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Deutsche Bank extends profit run on boost from dealmaking fees -Breaking


© Reuters. FILE PHOTO – The Deutsche bank logo is visible in Hong Kong (China), July 8, 2019. REUTERS/Tyrone Siu

Frank Siebelt, Tom Sims

FRANKFURT Deutsche Bank (DE:). The bank posted stronger profits than anticipated at 7% for the third quarter. This is the fifth consecutive quarter of profitability. However, fees charged for advice on deals partially compensated for the drop in trading revenues.

Although the profit was not nearly as high as those of U.S. counterparts, Chief Executive Office Christian Sewing is pleased with the outcome of his 9 billion euro ($10 million) restructuring of German bank. This follows a number of regulatory errors and huge losses over the preceding decade.

The bank’s dependance on money spinners was a problem for investors. After hitting a high of four months in the preceding session, its shares fell 6% early this afternoon.

The net profit attributable shareholders increased to 194million euros ($225 million), compared to 182million a year ago. This beats the forecasts of 135million by Deutsche.

This was partially due to a reduction in the provisional reserve to offset the fallout from coronavirus pandemic. However, costs associated with the ongoing bank overhaul helped to keep profit under control.

This is the longest consecutive streak of profitability since 2012, with its fifth consecutive quarter in profit.

(GRAPHIC: Deutsche Bank results –


Sewing stated that “we are focused on driving efficiency while keeping strong controls and are confident in achieving Deutsche Bank’s 2022 goals.”

In a memo to his staff, he stated that “it is also obvious that we mustn’t lose any ground in our disciplined pathway.”

JPMorgan’s analysts said that strong results showed JPMorgan was “on track” to meet its strategic objectives.

Bank of America (NYSE) analysts rate Deutsche Bank as “underperform”. They believe that Deutsche Bank’s Investment Bank business is not up to par with U.S. competition and question whether it can sustain the revenue.

One trader called results of the bank’s “low-quality beat,” referring to their reliance on unpredictability in investment banking.

The bank has been working to reduce dependence on volatile income from the investment bank in 2019. However, the revenue-generating division was still the largest source of bank revenues.

Deutsche Bank reported that the division of investment banking saw a 6% drop in revenue from last year. However, this was due to the end of a trading boom. It would mark a major improvement from 2019.

Global dealmaking was a major factor in the success of the advisory division at investment banks. Revenue grew 82% to 118 millions euros. A surge in fees from M&A and fundraisings also boosted earnings at U.S. rivals, such as Goldman Sachs (NYSE:) and Morgan Stanley (NYSE:

The bank’s biggest division, fixed-income, and currency trading saw a 12% drop in revenue compared to a strong year ago as the markets eased off from their pandemic trading frenzy.

Due to increased loan growth and inflows under management of assets, James von Moltke, Chief Financial Officer, told journalists on a conference call that the bank feels more certain of reaching group revenue at least 25 Billion Euros next year.

($1 = 0.8593 euros)