FRANKFURT (dpa-AFX) - Germany's Deutsche Bank AG (DB) reported Thursday a profit in its third quarter, compared to loss a year ago. Last year, the company had registered a hefty 5.8 billion euros impairment charge related to Hua Xia Bank Co. Revenues also were higher in the quarter.
John Cryan, Chief Executive Officer, said, 'The results for the quarter demonstrate well the strengths of our operating businesses .... We continued to make good progress on restructuring the bank. However, in the past several weeks these positive developments were overshadowed by the attention around our negotiations concerning the Residential Mortgage Backed Securities matter in the United States. This had an unsettling effect. The bank is working hard on achieving a resolution of this issue as soon as possible.'
As per reports, Cryan is under pressure to lower cost further as mounting legal expenses threaten to undermine profitability. While a sell-off in the shares accelerated last month when the U.S. Justice Department asked $14 billion to settle a probe tied to residential mortgage-backed securities, Cryan said he doesn't plan to raise capital and expects U.S. authorities to scale back their initial demand.
The bank is also said to be considering options such as scaling back U.S. operations as part of a wider overhaul to lower costs, according to several media reports.
On October 12, the U.S. Securities and Exchange Commission announced that Deutsche Bank has agreed to pay a $9.5 million penalty for failing to properly safeguard non-public information generated by its research analysts.
In its third quarter, the bank's net income was 278 million euros, compared to last year's hefty loss of 6.02 billion euros. Pre-tax profit was 619 million euros, compared to last year's loss of 6.10 billion euros.
The profit was achieved despite cost burden of restructuring and severance, litigation, impairments and de-risking of Non-Core Operations Unit of 1.0 billion euros, the company said.
Net revenues increased to 7.49 billion euros from 7.33 billion euros last year amid a tough interest rate environment.
Global Markets net revenues climbed 10 percent, benefited by the Credit and Rates businesses. Revenues in Emerging Markets, Asia Pacific Local Markets and Equities were down.
Corporate & Investment Banking revenues were hurt by weakness in Advisory and Transaction banking revenues.
Revenues in the Private, Wealth and Commercial Clients segment grew 20 percent benefited from the absence of a charge related to Hua Xia Bank Co. Ltd. taken in the prior year quarter.
Excluding the impact of strong positive mark-to-market movements on policyholder positions in Abbey Life, Deutsche Asset Management net revenues declined 8 percent.
Provision for credit losses was 327 million euros, 58 percent higher than a year ago, mainly due to higher provisions in CIB reflecting continued market weakness in the Shipping and Oil & Gas sectors. Noninterest expenses were 50 percent lower at 6.5 billion euros.
In Germany, Deutsche Bank shares are currently trading at 13.33 euros, up 0.26 percent.
Copyright RTT News/dpa-AFX