Deutsche Bank says expects Q2 profit above expectations

Lloyd Doyle
July 18, 2018

The Frankfurt-based bank expects a net income of around €400 million.

The earnings surprise was a rare piece of good news for Deutsche Bank investors that have seen the shares trading at a record low, a tumultuous management reshuffle and a plan to reduce its global presence in its fourth major strategic overhaul in three years.

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

Deutsche Bank announced it would achieve pre-tax profits of 700 million euros (820 million US dollars) and a net quarterly result of 400 million euros in the period between April and June. New Chief Executive Officer Christian Sewing is cutting thousands of jobs and paring back businesses in the USA and Asia after recent attempts to restore profitability ended up eroding revenue.

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 earlier indicated that the top line would probably be lower.

Deutsche's preliminary report said its key sales and trading revenues were down 15 percent, while revenues at the investment bank benefited from about 100 million euros from an asset sale. However, according to the statement: "Management believes that these results demonstrate the resilience of the franchise", and added the restructuring has "progressed rapidly".

On the plus side, second-quarter earnings for the STOXX 600 are expected to grow 8.1 percent year-on-year, an improvement on the first quarter.

The results are considerably above the average consensus estimate, as compiled by Deutsche Bank and published on July 11, 2018, with IBIT of EUR 321 million and net income of EUR 159 million, revenues of EUR 6.4 billion. This is compared to the market's expectation of €6.4 billion. What the bank doesn't say in its latest release: No progress has been made in its key figures when compared to the same period a year ago.

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