After serving much drama to its shareholders – and global markets – over the past couple of months, when its stock tumbled to all time lows following the news of the bank’s $14 billion DOJ settlement ask, Deutsche Bank provided some relief when earlier this morning it reported a modest, unexpected profit of 256 million for the third quarter on lower litigation and restructuring costs, beating consensus estimates of a 394 million loss, and a far better number than the 6 billion loss reported one year ago. Revenues were also a modest improvement to consensus expectations of 7.19BN, coming in at 7.49BN as a result of a 14% jump in fixed income trading revenues.
The bank’s closely watched core tier one capital ratio rose from 10.8% at the end of June to 11.1% at the end of September, as Deutsche cut its risk-weighted assets by 18bn to 385bn. CFO Marcus Schenck said that the ratio would get a further boost of 40 to 50 basis points once the sale of its stake in Chinese lender Hua Xia was completed.
CEO John Cryan repeated that Deutsche was making ‘good progress’ on its restructuring, but admitted that results had been ‘overshadowed’ by its negotiations with the DOJ. ‘This had an unsettling effect. The bank is working hard on achieving a resolution of this issue as soon as possible.”
The failure to provide some additional guidance on the bank’s settlement process as well as on its recapitalization status is why the shares have undone the entire 3% gap higher, and were trading fractionally in the red. Raising a red flag, Deutsche Bank also said that it saw 9BN in outflows from its new business for private, wealth and commercial clients in the third quarter.
This post was published at Zero Hedge on Oct 27, 2016.
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