Deutsche Bank posts better than expected profits on M&A boom

·2-min read
Deutsche Bank posts better than expected profits on M&A boom
Net profits rose 7% to €194m in the third quarter of the year, beating analyst expectations of €135m . Photo: Joseph Nair/NurPhoto via Getty

Deutsche Bank (DBK.DE) revealed its net profits rose 7% to €194m (£163m, $224m) in the third quarter of the year, beating analyst expectations of €135m.

It benefited from a boom in mergers and acquisitions (M&A) activity over the period, as well as a steep decline in provisions for bad loans related to the coronavirus pandemic.

Revenue from advising on global deals surged 82% to €118m, while income from helping firms issue new debt and equity increased by 22% when compared to the same period last year.

However, Germany’s largest bank saw a fall in trading revenues during the quarter, although this was smaller than forecast, and a decline in overall revenues of 6%.

Revenues at its corporate bank were flat, while its retail bank saw a 2% decline. Revenue for fixed-income and currency trading, one of the bank's largest divisions, fell 12% from an exceptionally strong period in 2020.

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“In the third quarter, we again demonstrated the operating strength of our business: our revenues have proven to be resilient, we have increased our pre-tax profit despite additional transformation charges, and we have already exceeded our full year 2021 sustainability target,” Christian Sewing, chief executive officer, said.

“We are focused on driving efficiencies while maintaining strong controls, and we are confident of achieving Deutsche Bank’s 2022 targets.”

In 2019, Sewing set out a €9bn overhaul of the bank after a series of regulatory failings and billions in losses over the previous decade. 

It has now posted five consecutive quarters of profit, its longest streak in the black since 2012, according to Reuters.

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Deutsche Bank’s common equity tier ratio, a key benchmark for balance sheet strength, fell 0.3 percentage points to 13%.

Analysts at JPMorgan said the results were strong and showed the bank was "on the right path to deliver on its strategic ambitions".

Shares were 4.3% lower in Frankfurt on Wednesday, reversing earlier gains.

Watch: Major correction expected by year-end: Deutsche Bank

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