Deutsche Bank 2nd Quarter 2019

German-lender Deutsche Bank reported weaker than expected net loss of EUR 3.15 billion for the second quarter of 2019.

Analysts from Refinitiv estimated a net loss of EUR 1.7 billion for the second quarter, due to the bank's massive restructuring program that was announced earlier this month.

The shattered German lender got a net profit of 361 million euros in the same quarter last year, but has since endured a tumbling stock price and a new round of scandals.

Here are some key highlights for the quarter:

  • Net revenues hit 6.2 billion euros against 6.59 billion euros a year ago.
  • Common Equity Tier 1[ads1] capital ratio of 13.4% versus 14.7% a year ago
  • Significant strategic transformation fees of 3.4 billion euros.

Earlier this month, Deutsche Bank announced that they would leave their global equity business and cut 18,000 jobs by 2022. First, they headed top executives Garth Ritchie, Sylvie Matherat and Frank Strauss, who will leave the bank at the end of this month.

"We have already taken important steps to implement our strategy to transform Deutsche Bank," said Christian Sewing, the bank's CEO in a statement.

"This is reflected in our results. A substantial portion of our restructuring costs are already digested in the second quarter. Exclusion of transformation fees would be profitable and in our more stable businesses, revenue was flat or growing."

Deutsche Bank also revealed that over 900 employees have so far been notified or told that their roles will be terminated.

It further stated that excluding the strategic transformation fees, net income would have been EUR 231 million, compared to EUR 401 million in the same period last year.

The bank's shares have fallen more than 30% over the past 12 months, hit by a number of scandals related to historical failures of money laundering.

The prospect after the transition was met with some skepticism by Wall Street analysts questioning whether it was too radical and ambitious.

The bank expects the sweeping reforms, which also include the creation of $ 74 billion ($ 83.05 billion) "bad bank", to cost 7.4 billion euros by 2022. It had first expected to report a net loss in the second quarter of EUR 2.8 billion.

The lender also expressed concern about global trade tensions and the impact of persistently low interest rates from central banks, with the European Central Bank (ECB) announcing its latest monetary policy decision on Thursday. ECB President Mario Draghi is expected to pave the way for a reduction in the bank's deposit rate or a resumption of quantitative easing (QE).

"If these conditions persist for a prolonged period and are not offset by accommodations such as the resignation of reserves held by banks with the Eurosystem central banks, this may have a significant impact on revenue relative to our current expectations," in the Deutsche Bank performance report.

"Measures to offset this price impact, such as price changes or the introduction of fees, may not be sufficient to offset this impact." .

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