Deutsche Bank swings to profit

Deutsche Bank AG struck on Wednesday a more positive tone on its revenue outlook for the year after a strong performance of its investment bank helped the bank post higher revenue and swing to a profit in the second quarter.

The bank said it now expects revenue for the year to be essentially flat. It had previously guided for slightly lower revenue.

The improved guidance comes as the German lender swung to an after-tax profit in the second quarter, while also posting higher revenue, as a strong quarter for its investment-bank unit helped offset higher bad-loans provisions.

After-tax profit for the period was 61 million euros ($71.5 million) compared with a EUR3.15 billion loss a year earlier, when heavy restructuring charges weighed on the results, while analysts had expected a loss of EUR46 million.

Revenue rose 1% to EUR6.29 billion, beating expectations of EUR6.11 billion. Investment-bank revenue rose 46% on year, with fixed-income revenue up 39%.

The German bank set aside EUR761 million to cover credit losses, adding to the roughly half a billion euros it stowed away in the first quarter. Like other banks in Europe and the U.S., the lender is preparing for a potential wave of loan losses brought about by the coronavirus pandemic. Earlier this month, U.S. banks JPMorgan Chase & Co., Wells Fargo & Co. and Citigroup Inc. took $28 billion in bad-loan charges.

However, the provisions are lower than the EUR818 million analysts had forecast, according to a consensus forecast provided by the bank.

The second-quarter results may bolster Chief Executive Christian Sewing’s overhaul, which includes cutting 18,000 jobs and exiting businesses.

“In a challenging environment we grew revenues and continued to reduce costs, and we’re fully on track to meet all our targets,” Mr. Sewing said.

Deutsche Bank posted a loss attributable to shareholders of EUR77 million compared with a loss of EUR3.27 billion a year earlier.

Pietro Lombardi

source:marketwatch.com