Interim Profit Down: Deutsche Bank Suffers New Setback
Deutsche Bank reported lower-than-expected profits for the second quarter on Tuesday, underperforming US rivals like Goldman Sachs and Morgan Stanley. Earnings suffered because more funds went to covering the costs of lawsuits against the bank.
Deutsche Bank has reported that it earned less than expected in this year's second quarter, posting a pre-tax profit of 792 million ($1.05 billion), down 18 percent year-on-year and 67 percent less than in the previous quarter.
Now it's increasing that amount by a further 630 million. Net profit totalled 355 million, about half as much as in the weak second quarter of 2012 when the euro crisis hit earnings from investment banking.
Deutsche Bank's investment banking earnings rose by around 10 percent in the second quarter, but fell well short of the dream results earned by its US competitors.
Outperformed by US Peers
By comparison, Morgan Stanley, Goldman Sachs, JPMorgan Chase & Co and Bank of America Corp have all beat analysts' profit expectations for the second quarter, thanks largely to strength in investment banking.
News of Deutsche Bank's poor second-quarter performance pushed its shares down as much as four percent in early trading on Tuesday.
"In the second quarter our core businesses performed well, our franchise remained strong, and we continued to reconfigure our platform to serve our clients more effectively," co-chief executives Anshu Jain and Jürgen Fitschen said in a statement.
They referred to a new code of conduct presented to their 100,000 staff last week in a bid to bring about cultural change in the bank, whose reputation has suffered from scandals, fraud allegations and accusations of reckless profiteering that contributed to the financial crisis.
Deutsche Bank also said it planned to reduce its balance sheet to help it meet requirements on its so-called leverage ratio -- a measure of indebtedness that supervisory authorities plan to focus more heavily on in future.
The bank has identified 250 billion worth of assets to cut in a bid to meet new bank safety rules.
cro -- with wire reports
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