FRANKFURT (Reuters) – The end of the zero interest rate policy and earnings from corporate customers are making up for the doldrums in investment banking at Deutsche Bank.
The bottom line is that the money house made a profit of 1.1 billion euros, 475 percent more than in the same period last year, as the largest German money house announced on Wednesday. On average, analysts had only expected a net profit of 835 million euros. “We achieved our highest result in more than a decade,” said bank boss Christian Sewing. It was the ninth consecutive quarterly profit for Deutsche Bank.
Investment banking profits rose 6 percent year-on-year to €2.37 billion. According to insiders, the institute is nevertheless laying off several dozen investment bankers in London and New York because of the weak business with takeovers and mergers. The bank expects that the volatile capital markets will continue to weigh on income in the investment bank, but the turnaround in interest rates will increase profits in the securities business.
The bank reacted to the increased risk of loan defaults with a risk provision of EUR 350 million – three times as much as in the same quarter of the previous year, when the risk provision was EUR 117 million. “We remain confident in our solid loan book and have reiterated our guidance that we expect full-year provisioning to be approximately 25 basis points of average loan size,” Sewing wrote to bank staff.
Total income increased by 15 percent to 6.9 billion euros. “We are right on track to achieve our goals for 2022,” said the head of the bank. “Since we announced our strategy in July 2019, we have never let ourselves be diverted from our path – despite the great changes and macroeconomic shocks of the past two years.”
For investors, the quarterly figures from Deutsche Bank and several other European institutions, such as Barclays, Unicredit and Santander, which presented their figures on Wednesday, are an important indicator of the effects of the energy crisis, the slowdown in the global economy and the increase in the key interest rate.
(Report by Marta Orosz and Tom Sims; edited by Sabine Wollrab. If you have any questions, please contact our editorial team at [email protected] (for politics and the economy) or [email protected] (for companies and markets) .)
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