Deutsche Bank results 1st quarter 2022

Deutsche Bank reported its seventh consecutive quarterly result on Wednesday, but warned that the current environment is “challenging” and “cost pressures have intensified”.

The German lender said its net profit reached 1.06 billion euros ($ 1.13 billion) in the first quarter of the year. Analysts had forecast a figure of 1.01 billion euros for the three-month period, according to data from Refinitiv.

“Deutsche Bank is more stable and resilient than it has been for many years. Our figures for the first quarter clearly show this,”[ads1]; CEO Christian Sewing said in a letter to employees on Wednesday. But the German bank noted in its earnings report that the outlook for this year was challenging.

“Despite the uncertainty associated with the war in Ukraine and the remaining challenges associated with the COVID-19 pandemic, we intend to continue to carry out our strategy in a disciplined manner with a focus on improving sustainable profitability by increasing the revenues of our core bank. “while we remain disciplined in terms of costs and capital, but the current environment is increasingly challenging and cost pressures have intensified,” the bank said.

Rising inflation and how central banks can react to this have rattled the markets recently, and caused considerable uncertainty for companies, including banks. A sudden change in monetary policy can affect banks’ results.

“A wall of worries”

James von Moltke, CFO of Deutsche Bank, told CNBC’s Annette Weisbach: “There is a wall of concern at the moment.”

“There are a number of different functions out there, and of course the war in Ukraine dominates because it dominates the news, but it should not be overshadowed that there is still some pressure on supply chains, the Chinese reaction to Covid and other functions,” he said.

Other data highlights for the quarter:

  • Revenue rose 1% from a year ago to 7.33 billion euros.
  • Provisions from credit losses amounted to EUR 292 million, compared with EUR 69 million a year ago.
  • Tier 1 capital adequacy, a measure of the banks’ solvency, was 12.8% down from 13.7% a year ago.

All Deutsche Bank divisions delivered better results compared to a year ago. Within investment banking, interest rates and currencies reported that revenues were 15% higher.

Commenting on the results, von Moltke added that “these trends are likely to continue into the second quarter.”

“There is still uncertainty in the financial markets and some volatility out there, our goal is to support our customers in this environment,” he said.

Russia exposure

On March 11, Deutsche Bank said it would suspend Russia’s operations – a major reversal compared to its original stance when the war broke out in Ukraine. The German bank said it had joined a number of international peers to leave the country in response to the invasion of Ukraine and subsequent operational restrictions.

As such, Deutsche Bank said it cut its exposure to Russia during the first quarter. Gross lending exposure was reduced by 5% to EUR 1.3 billion and net lending exposure was reduced by 21% to EUR 0.5 billion during the quarter. It also said it was “unreservedly” implementing Western sanctions against Russia.

The German lender surprised the markets at the end of 2021 with a profit of 145 million euros when investors had estimated a net loss for the last quarter of the year. The shares are down around 6.6% since the beginning of the year.

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