Deutsche Bank said today that it made €777 million in net profit in a turbulent third quarter, beating analysts’ estimates.
The third-quarter earnings figure contrasts with a loss of €1.2 billion in the same quarter last year, when the bank took a €2.3 billion writedown related to consolidating its acquisition of Postbank.
Chief executive Josef Ackermann cited stronger results from the bank's basic banking business and an effort to cut
risky business at its investment banking operation amid market swings caused by Europe's crisis over heavily indebted governments.
He said it was the toughest quarter since the one that followed the collapse of US investment bank Lehman Brothers in late 2008.
"During the third quarter, the operating environment was more difficult than at any time since the end of 2008, driven
by a deteriorating macro-economic outlook, and significant financial market turbulence," he said in a statement.
He said the bank "benefited significantly from the strategic decisions we have taken to recalibrate and de-risk our
investment bank, increase the earnings contribution from our 'classic' banking businesses, and strengthen our capital,
liquidity and funding position."
The bank's ratio of highest-quality reserves to loans and other investments reached 10.1 per cent. The so-called core tier 1 capital ratio is an important measure of a bank's ability to absorb losses. European leaders are seeking to push banks which are undercapitalised to hold at least 9 per cent.
The bank, Germany's largest, also wrote down €228 billion worth of shaky Greek bonds, whose value has fallen during the eurozone's government debt crisis.
The bank had already signalled the Greek writedown and said it would not achieve its profit target for this year.
Market analysts surveyed by Factset had foreseen net profit of €425 million. The company's net revenues for the quarter were €7.3 billion, up €2.3 billion, or 47 per cent, from a year ago.
In last year's third quarter, revenues were reduced by the Postbank charge; if that is excluded, revenues were
essentially unchanged from a year ago as lower investment banking revenues were offset by higher retail and
commercial banking revenues, primarily reflecting the addition of Postbank and its large branch banking network.
AP
