Deutsche Bank Q2 Profit Soars, Revenues Down; Warns On Outlook; Stock Dips

Deutsche Bank AG (DB) on Thursday reported significantly higher profit in its second quarter with lower provision for credit losses and lower expenses. Meanwhile, the company said the level of profitability falls short of its longer term aspirations. Revenues declined with weak results in all segments. The shares of the German banking giant were declining around 4 percent in the morning trading.

John Cryan, Chief Executive Officer, said, “Our second-quarter results give a good summary of where we stand today. Profitability is significantly better than a year ago. We made good progress in bringing costs down and continued to attract net money inflows from clients. Despite the significant improvement, this level of profitability falls short of our longer term aspirations.”

The company added that revenues were not as universally strong as it would have liked, in large measure because of muted client activity in many of the capital markets.

“As we modernise our bank we are turning our focus onto building profitable growth,” Cryan said.

For the second quarter, net income surged to 466 million euros from last year’s 20 million euros. Pre-tax profit more than doubled to 822 million euros from 408 million euros in the second quarter of 2016.

Provisions for credit losses were 79 million euros, a 70 percent decline from last year, primarily driven by broad-based improved performance in the Corporate & Investment Bank.

The increase in profit also reflected a 15 percent drop in noninterest expenses to 5.7 billion euros with lower restructuring and impairment costs, the effects from disposals and the closure of the Non-Core Operations Unit, lower litigation costs and cost-management efforts. Adjusted costs declined 6 percent.

Group net revenues, meanwhile, decreased 10 percent to 6.62 billion euros from the the prior year’s 7.39 billion euros.

The company said the revenues reflected the negative impact of more than 340 million euros from the tightening of spreads on own debt and losses on sales of businesses.

Among segments, Corporate & Investment Bank net revenues declined 16 percent year-over-year to 3.6 billion euros, including the negative impact from Debt Valuation Adjustments. Excluding this effect, revenues were 14 percent lower.

In the segment, Global Transaction Banking net revenues fell 12 percent, Origination and Advisory revenues decreased 7 percent, Financing revenues fell 5 percent and Sales & Trading revenues declined 12 percent.

Private & Commercial Bank net…

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