KWar in Ukraine, energy crisis – none of this could affect Deutsche Bank in the past quarter. On the contrary, she earned more than expected. Before taxes, it was 1.6 billion euros, almost three times as much as a year earlier. In addition, the institute reported the best third-quarter result since 2006. Analysts had only expected Deutsche Bank to make a pre-tax profit of 1.34 billion euros.
Revenues of 6.92 billion euros were also above the expected 6.5 billion euros. The shareholders of the company still have a profit of 1.12 billion euros in the third quarter. Germany’s largest commercial bank thus joined the ranks of its US competitors, who were also able to convince with their figures for the September quarter.
“We achieved our highest earnings in more than a decade – both in the third quarter and in the first nine months of the year. This underscores the successful transformation of our bank,” commented CEO Christian Sewing on the results presented. The CEO was also convinced that he would achieve the goals he had set himself for this year. The return on tangible equity should be 8 percent. Analysts previously doubted that the institute, which is at the end of its restructuring process initiated in 2019, would succeed.
Profitability already above target
After the first nine months, the profitability ratio is 8.1 percent and thus also significantly higher than the 4.8 percent achieved in the same period of the previous year. The cost/income ratio also improved from 82 percent in the previous year to 73 percent. This means that Deutsche Bank had to spend 73 cents for every euro of income. And that with an increased number of employees, which the institute justified by hiring 749 university graduates and integrating a further 547 external employees. On September 30, the bank had 84,556 employees (full-time equivalents) worldwide, 1,641 more than three months ago.
In a conference call, CFO James von Moltke admitted that the original goal of reducing the bank’s workforce to 74,000 would be missed. But there were good reasons for this – investments in IT and thus the future viability of the bank, as well as more employees in controlling so as not to get into regulatory conflicts.
In terms of earnings, all four units of Deutsche Bank were able to increase, two of them, namely the corporate and the private customer bank, even double-digit. Group-wide, the institute was able to increase its income by 15 percent, which is also due to higher margins after the interest rate turnaround. Currently, banks are getting more interest when they park deposits with the European Central Bank (ECB) than they pay their customers. This difference could increase significantly again after tomorrow’s ECB meeting.
At the same time, interest rates on lending are rising. “In the first nine months, revenues increased by 7 percent to 20.9 billion euros,” says the interim report. And it could get even better. The continued good business development opens up the possibility of exceeding the previous forecast for group earnings for the full year of EUR 26 to 27 billion.
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