Germany's Deutsche Bank sees higher-than-expected Q2 profit

18 July, 2018, 16:56 | Author: Eric Barnett
  • Things are looking up, Deutsche Bank says | Business

On the plus side, second-quarter earnings for the STOXX 600 are expected to grow 8.1 percent year-on-year, an improvement on the first quarter.

Deutsche Bank plans to disclose full details of the second quarter results as planned on July 25, 2018.

Deutsche Bank (DB.N) shares rose 7.3 per cent on the news, paring losses this year to 35 per cent. It expects revenue of €6.6 billion against analysts' forecasts of €6.4 billion.

Germany's biggest bank now expects net profit of about 400 million euros ($467 million) for the April-June period.

Most recently, the financial institute's US subsidiary failed a USA stress-test due to what local regulatory authorities described as "significant weaknesses" in internal corporate risk management.

For one thing, Monday's news has been a game of managing the mood. The bank had earlier indicated that the top line would probably be lower. At the end of May, CEO Christian Sewing called the earnings situation in its investment banking unit "challenging". Indeed, the bank has earned something of an inglorious reputation in this regard. Sewing, a retail banking veteran, was appointed in April to succeed John Cryan as part of the overhaul. A spokesperson for the bank contacted by WRAL TechWire last month said the firm would have no comment. However, according to the statement: "Management believes that these results demonstrate the resilience of the franchise", and added the restructuring has "progressed rapidly". This may be true, but its lackluster performance has also proven resilient. What the bank doesn't say in its latest release: No progress has been made in its key figures when compared to the same period a year ago.

The corporate and investment bank seems to have accounted for the lion's share of that beat, but revenue at the unit included a 100 million-euro gain on an asset sale and debt valuation adjustments reflecting a widening of Deutsche Bank's credit spreads during the quarter. After taxes, Deutsche's earnings were less than 6 percent of JP Morgan's. And the U.S. investment bank's profits are rising to boot, while Deutsche's remain stable.



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