching their highest level since December 2017. The bank reported a net profit of 1.275 billion euros ($1.365 billion), exceeding analyst forecasts of 1.23 billion euros, according to LSEG data. This marks Deutsche Bank’s highest first-quarter profit since 2013 and its 15th consecutive quarterly profit.

Total revenue for the first quarter rose 1% year-over-year to 7.8 billion euros, attributed to growth in commissions and fee income, along with strong performance in fixed income and currencies. The revenue figure surpassed analysts’ expectations of 7.73 billion euros.

The bank’s investment banking unit saw a significant turnaround, with revenues increasing by 13% to 3 billion euros, following a 9% decline through full-year 2023. The recovery in this segment was driven by growth in financing and credit trading revenue, re-establishing the division as the bank’s highest-earning unit.

Other key first-quarter highlights include:

• Net inflows of 19 billion euros across the Private Bank and Asset Management divisions.
• Credit loss provisions dropped to 439 million euros from 488 million euros in the fourth quarter of 2023.
• The Common Equity Tier 1 (CET1) capital ratio, a measure of bank solvency, stood at 13.4%, slightly lower than 13.6% a year earlier.

Deutsche Bank’s Chief Financial Officer, James von Moltke, expressed optimism about the bank’s future, citing momentum across all four business units. “We do think it’s sustainable,” he told CNBC, emphasising that the bank is meeting its commitments on costs and capital returns.

Despite these positive results, analysts at Keefe, Bruyette & Woods described the group results as “reasonable” but not exceptional. They highlighted strong investment banking figures but noted underperformance in the corporate banking and asset management divisions. Credit loss provisions remained elevated, and guidance for the rest of the year was unchanged despite rising interest rates.

Deutsche Bank announced in 2023 that it would cut 3,500 jobs over the coming years to achieve 2.5 billion euros in operational efficiencies. This effort is part of the bank’s strategy to boost profitability and increase shareholder returns.

Deutsche Bank’s strong first-quarter performance and renewed investment banking strength suggest a positive outlook, but the bank will need to address ongoing challenges in its other business segments to maintain its momentum.