Deutsche Bank plans job cuts as retail lifts profit
DEUTSCHE Bank’s third-quarter pre-tax profit beat forecasts as retail banking and asset management offset a drop in investment banking which it warned was facing the toughest conditions since 2008 that could lead to more job cuts.
Weaker market activity forced Germany’s flagship lender to drop ambitious full-year targets earlier this month and announce 500 job cuts. Yesterday the bank said it was in the process of cutting 10 per cent of its investment banking staff.
“During the third quarter, the operating environment was more difficult than at any time since the end of 2008, driven by a deteriorating macro-economic outlook, and significant financial market turbulence,” said chief executive Josef Ackermann.
Finance chief Stefan Krause said the bank would continue to adjust headcount if the market environment persisted, adding that the outlook for the sector remained highly dependent on the resolution of Europe’s sovereign debt crisis.
The Frankfurt-based bank said its third-quarter pre-tax profit was €942m (£819.3m). Analysts had forecast a figure of €572m, compared with a year-earlier loss of €1.05bn.
But pre-tax profit from the corporate and investment bank fell to €329m from €1.3bn in the year-earlier period as trust services, trade finance and cash management only partially offset a 34 per cent slump in debt market sales and trading.
Overall, group results were flattered by a gain in economically hedged positions and a gain from the widening of credit spreads on its own debt as well as a lower-than expected VAT claim, analysts covering the firm said.