(28 October 2016 – Germany) Deutsche Bank issued third-quarter results that surprised the market.
Analysts expected figures for the three months to September to show a hefty loss for the second year in a row, but instead they revealed a €278 million (A$402 million) net profit.
For the same period in 2015, the bank reported a €6 billion loss, and above the consensus estimate for a fall of €394 million.
The German bank’s performance was driven by its investment banking arm that generates most of its income in the US. According to the Financial Times, this was “buoyed by a recovery in bond trading that helped banks across Wall Street.”
Deutsche reported a 10 percent increase in overall revenues to €7.5 billion.
Following a decision to reduce its asset base by disposing of a number of “non-core” units, the bank increased its effective cash reserves ratio from 10.8 to 11.1 percent.
According to the bank’s chief executive, positive steps in turning around the business are being “overshadowed” by fines and litigation costs – mainly in the US.
The bank increased its litigation provisions from €5.5 billion to €5.9 billion for the quarter.
The figure below the demand for $14 billion (A$184 billion) from the US Department of Justice over pre-crash sales of mortgage-backed securities. The eventual penalty may force the bank to raise fresh capital.
The bank is also facing investigations in the UK and US over trading in Russia. Additionally, investors have commenced a civil suit claim, which reports say tally into the billions of dollars.