Deutsche Bank Q1 pretax profit tumbles as trading weighs

Deutsche Bank's pretax profit fell by nearly a third in the first quarter to 1.68 billion euros ($2.33 billion) as an industry-wide slump in bond trading revenue depressed results, but the drag on earnings was not as bad as that seen by some of its rivals.

The pretax contribution from the investment banking division fell by more than a fifth, dragged down by a 10 percent fall in trading revenue, the bank said in a statement. The division includes Deutsche Bank’s main trading unit, whose biggest business is fixed income.

The earnings tumble signals a weak start to 2014 in what is traditionally a strong quarter. However the drop was not as significant as analysts had expected.

Revenue declines in trading, especially in bonds, have dogged investment banking results at peers such Barclays, JPMorgan and Citigroup.

The bank, Germany's largest, said it expected to suffer a hit of 1.5 to 2.0 billion euros due to new EU regulations expected to come into force this year that impose prudent valuation rules on assets.

That effect plus weaker results may complicate the bank’s plans to fortify its capital base through retained profit in a year when tougher regulations and supervisory demands are expected to prove costly.

Still, Deutsche repeated its profitability targets for 2015, which call for a post-tax return on equity (ROE) of over 12 percent for the group. The bank posted an ROE of 7.9 percent for the quarter.Deutsche Bank had been expected to post quarterly pretax profit of 1.4 billion euros ($1.9 billion), around 1 billion less than a year earlier, according to the average result of a Reuters poll.

Net profit totalled 1.1 billion euros, down 34 percent, also better than analysts had expected.

EDITORIAL OF THE DAY

  • Electricity generators sit on hundreds of gigawatts waiting for buyers

    Be it a Lok Sabha, Rajya Sabha or a state legislature poll, power — as in electricity — remains a major issue on which elections are won or lost.

FC NEWSLETTER

Stay informed on our latest news!

INTERVIEWS

Sarthak Raychaudhuri

vice-president, HR, Asia South Whirlpool of India

GV Nageswara Rao

MD & CEO, IDBI Federal Life

Timothy Moe

Goldman Sachs

TODAY'S COLUMNS

Arun Kumar Jain

A complex challenge for our PSUs

Till the mid-1990s, the central government and its companies were ...

Rajgopal Nidamboor

Up the ante of your conscious existence

It sounds cryptic, but is not as complex as it ...

Dharmendra Khandal

The one in which a blue whale was washed ashore

Quite unexpectedly, a gigantic blue whale was washed ashore at ...

INTERVIEWS

William D. Green

Chairman & CEO, Accenture