Deutsche Bank posted a 58 percent drop in net profit in the first quarter, to €236m compared with the same period last year.
Revenues dropped 22 percent year-on-year to €8.1bn, owing to "reflected a challenging environment and the impact of strategic decisions to downsize and exit certain businesses." But non-interest expenses fell 17 per cent to €7.2bn as litigation charges tailed off.
The bank's CET1 ratio stood at 10.7 per cent for the period, and the plan to sell off its stake in Hua Xia Bank in the second quarter is expected to add around 50 bps.
Deutsche Bank's share price was up 3.3 per cent in early trading.
Why it's interesting
Yes the figures are bad, but we already knew they were going to be.
Deutsche Bank is one of the banks to have suffered most as investors back away from the sector, with its share price down more than 25 per cent year-to-date. Co-chief executive John Cryan had already kitchen sinked the group by telling the world it wouldn't be profitable this year.
So despite the slump in profits and revenues, investors were clearly cheered by the firm's update on its turnaround plans, with Cryan looking to act quickly.
What Deutsche Bank said
Cryan said: “Financial markets were challenging during the first quarter, largely reflecting concerns about the outlook for the global economy. This uncertainty led to a decline in client activity in the capital markets, and our revenues fell from the prior year, most notably in our trading and corporate finance businesses. Our results reflect these challenging conditions as well as the impact of our strategic decisions to exit or reduce significantly selected businesses.
“Despite this, we made progress on a number of fronts including the modernisation of our IT platforms; the operational separation of Deutsche Postbank, which is almost complete; the continued disposal of non-core assets; and the ongoing closure or downsizing of our operations in selected countries. In addition, we markedly improved the process through which we adopt new clients.”
Cryan added: “Implementing our strategy remains our core focus and 2016 will be the peak year for our restructuring efforts. We expect to close the sale of our stake in Hua Xia Bank in the second quarter and this will strengthen our CET1 ratio. We continue to upgrade our technology, strengthen our control environment, and work towards resolving outstanding litigation matters.”
There will almost certainly be more short-term pain - but the business appears confident there is light at the end of the tunnel.