Deutsche Bank Posts Surprisingly Strong Q2 Preliminary Results for 2018

Marco Green
July 18, 2018

Before today, Deutsche Bank's stock was down nearly 40 percent this year, making it the worst-performing bank stock in Europe.

But analysts and investors said it was too early to judge whether Deutsche was on a sustainable path to recovery. It is likely to be seen as a positive sign for Christian Sewing, Deutsche Bank's new chief executive, who took over in April and has set out a plan to cut more than 7,000 jobs.

Shares in Deutsche zoomed up over 7% following the earnings preview, which German regulators require when results diverge dramatically from market expectations. The bank had been the worst-performing banking stock in Europe this year amid the tumult, down about 36 per cent.

Deutsche Bank AG has unexpectedly released its preliminary second quarter 2018 results on Monday.

A sign of just how dramatically Deutsche Bank has fallen: United States rival JP Morgan's net income of more than €7 billion in the second quarter was higher than Deutsche Bank's entire company-wide revenue (€6.6 billion).

The lender said group revenue will be about 6.6 billion euros, with the corporate and investment bank accounting for about 3.5 billion euros of that figure. Both are one-off effects that don't say anything about the unit's underlying business.

Costs are expected to come in at 5.8 billion euros, compared with estimates of 6.0 billion euros, Deutsche said.

Due to the expensive legal settlements in connection to accusations of criminal fraud, Deutsche Bank's annual profits have been deep in the red for the past three consecutive years.

Restructuring reduced the number of employees by 1,700 in the second quarter to slightly above 95,400, according to the bank. "That said, at this point in time, we don't think that the fundamental investment case changes".

On the positive side, Deutsche Bank seems to have managed to hold on to its market share in the business of advising companies on acquisitions and providing them with access to capital markets as revenue in its advisory and origination rose two per cent, compared with a stagnant overall fee pool at the three reporting USA banks.

"Management believes that these results demonstrate the resilience of the franchise", Deutsche Bank said in the filing.

Other reports by Click Lancashire

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