- 2024-05-15
- News
Deutsche Bank Q3 Profits Return, Revenue Up 5% Beyond Expectations
On October 23rd, Deutsche Bank (DB.US) announced its financial performance for the third quarter of 2024. The financial report indicated that Deutsche Bank's net revenue for the third quarter was €7.501 billion, a year-on-year increase of 5%, which exceeded the average analyst expectation of €7.338 billion; the net profit attributable to the company's shareholders was €1.461 billion, a year-on-year increase of 42%.
It is worth mentioning that in the second quarter, the net loss attributable to the company's shareholders was €143 million, ending 15 consecutive quarters of profitability. This was due to a slowdown in trading and the bank's accounting for expenses related to legacy issues in the retail division of Deutsche Postbank. Deutsche Bank also stated in its second quarter financial report that it would not initiate a second share buyback plan for this year.
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Deutsche Bank stated that the partial release of €440 million in litigation provisions in the third quarter helped to increase profits, and the bank has now applied for share buybacks. Deutsche Bank CEO Christian Sewing said, "We will continue on the path of profitable growth and exceed our initial target of capital distribution to shareholders."
The credit loss provisions were €494 million, a year-on-year increase of 102%. Non-interest expenses were €4.744 billion, a year-on-year decrease of 8%. The CET1 capital ratio, a measure of the bank's solvency, was 13.8%, up from 13.5% in the previous quarter; the leverage ratio was 4.6%; the return on tangible equity after tax (RoTE) was 10.2%, and the cost/income ratio was 63%.
By division: the Corporate Bank (CB) net revenue was €1.841 billion, a year-on-year decrease of 3%. The Investment Bank (IB) net revenue was €2.523 billion, a year-on-year increase of 11%; of which, Fixed Income and Currencies (FIC) business revenue increased by 11% year-on-year to €2 billion. The Private Bank (PB) net revenue was €2.319 billion, a year-on-year decrease of 1%. The Asset Management (AM) net revenue was €660 million, a year-on-year increase of 11%.
In recent years, the performance of European banks has been consolidated by a series of share buybacks and dividends. After the European Central Bank began to ease monetary policy this summer, European banks are now facing the pressure of achieving profitable growth in an environment of declining interest rates to keep up with their American counterparts.
McKinsey analysts warned, "Looking back, although the banking industry has reduced costs and maintained high credit quality, the improvement in returns since 2021 seems to be mainly due to the rise in interest rates." McKinsey pointed out that in order to maintain the current return on tangible equity, the speed at which banks cut costs needs to be about 2.5 times the speed of revenue decline.
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