Deutsche Bank escapes the worst from US sub-prime crisis
Deutsche Bank, the biggest private German bank, posted Wednesday a stronger third quarter net profit as one-off items and retail and asset management operations helped it overcome a global banking crisis.
By Agencies |
FRANKFURT: Deutsche Bank, the biggest private German bank, posted Wednesday a stronger third quarter net profit as one-off items and retail and asset management operations helped it overcome a global banking crisis.
Deutsche Bank thus escaped the situation of competitors like Swiss bank UBS, or US groups Merrill Lynch and Citigroup, which have been hit hard by the effects of the US subprime mortgage market meltdown. From July to September, the German bank's net profit grew by 31 per cent to 1.62 billion euros (2.34 billion dollars), exceeding an estimate provided earlier this month of 1.4 billion euros.
Solid returns from the bank's retail, asset management and transaction banking operations along with around 600 million euros in one-off gains from the sale of industrial holdings partly offset charges of 603 million euros on leveraged loans and loan commitments, as well as charges of 1.560 billion euros related to trading in structured credit products and mortgage-backed securities.
But pre-tax profit, the bank's own benchmark, fell by almost 19 percent to 1.45 billion euros, in line with market expectations. It was nonetheless better than Deutsche Bank's own initial estimation of a 33 per cent drop.
Profitability was also weaker than in the same period a year earlier, however, with return on equity of 12 per cent, compared with 26 per cent in 2006. For all of 2007, the bank is aiming for ROE of 25 per cent. "The third quarter of 2007 was a period of exceptional turbulence in financial markets," a bank statement quoted chairman Josef Ackermann as saying.
"In investment banking our performance was significantly impacted by this extremely challenging environment, however, our 'stable' businesses performed and we reaped the benefits of some recent investments." Ackermann reiterated the bank's objectives for next year.
"We reaffirm our commitment to delivering on our 2008 financial targets," the statement quoted him as saying. Deutsche Bank is aiming for a pre-tax profit of 8.4 billion euros excluding exceptional items in 2008, compared with 7.98 billion in 2006.
Ackermann said that the situation which emerged from a credit crunch that followed the subprime crisis "is also a time of opportunity for Deutsche Bank." Owing to its strong positions in investment banking, "we stand to benefit from the flight to quality," he forecast.
Deutsche Bank thus escaped the situation of competitors like Swiss bank UBS, or US groups Merrill Lynch and Citigroup, which have been hit hard by the effects of the US subprime mortgage market meltdown. From July to September, the German bank's net profit grew by 31 per cent to 1.62 billion euros (2.34 billion dollars), exceeding an estimate provided earlier this month of 1.4 billion euros.
Solid returns from the bank's retail, asset management and transaction banking operations along with around 600 million euros in one-off gains from the sale of industrial holdings partly offset charges of 603 million euros on leveraged loans and loan commitments, as well as charges of 1.560 billion euros related to trading in structured credit products and mortgage-backed securities.
But pre-tax profit, the bank's own benchmark, fell by almost 19 percent to 1.45 billion euros, in line with market expectations. It was nonetheless better than Deutsche Bank's own initial estimation of a 33 per cent drop.
Profitability was also weaker than in the same period a year earlier, however, with return on equity of 12 per cent, compared with 26 per cent in 2006. For all of 2007, the bank is aiming for ROE of 25 per cent. "The third quarter of 2007 was a period of exceptional turbulence in financial markets," a bank statement quoted chairman Josef Ackermann as saying.
"In investment banking our performance was significantly impacted by this extremely challenging environment, however, our 'stable' businesses performed and we reaped the benefits of some recent investments." Ackermann reiterated the bank's objectives for next year.
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"We reaffirm our commitment to delivering on our 2008 financial targets," the statement quoted him as saying. Deutsche Bank is aiming for a pre-tax profit of 8.4 billion euros excluding exceptional items in 2008, compared with 7.98 billion in 2006.
Ackermann said that the situation which emerged from a credit crunch that followed the subprime crisis "is also a time of opportunity for Deutsche Bank." Owing to its strong positions in investment banking, "we stand to benefit from the flight to quality," he forecast.
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