TDespite the Russian attack on Ukraine and an impending recession, Deutsche Bank surprisingly increased its profit significantly in the second quarter of 2022. Germany’s largest bank earned 1.2 billion euros after taxes this year between the beginning of April and the end of June after 828 million euros in the same period last year, as Deutsche Bank announced on Wednesday morning in Frankfurt. That’s a whopping 46 percent increase in profits. The return on equity (RoTE) of a very respectable 7.9 percent is almost in line with the target of 8 percent set for this year. Analysts had previously only expected a net profit of 950 million euros on average. However, Deutsche Bank no longer has the confidence to achieve its cost/income target for this year.
On the stock exchange, Deutsche Bank shares started slightly negative on Wednesday given the bank’s cautious outlook for the second half of 2022 and because of its corrected cost target for this year, but then turned positive. Apparently, the view prevailed that the profit growth is more surprising than the failure to meet the cost target.
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As usual, the biggest profit-maker was the capital market business (investment banking). Chief Financial Officer James von Moltke told journalists on Wednesday morning that Deutsche Bank had performed “extremely well” in the second quarter’s volatile foreign exchange rate business. Deutsche Bank has gained market share in areas of investment banking that are less important for the bank, advice on company acquisitions and takeovers (M&A) and the stock business. In fact, their arguably closest rivals in investment banking, US banks JP Morgan and Goldman Sachs, reported last week net profits in the second quarter of 2022 fell 28 percent and 47 percent, respectively, to $8.6 billion and $2.8 billion, respectively dollars reported.
But Deutsche Bank has been catching up since it began its turnaround in the summer of 2019. For the second quarter of 2022, the bar was no longer quite low. Because it should be remembered: At the end of June 2021, i.e. a year ago, Deutsche Bank reported its most successful half year since 2015 and reported a net profit of 1.6 billion euros for the first six months of 2021.
This year is going even better so far, despite the significantly worse environment with supply bottlenecks and energy shortages in industry. After the first three months of 2022, Deutsche Bank had also achieved a net profit of 1.2 billion euros, so that the half-year figure is now 2.4 billion euros.