A near 30 per cent decline in net profit and a warning that the litigation and regulatory environment will continue to remain “very challenging” may dominate early headlines for Deutsche Bank on Tuesday, but they don’t tell the whole story, FastFT reports.
The German banking giant revealed that net income slipped to €238m (£188.2m) for the three months ended in June, down from €335m (£265m) in the same period last year and less than the €470m (£371.6m) pencilled in by analysts, as revenues fell and the group was hit by higher tax charges.
But there’s some quite positive news in the results.
Specifically, Deutsche Bank’s crucial debt sales and trading arm, which it has refused to shrink even as competitors dramatically scale back, reported that revenues were flat year-on-year, at €1.8bn (£1.42bn).
Admittedly, flat isn’t usually something to celebrate, but given the lengthy slump in banks’ fixed income, currencies and commodities trading or “FICC” arms since the crisis, stable revenues will be seen as a positive sign for Deutsche and the market.
Deutsche’s main US rivals, including Goldman Sachs and JPMorgan Chase, also reported Q2 debt trading revenue that was better than initially feared.
In fact, it was Deutsche’s corporate banking and securities division was a relative bright spot, with pre-tax income up 17 per cent to €885m (£700m) as it managed to shave 7 per cent off the unit’s expenses and even as income from trading equities declined by 11 per cent.
Said co-chief executives Jürgen Fitschen and Anshu Jain: “The world’s economies are growing at different speeds, and this may cause differences in the pace at which interest rates normalize, creating opportunities; however, emerging geopolitical events in Ukraine and the Middle East may impact financial markets and our clients, and we continue to adapt to a fast changing regulatory framework.
“We remain committed to working systematically through our strategic agenda and, with enhanced capital strength, we face these challenges with greater confidence.”
