2023-04-27 16:36:02
Deutsche Bank, the largest bank in Germany, registered an attributable net profit of 1,158 million euros in the first three months of 2023, which represents an increase of 9.2% compared to the result recorded in the same period of the previous year by the entity, which has announced additional measures to increase efficiency, including cutting some 800 jobs in the second quarter, with the aim of reducing costs. “Our first quarter results underline how well we are doing,” said Christian Sewing, the bank’s CEO, recalling that the quarter was marked by high volatility and negative headlines regarding the banking sector. “This is reflected in the best start to the year in a long time. We generated 7.7 billion euros in revenue, the highest in a quarter since 2016, and the pre-tax profit of 1.9 billion euros was the best result since 2013,” added.
The turnover of the German bank in the first quarter of 2023 reached 7,680 million euros, 4.8% above the income recorded a year earlier and its best result since 2016 due to the rise in interest rates. Income improved in corporate banking (35%, up to 1,973 million euros) and in commercial banking (10%, up to 2,438 million euros) due to the rise in interest rates. But they fell in investment banking (-19%, to 2,691 million euros), because they had risen a lot the previous year and due to the turbulence in the markets in March, and in asset management (-1%, to 589 million of euros). Deutsche Bank has a Common Equity Tier 1 (CET 1) capital ratio of 13.6%, up from 12.8% a year earlier. Profit before taxes improved in the first quarter to 1,852 million (+12%), the best quarterly result since 2013. Profit before taxes only improved in corporate banking (+234%) and fell sharply in investment banking (-42%), in commercial banking (-29%) and in asset management (-44%).
Between January and March, Deutsche Bank provisioned 372 million euros for credit risk, compared to 292 million in the first quarter of 2022. The liquidity coverage ratio strengthened to 143% at the end of the quarter, from 142% at the end of the previous three months and above the regulatory requirement of 100% with a surplus of 63,000 million euros.
Deposits fell 2% year-on-year in the first quarter, to 592,000 million euros, due to competition and turbulence in financial markets at the end of March. Chief Financial Officer James von Moltke told the conference that the speculative attack suffered at the end of March had no impact on his deposits. Moltke foresees that deposits will remain stable at the level of 600,000 million euros at the end of April because, although they had an outflow of deposits of 1% the last two weeks of March, at the end of April they have risen again and have stabilized . Deutsche Bank fell sharply on the stock market and its debt default insurance soared to 200 basis points at the end of March due to panic days after the Swiss bank Credit Suisse was bailed out by the UBS.
Regarding the workforce cut, it will be 800 jobs in administrative areas, none in customer service. This job cut will generate restructuring costs of 500 million euros in 2023, of which 400 million euros will be recognized in the second quarter of the year. It will also reduce the real estate construction financing business due to the drop in demand due to the rise in interest rates and the increase in capital requirements in Germany for real estate loans. In addition, Deutsche Bank is reducing the number of members of its board of directors to cut expenses.
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