"Challenging" revenue environment weighs on Deutsche Bank despite profit rise


German bank Deutsche Bank AG (DB) reported Thursday that its third-quarter profit more-than doubled from a year ago mainly reflecting cost reductions and lower provision for credit losses.

The German bank said net income in the quarter was EUR649 million ($766.7 million) compared with EUR278 million in the same period previous year, helped by lower operating costs and legal expenses. The slump is particularly big in the fixed income and currencies (FIC) unit.

Net profit rose to 649 million euros ($768 million), despite a drop in investment bank revenue. Revenues were in line with analysts' forecasts. DB shares were losing around 2 percent in the morning trading in Germany.

Earnings have improved despite a 10 percent decline in revenues to 6.8 billion euros. The lender has reduced its headcount by about 4,000 employees this year.

Big banks globally have been hit by low market volatility, depressed trading volumes and the negative effects of persistent low interest rates. When asked about its performance in relation to the lender's US rivals, von Moltke insisted that Deutsche Bank's fixed income performance in the third quarter was "very much in line" with the bank's stateside peers.

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Total revenues in Q3FY17 lifted 4% to US$6.19 billion, compared to the same time past year . The result is a lift of 5%, from the second quarter of 2017.

Deutsche Bank's corporate and investment bank unit reported a decline in revenues of 23 percent to €3.5 billion.

Deutsche Bank has cited progress on both of its overhaul initiatives, in the retail bank and asset management.

"We are convinced that the benefits of our efforts will step by step become more apparent in the coming quarters and years", Cryan stressed. But the results looked better - down 24% year over year - when factoring in more-stable financing revenues that used to be included in the trading revenues.

Deutsche Bank is reporting an oversized drop in its trading revenues. However, Private & Commercial Bank segment posted 3 percent higher revenues driven in part by a one-time gain from the sale of shares in Concardis GmbH. Deutsche Asset Management segment also generated weak revenues.

Labour unions have already threatened strikes because Deutsche Bank plans to cut an unspecified number of jobs and close some bank branches. Chief Financial Officer James von Moltke said that the bank had resolved 13 of 20 outstanding financial risks, but that settlement amounts were hard to predict and could rise in months ahead.