Deutsche Bank raises quarterly profits despite crisis
Germany's biggest bank, Deutsche Bank, reported improved second-quarter profits on Tuesday even though its core investment unit slumped amidst concern about the eurozone debt crisis.
The bank also provided figures detailing its exposure to eurozone public debt which indicated it was not at risk of heavy losses in the event of defaults.
Shares in the bank rose sharply in opening trading on the Frankfurt stock exchange.
Deutsche Bank said that net profit gained nine percent to 1.2 billion euros (1.56 billion dollars), from 1.1 billion in the same period a year earlier.
The improvement was in part the result of consolidated activities from new acquisitions, including ABN Amro's commercial banking activities in the Netherlands and sharply lower quarterly provisions for credit losses.
They plunged from one billion euros to 243 million, a statement said.
Deutsche Bank said it was still on target to make a pre-tax profit of 10 billion euros by next year.
The statement acknowledged however that sales from the bank's corporate and investment banking unit, its biggest earner, fell to 4.7 billion euros from 5.3 billion in the same period of 2009 as investors hit by the eurozone crisis stayed on the sidelines.
"In a quarter which was characterised by increased investor uncertainty and higher market volatility, Deutsche Bank's investment banking business followed the industry-wide trend of weaker profitability," chairman Josef Ackermann was quoted as saying.
Deutsche Bank's private client and asset management segment delivered its best quarterly result since the peak of the financial crisis, meanwhile.
"This demonstrates the strength of our diversified business portfolio," Ackermann said.
After declining to detail holdings of European sovereign debt as part of stress tests published on Friday, Deutshe Bank gave the figures on Tuesday, and they showed its exposure was relatively limited.
As of March 31, the German bank held for example a total of 1.682 billion euros in bonds issued by local, regional and national authorities in Greece, and 1.949 billion euros in Spain.
Although second-quarter net profit edged higher, the banking group's net revenues slipped to 7.2 billion euros from 7.9 billion in the same period of 2009.
That owed in part to charges of about 270 million euros on commercial paper activities, others of 124 million on gambling properties and net mark-downs of 57 million euros on other assets, the statement said.
On the upside, the acquisition of ABN Amro assets added 208 million euros to Deutsche Bank's bottom line, the statement said.
For the first six months of 2010, Deutsche Bank reported revenues of 16.2 billion euros, up from 15.2 billion in 2009.
The bank said it had core capital equivalent to 11.3 percent of total assets.
In stress tests conducted on 91 major European banks, the required ratio was 6.0 percent when taking into account a hypothetical economic recession along with sharp losses on loans and investments in stocks and government bonds.
Shares in Deutsche Bank gained 2.82 percent to 51.8 euros in early Frankfurt trading, while the DAX index of leading German shares was up by 0.49 percent overall.
© 2010 AFP