Deutsche feels effects of weak market in latest results
(26 October 2017 – Germany) Deutsche Bank posted a 10 percent drop in revenue in the third-quarter, driven by a weak market and the effects of internal restructuring.
But, Germany’s largest lender said cost cuts helped lift profit above expectations.
“While the revenue environment remained challenging, we have made significant progress on our key initiatives,” Chief Executive John Cryan said.
Deutsche Bank last March announced an overhaul that includes the integration of its Postbank retail bank unit with its own in-house Deutsche Bank-branded consumer bank, as well as the partial sale of its asset management unit.
“We are convinced that the benefits of our efforts will step by step become more apparent in the coming quarters and years,” Cryan said.
Net profit rose to €649 million (A$982 million), despite a drop in investment bank revenue.
Revenue at Deutsche Bank’s bond-trading division were 36 percent lower due to lower client activity in less volatile markets, lagging US peers. The big U.S. investment banks’ bond trading revenues fell on average 22 percent from a year earlier.
The bank said efforts to restructure its retail and asset management businesses were progressing.
In the retail bank, Deutsche reiterated it was on track to realise more than €900 million in cost synergies by 2020 with an investment of €1.9 billion. However, labor unions are threatening strikes over further job cuts and the closure of bank branches.
In asset management, Deutsche Bank has asked banks to pitch for work on an initial public offering (IPO) of its asset management business, which it wants to legally separate from the bank by year-end, in a deal that could raise around €2 billion.
Deutsche has been recovering from multiple legal battles, ranging from its role in the marketing of U.S. mortgage-backed securities to a so-called “mirror trading” scheme that could be used for money laundering.
Last year, a looming $14 billion fine from the U.S. Department of Justice had unsettled clients and investors and prompted talk of a government bailout. On Wednesday, U.S. authorities announced the latest settlement.
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