Deutsche Bank drops 2008 targets after posting first quarter loss
Germany's biggest bank, Deutsche Bank, abandoned earnings targets for 2008 after posting Tuesday its first quarterly loss in five years as a result of the global credit crunch.
By Agencies |
FRANKFURT: Germany's biggest bank, Deutsche Bank, abandoned earnings targets for 2008 after posting Tuesday its first quarterly loss in five years as a result of the global credit crunch.
Financial director Anthony di Lorio said the financial crisis made it impossible to provide an accurate forecast for the full year.
The bank reported a first quarter pretax loss of 254 million euros (397 million dollars) as it took write-downs of 2.7 billion euros, reversing the year-earlier pretax profit of 3.16 billion euros.
The net result, excluding minority holdings, fell to a loss of 131 million euros from a profit of 2.12 billion euros.
The bank said it had managed to limit its losses through the sale of share holdings in German groups Daimler, Allianz and Linde.
Without tese gains, the net loss would have climbed to 1.1 billion euros. As a result, the bank's 2008 net profit target of 8.4 billion euros excluding exceptional items appeared to be out of reach.
Earlier, it had seemed to have escaped the worst of a crisis that has taken a heavy toll on other German banks but on April 1 Deutsche Bank warned that its lucrative investment banking unit had taken a hit as well.
The first-quarter results were undercut by 1.77 billion euros in mark-downs on leveraged loans and loan commitments, plus 885 million euros for commercial real estate loans and residential mortgage-backed securities.
In all, the charges came to 2.7 billion euros, higher than the April 1 forecast of about 2.5 billion euros.
"In the month of March, pressure on the banking sector was more intense than at any time since the current credit downturn began. Inevitably, this left its mark on Deutsche Bank's results."
Ackermann stressed that the bank was "well positioned to emerge stronger than ever from the crisis.
"We are equally determined to meet near-term challenges and to take advantage of longer-term opportunities," he added.
A breakdown of the results showed that the Corporate and Investment Bank unit, normally a strong contributor, saw revenues plunge 77 percent to 1.5 billion euros.
Shares in the bank fell 0.98 percent to 76.02 euros in morning Frankfurt trade while the Dax index of leading shares was down 0.56 percent overall.
Analysts said the results were better than the market had expected but a local trader nonetheless commented that they still looked "pretty bad" and predicted they would put pressure on the bank's shares all day.
Financial director Anthony di Lorio said the financial crisis made it impossible to provide an accurate forecast for the full year.
The bank reported a first quarter pretax loss of 254 million euros (397 million dollars) as it took write-downs of 2.7 billion euros, reversing the year-earlier pretax profit of 3.16 billion euros.
The net result, excluding minority holdings, fell to a loss of 131 million euros from a profit of 2.12 billion euros.
The bank said it had managed to limit its losses through the sale of share holdings in German groups Daimler, Allianz and Linde.
Without tese gains, the net loss would have climbed to 1.1 billion euros. As a result, the bank's 2008 net profit target of 8.4 billion euros excluding exceptional items appeared to be out of reach.
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Deutsche Bank had already warned it would be hard to make that target owing to the international financial crisis, which was sparked by the collapse in August last year of the US market for high risk, or subprime, mortgages.Earlier, it had seemed to have escaped the worst of a crisis that has taken a heavy toll on other German banks but on April 1 Deutsche Bank warned that its lucrative investment banking unit had taken a hit as well.
The first-quarter results were undercut by 1.77 billion euros in mark-downs on leveraged loans and loan commitments, plus 885 million euros for commercial real estate loans and residential mortgage-backed securities.
In all, the charges came to 2.7 billion euros, higher than the April 1 forecast of about 2.5 billion euros.
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Chairman Josef Ackermann was quoted Tuesday as saying that "in the first quarter of this year, financial market conditions were the most difficult in recent memory."In the month of March, pressure on the banking sector was more intense than at any time since the current credit downturn began. Inevitably, this left its mark on Deutsche Bank's results."
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Deutsche Bank partially offset the losses with 854 million euros in gains from the sale of shares in the German auto manufacturer Daimler, insurer Allianz and industrial gas group Linde.Ackermann stressed that the bank was "well positioned to emerge stronger than ever from the crisis.
"We are equally determined to meet near-term challenges and to take advantage of longer-term opportunities," he added.
A breakdown of the results showed that the Corporate and Investment Bank unit, normally a strong contributor, saw revenues plunge 77 percent to 1.5 billion euros.
Shares in the bank fell 0.98 percent to 76.02 euros in morning Frankfurt trade while the Dax index of leading shares was down 0.56 percent overall.
Analysts said the results were better than the market had expected but a local trader nonetheless commented that they still looked "pretty bad" and predicted they would put pressure on the bank's shares all day.
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