Deutsche Bank profits up,despite volatile markets

29th October 2004, Comments 0 comments

29 October 2004 , FRANKFURT - Deutsche Bank, Germany's biggest bank, kicked off the banking sector's third-quarter reporting season Friday by posting an 18 percent rise in earnings. A clampdown on costs and lower risk provisioning helped to offset a drop in revenue from equity trading. The Frankfurt-based bank beat analysts' forecasts by reporting that its third-quarter net profit rose to EUR 680 million. This compares to EUR 576 million in the same three-month period last year. Releasing the results, Deu

29 October 2004  

FRANKFURT - Deutsche Bank, Germany's biggest bank, kicked off the banking sector's third-quarter reporting season Friday by posting an 18 percent rise in earnings.

A clampdown on costs and lower risk provisioning helped to offset a drop in revenue from equity trading.

The Frankfurt-based bank beat analysts' forecasts by reporting that its third-quarter net profit rose to EUR 680 million. This compares to EUR 576 million in the same three-month period last year.

Releasing the results, Deutsche Bank chief Josef Ackermann, who is in the middle of a major restructuring of the bank, said it had achieved the results despite a "very challenging" business environment in the third quarter.

He added that specific business areas had been hit by tough operating conditions and that management was forced to take decisive action to boost performance.

Nevertheless, he said: "We continue to reap the benefits of our transformation strategy, and our overall performance in this environment was very robust."

But underscoring Deutsche Bank's dependence on volatile global markets, the bank said that trading income at its key corporate and investment banking operations slumped 10 percent to EUR 1.27 billion and asset management revenue tumbled by 16 percent.

Ackermann has set a goal of raising the bank's pre-tax return on equity to 25 percent by 2005. In the third quarter, the return was 16 percent, which was down on the 18 percent reached in the second quarter but higher than the 11 percent return in the third quarter a year ago.

At the same time, bank expenses during the third-quarter fell from EUR 4.23 billion 12 months ago to EUR 3.97 billion, loan-loss provisions dropped by 53 percent to EUR 83 million compared to last year and as a result helped to buoy the bank's latest earnings.

Net income for the first nine months of 2004 was EUR 2.3 billion, up 145 percent from EUR 929 million in the first nine months of 2003, Deutsche said.

The release of Deutsche Bank's results comes ahead of the publication during the next two weeks of the third-quarter earnings for its key German rivals - HVB AG, Commerzbank AG and Dresdner, which is the banking offshoot of the giant Munich-based insurer Allianz AG.

With bank earnings having slumped in recent years as a result of a protracted period of economic stagnation, escalating business bankruptcies and weak global markets, Germany's big banks have been attempting to boost earnings by slashing costs including laying off thousands of workers and refocusing their corporate strategies.

But as a further sign of the impact on Deutsche Bank's results of the less-than-sparkling performance by global markets, the bank said that total third-quarter revenue edged down to EUR 5.1 billion from EUR 5.4 billion during the second quarter.

Deutsche Bank said that while interest income fell 28 percent to EUR 1.16 billion, fee and commission income declined 4 percent to EUR 2.3 billion.

Reflecting investor disappointment with the results, Deutsche Bank's shares dropped 0.8 percent following the release of the figures and consequently added to the downward pressure on stock which has dropped by about 10 percent since the start of the year.

DPA

Subject: German news

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