Investors Cool to Deutsche Bank Profit Report

Posted by: Jack Ewing on October 21

Deutsche Bank (DB), following in the footsteps of Daimler two days earlier, rushed out preliminary profit figures Oct. 21. But the bank’s announcement that net earnings for the period were $2.1 billion, up from $619 million a year earlier, was not received as warmly by investors as the Daimler numbers. Deutsche Bank shares fell 3.5% in Frankfurt trading as investors registered disappointment that the result wasn’t better.

The two-paragraph press release from the bank did not include any revenue figures or a breakdown by company division. Deutsche Bank said only that all units were profitable. Pre-tax profit was $1.9 billion, vs. $139 million a year earlier. Tax credits helped boost the net income figure, the bank said. In addition, the bank’s Tier 1 capital ratio, a key measure of its financial health, was 11.7%, a comfortable level. The bank plans to release more detailed figures Oct. 29.

In the course of the global financial crisis Deutsche Bank suffered several multi-billion dollar writedowns, but was able to absorb the losses without a direct government bailout. CEO Josef Ackermann has argued that, by maintaining its independence, the bank will be in a position to gain market share against its battered competitors and acquire assets cheaply. On Oct. 20, for example, Deutsche said it had reached agreement with the Dutch government to acquire parts of ABN Amro’s commercial banking operations in the Netherlands, becoming the fourth-largest provider of corporate and investment banking services in the country.

Ackermann could still be proved right, but it appears investors aren’t yet convinced.