Deutsche Bank profit tops forecast despite investment bank revenue drop

Deutsche Bank Beats Profit Forecast as Retail and Corporate Banking Outperform

Deutsche Bank Third-Quarter Results Overview

By Tom Sims and Matthias Inverardi

Profit Growth Defies Expectations

FRANKFURT, Oct 28 (Reuters) - Deutsche Bank reported a 2% rise in third-quarter profit on Wednesday, defying expectations for a decline, as strength in its retail and corporate banking businesses offset weaker investment bank revenue.

Germany's largest lender posted net profit attributable to shareholders of €1.59 billion ($1.77 billion), up from €1.56 billion a year earlier and ahead of analysts' average forecast of €1.44 billion.

Investment Banking Performance

Signs of Weakness in Investment Banking

The results add to signs of weakness at major investment banks as volatile capital markets weighed on activity during the quarter.

Rising bond yields, concerns over AI and geopolitical conflicts have unsettled investors and corporate boardrooms, curbing dealmaking and weighing on investment banking revenue.

Trading Revenue and Market Comparison

Revenue from fixed-income and currency trading, one of Deutsche Bank's largest businesses, fell 3% after a record performance a year earlier. The decline was in line with expectations and less severe than the 5% drop reported by US peers.

For the investment bank as a whole, revenue was down 2%, in line with expectations. The division remained Deutsche Bank's largest revenue contributor.

Outlook and Sector Context

Optimistic Full-Year Forecast

Deutsche Bank struck a more optimistic tone on its full-year outlook, forecasting group revenue of more than €33 billion, compared with previous guidance of around €33 billion.

European Banking Sector Trends

A flurry of European banks report earnings this week including UBS and BNP Paribas, with investors watching whether they can sustain recent record profits.

HSBC rattled the sector on Tuesday after it disappointed investors on revenue growth, sending shares in Europe's most valuable bank down 5%.

Deutsche Bank's shares were indicated to open up 2%.

Retail and Corporate Banking Outperformance

Private and Corporate Bank Results

The bank's other two main divisions outperformed expectations. Revenue at the private bank rose 8%, compared with expectations for a gain of 7%. Revenue at the corporate bank rose 9%, ahead of an expected 6% gain.

CEO Statement and Strategic Progress

"We are delivering on our commitments and are firmly on track to meet our 2026 objectives," CEO Christian Sewing said.

Turnaround and Stability

The figures extend Deutsche Bank's run of quarterly profits in recent years as Sewing continues a turnaround that has stabilised the bank after years of turmoil.

($1=0.8981 euros)

(Reporting by Tom Sims and Matthias Inverardi. Editing by Clarence Fernandez and Mark Potter)