The third-quarter (Q3) results of Deutsche Bank have not only met but surpassed analysts’ projections, showcasing a remarkable resurgence for the German financial powerhouse.
Deutsche Bank announced on Wednesday its plans for increased share buybacks and hinted at a potentially larger return of capital to investors than initially projected. This revelation saw the German banking giant’s shares surge nearly 7% during midday trading in Frankfurt. The net profit attributable to shareholders for Deutsche Bank stood at an impressive 1.031 billion euros, surpassing the anticipated figure of approximately 937 million euros as forecasted by analysts.
Despite a slight dip in earnings, the financial institution celebrated its 13th consecutive profitable quarter, marking a significant turnaround after enduring substantial losses in previous years. Although revenue from Deutsche’s investment banking division experienced a decline, the retail and corporate sectors saw an encouraging uptick in interest rates. Notably, the retail segment emerged as the primary revenue generator, with analysts predicting it will continue to lead in revenue generation for the full fiscal year, surpassing the investment bank’s dominance in the previous three years.
James von Moltke, Chief Financial Officer of Deutsche Bank, expressed optimism regarding the original 8 billion euro capital return plan, indicating potential for further expansion, though he noted that the exact extent remains uncertain. Analysts at Mediobanca echoed this sentiment, asserting that the shares should be commended for this additional capital return.
Deutsche Bank’s origination and advisory business reported exceptional performance in the quarter, with revenue skyrocketing to 323 million euros, tripling its previous figure. CEO Christian Sewing attributed this success to a “strong and sustained business growth momentum” coupled with a continued focus on cost management. Sewing also disclosed plans for staff reductions.
While investment banking revenue experienced a modest 4% decline, it outperformed expectations, thanks to the robust showing of Deutsche’s origination and advisory business. In contrast, other major financial institutions reported varying results. Goldman Sachs experienced a 6% decrease in revenue for the quarter, while JPMorgan Chase saw a 1% increase. Barclays, on the other hand, reported a 13% drop in similar revenue.
The impressive Q3 results of Deutsche Bank, coupled with the promise of potential capital return to investors, elicited a positive response from the market, as evidenced by the 7% surge in the lender’s shares during midday trading in Frankfurt. Despite recent regulatory challenges that impacted Deutsche’s retail division, the bank’s overall outlook appears to be on an upward trajectory.
*(Currency exchange rate: $1 = 0.9433 euros)*