A ONE-OFF €2.3bn (£2bn) charge on Deutsche Bank’s acquisition of Postbank pushed Germany’s biggest lender into the red in the third quarter, though underlying results held up strongly when compared to the bank’s peers.
Deutsche Bank posted a pre-tax loss of €1bn for the quarter, compared to a profit of €1.3bn in the third quarter of 2009. Stripping out the Postbank charge, pre-tax earnings came in flat year-on-year at €1.3bn, while net revenue came in at €5bn, or €7.3bn adjusted for the Postbank charge, compared to €7.2bn last year.
Like its rivals, Deutsche – which earlier this month completed a €10.2bn rights issue to finance the Postbank takeover and strengthen its capital base in the face of stringent new regulatory requirements – saw investment banking revenues weaken over the quarter in the face of declining activity levels. The corporate and investment banking division posted revenues of €4.2bn, compared to €4.4bn last year, though chief executive Josef Ackermann signalled that a seasonal slowdown in July and August, exacerbated by concerns over sovereign risk and the fragility of the global recovery, had been followed by a “strong rebound” in September.
Within the division, Deutsche said equity sales and trading revenues fell 25 per cent as the bank, along with the wider sector, struggled with muted client activity. But sales and trading in debt and other products recorded a fillip of five per cent to €2.2bn compared to the third quarter of 2009, driven in particular by strong volumes in foreign exchange.
Deutsche was also buoyed over the quarter by a 29 per cent rise in global transaction banking revenues to €852m and a 29.7 per cent boost to asset and wealth management revenues to €1bn.
The bank also recorded a sharp fall in the provisions it made for losses on bad loans, putting aside €362m in the third quarter compared to €544m in the same period in 2009.
Deutsche set aside a €3bn compensation and benefits pot, up from €2.8bn in the third quarter last year, partly due to “significantly higher” expenses related to acquisitions and deferred compensation.