Deutsche Bank profit up 10%, defying expected decline, as investment bank booms
Deutsche Bank Surpasses Profit Expectations in Second Quarter
By Tom Sims and Matthias Inverardi
FRANKFURT, July 29 (Reuters) - Deutsche Bank posted on Wednesday a rise of 10% in second-quarter profit, defying expectations for a drop, as strength at its global investment banking division offset a rise in expenses.
Quarterly Financial Performance
Germany's largest lender recorded net profit attributable to shareholders of €1.64 billion ($1.87 billion) in the quarter, up from €1.49 billion a year earlier, bettering analysts' expectations for a profit of €1.38 billion.
The profit gain is more muted than at some big U.S. and European competitors, which have also benefited from a trading boom in the wake of the Iran war, merger and acquisition deals and initial public offerings.
CEO Commentary and Strategic Outlook
"We have upside to our 2028 targets," CEO Christian Sewing said.
The figures extend a nearly continuous return to quarterly profit over recent years, as Sewing stabilised one of the globe's most significant lenders.
Expense Increases and Business Exits
Profit in the quarter was partly damped by an increase of 8% in expenses, among them a hit of nearly €100 million from the exit of the bank's retail business in India, announced at the end of June.
Investment Banking Division Performance
Deutsche's global investment bank remained the biggest revenue generator in the quarter, with revenues rising 19%, more than an expected 7.6% increase.
Fixed-Income and Currency Trading
Within the investment bank, revenue at its fixed-income and currency trading business, one of the bank's largest, rose 16%, better than expectations for a 5.1% increase.
Comparison with Global Peers
Such revenue was up 13% on average for the top five U.S. banks, ranging from 6% at JPMorgan to 32% at Goldman Sachs. Deutsche's division also outpaced European rivals Barclays and BNP Paribas.
Origination and Advisory Services
Business including origination and advisory services was 36% higher, versus expectations for a rise of 18%. Deutsche Bank was among the lenders helping with SpaceX's IPO and Alphabet's capital-raising.
Performance of Other Divisions
Revenue at Deutsche's other two big divisions was more muted.
Retail and Corporate Banking
At the retail division revenue was up 8%, slightly ahead of expectations for a 7.3% rise. The corporate bank saw a 1% rise in revenue, while analysts had seen a drop of around 1.2%.
($1=0.8772 euros)
(Reporting by Tom Sims and Matthias Inverardi; Editing by Kirsti Knolle and Clarence Fernandez)