Deutsche Bank recently reported a net loss attributable to shareholders of 143 million euros, falling slightly short of analyst predictions. Much of this loss can be attributed to a 1.3 billion euro provision for an ongoing lawsuit regarding its Postbank division. This provision was expected, as the bank had previously flagged it. The lawsuit alleges that Deutsche Bank underpaid for the acquisition of the retail banking giant in 2010. Despite this setback, the bank remains committed to distributing over 8 billion euros in share buybacks across the 2021-2025 financial year period.
The bank reported a 2% increase in net revenue to 7.6 billion euros for the second quarter. Efficiency savings also reached 1.5 billion euros. However, revenue reports varied across different divisions. While the investment bank division saw a 10% increase in revenue to 2.6 billion euros, fixed income and currency revenue fell by 3% to 2.1 billion euros. Revenue in corporate banking remained nearly flat at 1.9 billion euros.
Despite the recent losses, Deutsche Bank’s Chief Financial Officer, James von Moltke remains optimistic about the future. He highlighted positive drivers for the second half of the year, including improvements in net interest income. Von Moltke suggested that the banking book segments may stabilize, reflecting lower funding costs and better spreads on both deposit and loan sides. He also mentioned encouraging signs in the financial market and corporate finance sectors, with revenue doubling in the origination and advisory business year-on-year.
Analyst Reactions
Analysts have mixed reactions to Deutsche Bank’s recent performance. Citi analysts referred to it as a “solid quarter,” with some divisions performing above expectations. RBC analysts also noted that while investment banking results were strong, loan losses were higher than anticipated. Despite these mixed reactions, the overall outlook for 2024 and 2025 remains largely unchanged.
Comparison to Previous Quarters
This recent loss marks the end of a 15-quarter profit streak for Deutsche Bank. It follows a trend of improved earnings for the bank, with the previous quarter showing a 10% higher profit, the best quarterly result since 2013. The bank’s performance also comes amidst a busy day for European bank earnings, with Italy’s UniCredit maintaining a profit streak and Spain’s Santander reporting a significant increase in net profit.
While Deutsche Bank has faced a setback with the end of its profit streak, there are still positive signs for the future. The bank’s commitment to shareholder distributions and the stabilization of certain revenue streams indicate that there may be better times ahead. By addressing losses and maintaining a focus on efficiency and revenue growth, Deutsche Bank may be able to regain its momentum in the coming quarters.