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Deutsche Bank has achieved the highest quarterly profit since 2014, thanks to the rise in bond trading, strong results in asset management and a clean solution from exposure to Archegos Capital family offices.
Germany’s largest lender achieved a net profit of € 908 million in the first three months of 2021, compared to € 43 million in the first quarter of 2020.
Deutsche also dropped its full-year forecast for 2021, saying it now expects revenues to be “essentially flat,” compared to previous year-on-year guidance.
Heavy losses over the years, a fall in market share and a repeated committee battle led CEO Christian Sewing to embark on the group’s most radical restructuring in mid-2019, reducing the performance of few investment banks, drastically reducing the lender’s balance sheet and reducing 18,000 jobs. For 2022.
High restructuring costs resulted in losses of € 5.7 billion in 2019, when the lender returned to profitability, having reported a net profit of € 113 million last year.
“Our first quarter is proof that Deutsche Bank is on the right track in its four main businesses and is building sustainable profitability,” Sewing said.
The results exceeded analysts ’expectations by about 60 percent. Deutsche’s shareholder equity — the main benchmark for profitability — was 7.4 percent in the first quarter and was close to its 822 target for 2022.
A key driver of performance was the investment bank, with annual revenues down 32% to 3.1 billion euros and the group’s asset management unit, with revenues rising 23 percent to 637 million euros. Either or both exceeded analysts ’expectations.
Bloomberg previously reported that Deutsche had 3.4 billion euros exposure to the affected investment group Archers. In any case, unlike many other members (including rivals UBS and Credit Suisse) large losses, the bank said on Thursday that it had dissolved its position without any success.
Deutsche’s private banking and corporate banking, which Sewing previously referred to as a division that could help them eliminate the tight revenues from investment banks. However, provisions for credit losses fell in both units as pre-tax profits increased.
Deutsche’s Common Equity Tier 1 ratio – the main indicator of balance sheet strength – rose to 13.7% of risk-weighted assets, up from 12.8 per cent a year ago.
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