| 14 June 2024, Friday |

Deutsche Bank swings to Q1 profit on investment bank strength

Deutsche Bank swung to better-than-expected net profit in the first quarter of 2021 as strength at the investment bank helped offset the headwinds of an ongoing restructuring program and the coronavirus pandemic.

Deutsche painted a rosier look for 2021, saying it now expects revenues to be “essentially flat”, compared with a previous estimate of “marginally lower”.

The German lender said on Wednesday that its first-quarter net profit attributable to shareholders was 908 million euros ($1.10 billion), which compares with a year-earlier loss of 43 million euros. Analysts had expected a profit of almost 600 million euros.

It was the strongest quarter for Deutsche since the first quarter of 2014, as revenue at its fixed-income trading business and origination and advisory services surged, trends that have also lifted profits of competing banks.

The figures are good news for Chief Executive Officer Christian Sewing, who embarked on a radical restructuring two years ago that involved shedding 18,000 staff in an effort to return the bank to profitability.

“These results give us confidence that we’ll reach our 2022 targets,” Sewing said in a statement.

The investment bank’s resilience showed last year, helping Deutsche eke out a small profit for 2020 – its first after five years of losses.

Questions have remained about the sustainability of its investment banking boom, but analysts expect Deutsche to deliver another profit in 2021, a consensus forecast of their estimates shows.

Deutsche’s key fixed-income and currency sales and trading business, with revenue up 34% at nearly 2.5 billion euros, marked its best quarter since 2015.

That growth is better than some U.S. investment banks. Goldman Sachs reported a 31% rise in such trading in the first quarter, while those at JPMorgan were up 15%.

Origination and advisory services revenue at Deutsche, up 40%, showed its best quarter since 2017.

However, low interest rates and a slowdown in global trade pressured revenue at Deutsche’s other divisions, such as those for corporate and retail clients, though asset management revenue rose 23%.

  • Reuters