Deutsche Bank reveals slump in profit due to euro weakness

 
City A.M. Reporter
DEUTSCHE Bank rushed out a profit warning yesterday afternoon, and became the latest global investment bank to reveal weak second quarter pre-tax profit, as the flagging euro and lower trading activity hit earnings.

Preliminary figures released yesterday ahead of Deutsche’s planned 31 July reporting date showed the bank expects quarterly pre-tax profit of about €1bn (£645m), down from €1.8bn a year earlier and below market expectations. Deutsche said it would take steps to de-risk its operations as a result.

Deutsche blamed the weak euro for inflating its dollar and sterling cost base, shrinking its second-quarter net income to about €700m from the €1.2bn a year before. The results are the first since new co-chief execs Anshu Jain and Jürgen Fitschen took over in June.

Philipp Haessler, banking analyst at Equinet, said: “The figures are weaker than expected, mainly due to costs and risk provisions.”

Costs were €300m higher than expected, Metzler bank analyst Guido Hoymann said, adding the results did not appear to include any provisions for a potential settlement in the Libor rigging scandal.

An internal probe at Deutsche found that two of its former traders may have been involved in colluding to manipulate benchmark interest rates, but there was no indication of failure at the top of the organisation, three people close to the investigation said.