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Deutsche Bank has recorded its highest quarterly profits since 2014, thanks to a boom in bond trading, strong results in asset management and a net exit from its exposure at the Archegos Capital family office.
The leading German lender achieved a net profit of 908 million euros during the first three months of 2021, compared to 43 million euros in the first quarter of 2020.
Deutsche also raised its outlook for the full year to 2021, saying it expects revenues to be “essentially flat,” compared to previous indications of a year-over-year drop.
Years of heavy losses, falling market share and repeated board battles led CEO Christian Sewing in mid-2019 to undertake the group’s most radical restructuring in two decades, which involved reducing the investment bank with lower performance, drastically reducing the lender’s balance sheet and reducing 18,000 jobs. in 2022.
Although the strong restructuring costs caused losses of 5.7 billion euros in 2019, the lender has returned to profitability, having recorded a net profit of 113 million euros last year.
“Our first quarter is further proof that Deutsche Bank is on the right track in all four core businesses and is building sustainable profitability,” Sewing said.
The results exceeded analysts’ expectations by about 60%. Deutsche’s return on tangible equity, a key benchmark for profitability, stood at 7.4% in the first quarter and approached its 8% target for 2022.
The key driver of the performance was the investment bank, which recorded a year-on-year increase of 32% in revenues to 3.1 million euros, and the group’s asset management unit, where revenues increased 23% to 637 million euros. Both exceeded analysts ’expectations.
Bloomberg previously reported that Deutsche had an exposure of 3.4 million euros to an affected investment group Archers. However, unlike many colleagues (including rivals UBS and Credit Suisse) who have suffered heavy losses, the bank said on Thursday that it was able to develop its position without any success.
Deutsche’s private bank and corporate bank, which Sewing had previously promoted as divisions that could help squander the lender’s volatile investment banking income, reported that both fell in revenue. However, falling provisions for credit losses increased pre-tax profits in both units.
Deutsche’s Tier 1 equity ratio, a key indicator of balance sheet strength, rose to 13.7% of risk-weighted assets, up from 12.8% a year ago.
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