Status: 04/27/2022 08:30
Despite growing uncertainty over the war in Ukraine, Deutsche Bank generated its highest quarterly profit in nine years. Commerzbank also recorded a significant increase in profits.
The new financial year got off to an unexpectedly positive start for German listed banks. Both industry leader Deutsche Bank and Germany’s second largest private bank, Commerzbank, reported significant earnings growth, exceeding analysts’ expectations.
Deutsche Bank earns a surprising amount
“Results across all business areas are in line or above plan and we have achieved our highest quarterly profit in nine years,” said Christian Sewing, head of Deutsche Bank. The bottom line is that Germany’s largest money house earned nearly 1.1 billion euros in the first quarter, and thus 21% more than in the same period last year.
Analysts had expected only around 950 million euros on average. Deutsche Bank was thus able to record its seventh consecutive quarter of earnings. The group’s income increased by 1% to 7.3 billion euros. They were as high as the last in the first quarter of 2017.
War-related risk provisions in Ukraine quadrupled
The growth in profits and profits is particularly noteworthy against the backdrop of the war in Ukraine, which is why Deutsche Bank had to drastically increase its risk reserves: with 292 million euros, the DAX group has set aside four times as much. money for possible loan defaults as much as in the first quarter of 2021. According to the bank, it reduced its net credit exposure to Russia by 21% to EUR 0.5 billion.
CFO James von Moltke was pleased with the results: “We are in a good position to achieve our goals for this year.” In the summer of 2019, CEO Sewing ordered the Frankfurt institution a complete restructuring, cut the internal investment bank and started cutting thousands of jobs. The goal is to achieve an after-tax return of 8% this year. For comparison: in 2021, this important indicator was a meager 3.8%.
Commerzbank doubles its profit
Commerzbank had already presented the financial statements for the first quarter in the evening, thus also arousing a positive surprise. The surplus more than doubled in the first quarter to 284 million euros in a year, Germany’s second-largest private bank said yesterday after the stock market closed based on preliminary data. A year ago, there was still a profit of 133 million euros in the first quarter.
However, as for Deutsche Bank, possible risks linked to the Russian war against Ukraine weighed on the balance sheet. Loan loss provisions have more than tripled in one year. It has risen to 464 million euros after 149 million euros a year ago.
But this is not the only parallel with Deutsche Bank: like Christian Sewing, the head of Commerzbank Knof has ordered a radical restructuring of his institution. Under his leadership, the Frankfurt institute returned to profit in 2021. For the current financial year, it has confirmed its forecast of consolidated earnings of over one billion euros.
Stocks on the rise
Analysts were impressed with Commerzbank data: Money House presented solid key data with solid earnings growth, JPMorgan analyst Kian Abouhossein wrote. The bank’s unexpectedly strong key data and confirmed annual outlook should have a positive effect on the stock, Canadian bank RBC analyst Anke Reingen said.
Indeed, according to pre-market indications, Commerzbank stock is expected to start trading XETRA with a hefty premium of over six percent. Deutsche Bank’s figures are also well received by the market. The stock of the money house listed on the DAX is trading in the morning with a good 2% higher.
Deutsche Bank generates the highest quarterly profit
Ursula Mayer, HR, 27.4.2022 08:38 Uhr