Deutsche Bank posts record quarterly profit despite uncertainty, higher provisions
Deutsche Bank's First-Quarter Earnings Overview
By Tom Sims and Jörn Poltz
FRANKFURT, April 29 (Reuters) - Deutsche Bank reported record first-quarter profit on Wednesday, despite setting aside 90 million euros ($105 million) for the impact of the Iran war and depressed revenue at its global investment bank due to a weaker dollar.
Quarterly net profit of 1.912 billion euros ($2.22 billion) represents the largest in the history of Deutsche Bank, a milestone under Christian Sewing, who became CEO in 2018 with the task of turning around Germany's largest lender.
CEO's Perspective on the Results
"This achievement is even more remarkable given the increasingly uncertain geopolitical environment since the beginning of the year, especially the conflict in the Middle East," Sewing said in a message to staff.
The quarter marks the start of a new three-year period in which Deutsche Bank has pledged to meet more ambitious profit and cost targets but comes as the Iran war has disrupted markets and as fears over the health of private credit rattle investors.
Profit Figures and Analyst Reactions
Deutsche Bank's net profit attributable to shareholders was up from 1.775 billion euros in the same quarter a year earlier. It also exceeded analysts' expectations of 1.768 billion euros.
However, analysts with Citi, which rates Deutsche as "neutral/high risk", called the results mixed and RBC said the increase in provisions "dampen the excitement".
Shares in Deutsche Bank, one of a number of European lenders reporting earnings this week, fell 2.6% in early trading.
Comparison with Other European Banks
Swiss bank UBS also reported better-than-expected first-quarter net profit on Wednesday, helped by record trading revenue amid market turbulence triggered by the Iran war.
Analysts at Standard & Poor's last week warned that risks for European banks are rising, citing higher inflation, slower growth, market turbulence, and exposure to vulnerable corporate sectors including chemicals.
Provisions and Risk Management
'BETTER TO BE PRUDENT'
Deutsche Bank recorded provisions for credit losses of 519 million euros, up from 471 million euros a year ago and higher than analysts' expectations for 447 million euros. It said the increase was partly due to a single commercial real estate exposure at the investment bank but did not elaborate.
The 90 million euros risk provision was in light of the Middle East conflict, the bank said.
"We all felt that it was better to be prudent around our outlook rather than just be on a lag and wait for things to come to us first," said the bank's new finance chief, Raja Akram.
Revenue Performance by Division
Investment Bank Performance
The global investment bank remained the largest contributor to revenue, although it was flat as expected. The weaker dollar weighed on the bank's euro-denominated earnings.
Fixed-Income and Currency Trading
Within the investment bank, revenue from fixed-income and currency trading, one of Deutsche Bank's largest businesses, fell 1%, outperforming expectations for a 3% fall.
By comparison, such revenue was up 21% at JPMorgan and down 10% at Goldman Sachs.
Outlook and Advisory Services
Deutsche Bank nevertheless upgraded its outlook for revenue at the investment bank for 2026, expecting it to be higher rather than just slightly higher, as deals in April were picking back up after companies put plans on hold in March.
Revenue from origination and advisory services climbed 5%, slightly below expectations for a 5.9% increase.
Other Divisions: Retail and Corporate Banking
Revenue at Deutsche Bank's other two big divisions was mixed. Retail banking revenue was up 5%, slightly ahead of expectations for a 4.4% rise, while the corporate bank saw a 3% revenue fall, compared with analysts’ forecasts for a drop of about 0.8%.
(Reporting by Tom Sims and Joern Poltz, editing by Kirsti Knolle, Mrigank Dhaniwala, Louise Heavens and Alexander Smith)
