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“The good start of the year gives us further confidence that we will achieve our goals for the current year,” confirmed Group CEO Christian Sewing when the interim report was unveiled in Frankfurt on Wednesday. Despite the surprisingly high quarterly earnings, the news was met with a drop in prices on the stock exchange.
More recently, Deutsche Bank’s share fell 5.60 percent to € 9.55, making it one of the DAX’s biggest losers, while competitor Commerzbank’s share rose after preliminary data was presented. Industry insiders rated Deutsche Bank’s quarterly data as solid or even strong. However, analyst Chris Hallam of US bank Goldman Sachs wrote, the group’s adjusted costs of € 5.4 billion exceeded market expectations, inter alia due to higher personnel costs.
Before tax, Deutsche Bank earned around € 1.7 billion in the first three months, four percent more than in the same period last year. The bottom line is that shareholders have a surplus of nearly € 1.1 billion, an increase of 17%. The institute therefore also exceeded the average expectations of analysts.
“As a bank, we have shown over the past few weeks and months that we are particularly good in particularly difficult times,” summed up Sewing. “All companies are going according to or before the plan and we have achieved our best quarterly profit in nine years.”
The income – or the total income – of the largest German financial institution was 7.3 billion euros, the latest in the first quarter of 2017. Experts even expected a decline this time. For the full year, management continues to anticipate an increase in profits of between 26 and 27 billion euros.
The main profit maker in the first quarter, with € 1.5 billion before tax, continued to be investment banking, where the bank made money by trading bonds and currencies. But the corporate and private client divisions also increased their pre-tax profits in the months of January to March more strongly than analysts expected. “In a challenging environment, we have grown in all core business areas, both in terms of income and profit,” summarized CFO James von Moltke.
In 2019, Sewing ordered the institution to undergo a major restructuring, cut the internal investment bank and initiated the reduction of thousands of jobs. The goal: to increase the return on tangible equity to 8% by the end of 2022. By 2025 it should be even more than ten percent after taxes.
But analysts doubt this will be successful, because in 2021 the yield was only 3.8 percent. And this despite the fact that the Dax Group achieved its highest annual profit since 2011 in the second Corona year of 2.5 billion euros.
In the first quarter of the current year, the bank achieved a return of 8.1%. And the institute did the math: if the bank withdrawal, which rose by more than a quarter to 730 million euros, had not been fully accounted for in the first quarter, the yield at the end of March would have been 11.2 per cent.
Deutsche Bank has set aside much more money than a year earlier for possible loan defaults: at EUR 292 million, risk provisions were more than four times higher than in the first quarter of 2021. This is also related to the war in Ukraine. Deutsche Bank reduced its net credit exposure to Russia by 21% to € 0.5 billion in the quarter.
For comparison: Commerzbank had put its risk in Russia at € 1.3 billion net in early March. The institute, which is listed on the MDAX, has made around half a billion euros in provisions in connection with the war in Ukraine, as announced in a preliminary quarterly report Tuesday evening. Despite the increase in loan loss provisions, Commerzbank also earned more in the first quarter than the previous year: the surplus jumped from € 133 million to € 284 million. Commerzbank intends to release detailed data for the first quarter on May 12.
At the subsidiary of the Deutsche Bank DWS fund (DWS Group GmbHCo), investors withdrew one billion euros in the first quarter. However, DWS increased its earnings by 9% year-on-year to 689 million euros and consequently also increased its profits: at 186 million euros, the surplus in the first quarter was ten percent above the level of the same period last year.
/ me / stw / zb
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