quarterly figures
Deutsche Bank: On course to return target after profit increase
Clouds move over the headquarters of Deutsche Bank. Photo: Arne Dedert/dpa
© dpa-infocom GmbH
Germany’s largest money house earned more in the first quarter than a year earlier, although the Ukraine war is causing new uncertainty.
After making billions in profits in the difficult first quarter, Deutsche Bank is on track to its return target for 2022.
“The good start to the year gives us further confidence that we will achieve our goals for the current year,” confirmed CEO Christian Sewing on Wednesday.
At the end of March, the pre-tax result was around 1.7 billion euros, four percent higher than in the same period of the previous year. The bottom line was that shareholders had a surplus of almost 1.1 billion euros, after 908 million euros a year earlier.
“As a bank, we have proven over the past few weeks and months that we are particularly good in particularly difficult times,” Sewing summed up. “Results from all businesses are on or above plan, and we achieved our highest quarterly profit in nine years.” The income – i.e. the total income – of the largest German money house was at a good 7.3 billion euros as high as in the first quarter of 2017.
The main profit maker with 1.5 billion euros before taxes is still investment banking, in which the bank earns, for example, from trading bonds and currencies. But the corporate and private customer divisions also increased their pre-tax profits in the months from January to March more than analysts had expected. “In a challenging environment, we grew in all core business areas, both in terms of income and profit,” summarized CFO James von Moltke.
In 2019, Sewing ordered the institute to undergo a far-reaching restructuring, trimmed the in-house investment bank and initiated the reduction of thousands of jobs. The goal: to increase the return on tangible equity to eight percent by the end of 2022. By 2025 it should even be more than ten percent after taxes.
Analysts have doubts about Sewing’s return targets
But analysts have doubts as to whether this will succeed, because in 2021 the return was just 3.8 percent. And that despite the fact that the Dax group had 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 percent. And the institute did the math: If the bank levy, which had risen by more than a quarter to 730 million euros, had not been booked in full in the first quarter, the return at the end of March would have been 11.2 percent.
Deutsche Bank set aside significantly more money than a year earlier for possible loan defaults: At EUR 292 million, risk provisions were more than four times as high as in the first quarter of 2021. This is also related to the Ukraine war. Deutsche Bank reduced its net credit exposure related to Russia by 21 percent to EUR 0.5 billion in the quarter.
For comparison: Commerzbank had put its risk in Russia at 1.3 billion euros net at the beginning of March. The institute, which is listed in the MDax, made around half a billion euros in provisions in connection with the Ukraine war, as announced on Tuesday evening in a preliminary quarterly balance sheet. Despite the increased risk provisions, Commerzbank also earned more in the first quarter than a year earlier: the surplus jumped from EUR 133 million to EUR 284 million. Commerzbank intends to publish the detailed figures for the first quarter on May 12th.
At the Deutsche Bank fund subsidiary DWS, investors withdrew a billion euros in the first quarter. Nevertheless, DWS increased its income by nine percent year-on-year to EUR 689 million and consequently also increased its profit: At EUR 186 million, the surplus in the first quarter was ten percent above the level of the same period last year.