Deutsche Bank Loss Is Smaller Than Estimated on Investment Bank
Oct. 27 (Bloomberg) -- Deutsche Bank AG, Germany's biggest bank, reported a third-quarter loss that was smaller than estimated as higher profit at the investment bank cushioned a writedown on its Deutsche Postbank AG stake.
The net loss of 1.21 billion euros ($1.66 billion) compares with a profit of 1.38 billion euros in the year-earlier period, the Frankfurt-based company said today. Analysts predicted a 1.52 billion-euro loss after Deutsche Bank said on Sept. 21 it would book a 2.3 billion-euro charge related to Postbank.
Chief Executive Officer Josef Ackermann completed a record 10.2 billion-euro share sale this month to buy the rest of Bonn- based Postbank and meet stricter capital rules. Pretax profit at the investment bank, known as corporate banking and securities, rose 12 percent to 1.1 billion euros, beating the 888 million- euro estimate of analysts.
"Deutsche Bank's investment-banking unit performed much better than competitors," said Konrad Becker, a Munich-based analyst at Merck Finck & Co., who recommends buying the shares. "This helped cushion the overall loss on the Postbank charge."
UBS AG, Switzerland's biggest bank, reported a surprise third-quarter loss at its investment bank yesterday on a slump in trading. Credit Suisse Group AG, Switzerland's No. 2 bank, posted a 74 percent drop in third-quarter profit as lower client activity curbed trading revenue. Both firms are based in Zurich.
Postbank Offer
Deutsche Bank has fallen 8.7 percent in Frankfurt trading this year, valuing the company at 38.3 billion euros. The decline compares with a 3.4 percent drop in the Bloomberg Europe Banks and Financial Services Index.
"In a stable economic environment, we will work to achieve continued earnings growth," Ackermann, 62, said in a letter to the shareholders today. With Postbank, "we will significantly enhance our position in our home market and thus strengthen our second key source of revenues alongside our successful investment banking business."
Net income excluding the Postbank charge would have been 1.1 billion euros in the quarter, the bank said.
Ackermann is building up his consumer-banking and asset- management operations to counterbalance the investment bank, where earnings are more vulnerable to financial market swings. Since 2006, Deutsche Bank acquired Berliner Bank AG, Nuremberg- based Norisbank AG and private wealth manager Sal. Oppenheim Group, as well as a 30 percent stake in Bonn-based Postbank.
Investment Bank
Deutsche Bank offered 25 euros a share in cash last month to Postbank's outstanding shareholders. A takeover of Postbank, which may cost an estimated 6.4 billion euros if all shareholders accept the offer, would more than double Deutsche Bank's retail clients to 24 million and add about 1,100 branches.
Sales and trading at the investment bank, run by Anshu Jain, fell 4 percent in the quarter, less than at UBS and Credit Suisse. Revenue from debt and other products increased 5 percent to 2.24 billion euros while equity trading revenue slipped 25 percent to 650 million euros.
Earnings from the consumer-banking unit rose 64 percent to 245 million euros. That exceeded the analysts' estimate of 217 million euros. Asset and wealth management posted pretax profit of 78 million euros, down from 134 million euros in the year- earlier period. Pretax profit from transaction banking increased 6 percent to 214 million euros.
Capital Rules
Deutsche Bank reiterated today that it aims to double pretax profit at its operating businesses to 10 billion euros by 2011 from 2009 levels, helped by gains in investment banking, Asia and consumer lending.
Regulators from 27 nations last month more than doubled capital requirements for banks to avert future financial crises. Deutsche Bank expects to meet higher standards planned for 2019 as early as the beginning of 2013, Ackermann said today.
The bank's Tier 1 capital ratio, a measure of financial strength, totaled 11.5 percent at the end of September, compared with 11.3 percent at the end of the second quarter. The ratio doesn't include the share sale.
To contact the reporters on this story: Aaron Kirchfeld in Frankfurt at akirchfeld@bloomberg.net
To contact the editors responsible for this story: Frank Connelly at fconnelly@bloomberg.net Edward Evans at eevans3@bloomberg.net
Find out more about Bloomberg for iPhone: http://m.bloomberg.com/iphone/Víctor Lei
No comments:
Post a Comment