Deutsche Bank Profit More Than Doubles -- Update
Deutsche Bank AG on Thursday said its third-quarter profit more than doubled, beating analysts' expectations, despite a fall in revenue.
The German bank said net income in the quarter was EUR649 million ($766.7 million) compared with EUR278 million in the same period last year, helped by lower operating costs and legal expenses.
The bank said noninterest expenses declined 14% year-over-year to EUR5.66 billion. Quarterly revenue decreased almost 10% to EUR6.8 billion, hurt by a 30% drop in sales and trading revenues and lower deal-advisory fees. Revenues were in line with analysts' forecasts.
The profit figure compares with analyst expectations of about EUR253 million, according to a consensus forecast compiled by FactSet.
Low market volatility, depressed trading volumes and the negative effects of persistent low interest rates have hit banks globally in recent months. Deutsche Bank traditionally has relied more heavily on fixed-income trading for profits than many of its peers. Big U.S. banks that already reported third-quarter earnings got bumps from strong investment-banking results or other businesses that helped offset trading revenue declines.
"While the revenue environment remained challenging, we have made significant progress on our key initiatives such as the planned merger of Deutsche Bank and Postbank in Germany as well as the preparation for the IPO of our asset management business," Chief Executive John Cryan said in a statement.
Investment-banking revenues were down 23%, to EUR3.5 billion, dragged down in part by fixed-income trading revenues, which were 36% lower in the quarter compared to a year ago. Revenues in the private and commercial bank were up 3%, to EUR2.6 billion.
Revenues in the asset-management unit were stable for the quarter at EUR628 million. Deutsche Bank plans to float a minority stake in that business by 2019 through a public offering. The bank said that plan is on track.
Deutsche Bank has been seeking to revive deal-advising profits and win back business in other areas, such as cash-management services for corporate clients and trading with hedge funds, after a stark period of cost-cutting and risk-paring.
Those moves come amid a prolonged restructuring period and strategic decisions seen by analysts and investors as still unproven. The bank, led by Mr. Cryan, this year reversed an earlier decision to split its trading and investment-banking businesses, and also said it will integrate a German retail business, Postbank, it had planned to sell.
Deutsche Bank earlier this year settled a big U.S. probe into crisis-era sales of mortgage securities and raised $8.5 billion in a share sale, putting immediate fears about inadequate capital to rest.
Write to Jenny Strasburg at firstname.lastname@example.org and Pietro Lombardi at Pietro.Lombardi@dowjones.com
(END) Dow Jones Newswires
October 26, 2017 02:22 ET (06:22 GMT)