Tax credits boost profit at Deutsche
DEUTSCHE Bank yesterday said it expects third-quarter profit to triple after a boost from tax credits, though analysts said the market had been anticipating an even better performance from the bank.
Germany’s biggest bank said pre-tax profit for the three months to September would be in the range of €1.3bn (£1.17bn), with net profit coming in at around €1.4bn after the conclusion of a number of tax audits.
The firm said its core tier one capital ratio, a key indicator of its regulatory cash reserves, would be around 11.7 per cent at the end of the quarter, up from 11 per cent in June.
But analysts said the figures were languishing somewhat behind the stellar results posted by the bank’s large US rivals in recent days.
“I suspect that the market had secretly anticipated even better figures,” said Hamburger Sparkasse analyst Christian Hamann.
Equinet analyst Philipp Haessler added that the results – which smashed previous pre-tax profit forecasts of just under €1.2bn – were positive. But he added: “We continue to see high risks for a capital increase and declining earnings in the coming quarters due to a normalisation of the capital market environment.”
Deutsche, which avoided tapping the German government for aid over the course of the crisis, said it expected all business segments would report positive results when it releases a full earnings report next Thursday.
HOW DO DEUTSCHE BANK’S AND MORGAN STANLEY’S RESULTS COMPARE TO THEIR RIVALS?
Deutsche Bank and Morgan Stanley are just the latest in a string of top banking players to report impressive sets of results for the third quarter of the year.
Continued strength in fixed income last week drove US giant Goldman Sachs to quadruple its third-quarter earnings to $3.2bn (£1.93bn) despite a lacklustre performance in the group’s investment banking division.
Group income of $3.19bn was more than three times the $845m earned over the same period last year, while revenue in fixed income, currency and commodity trading (FICC) ballooned to $5.99bn, 274 per cent above the $1.6bn the division posted last year.
JP Morgan Chase’s bumper $3.6bn quarterly profit was also a tough act to follow as its investment bank capitalised on the disappearance of some rivals and the weakness of others, offsetting rising losses on credit cards and other consumer loans.
Only Citigroup, which inched to an unexpected third quarter profit of $101m on the back of $20.39bn in revenues, has failed to impress.
Analysts pointed out that, but for stock dividends and one-off items, the bank would have recorded a $3.2bn loss.
Chief executive Vikram Pandit said the firm was still being weighed down by loan losses from troubled US consumers.