Despite the Deutsche Bank group’s impressive earnings, the firm’s stock price is down. With a 3.09% drop at the end of trading on Tuesday, it closed at $9.25.
Frankfurt-based multinational investment bank and financial services company Deutsche Bank AG (NYSE: DB) has reported yet another profitable quarter as revealed in its latest earnings release. Per the announcement, Deutsche Bank reported a quarterly profit of 309 million euros with a profit before tax of 482 million euros both equivalent to $363.8 million and $567.5 million respectively.
The bank’s strong quarterly performance also bolster its nine-month profit of 435 million euros while the profit before tax was pegged at 846 million euros. Deutsche Bank group’s earnings based on its revenue was up 13% year-on-year to 5.9 billion euros in the quarter. Per the breakdown of the revenue figures, core bank net revenues amounted to 6 billion euros representing a 9% rise year on year while the financial service firm’s Investment Banking net revenues of 2.4 billion euros, came up to 43%.
The firm’s common equity tier 1 capital ratio came in at 13.3% compared to 13.4% this same period last year. Additionally, the total non-interest expenses came in at 5.2 billion euros in the Q3 as against the reported 5.8 billion euros a year ago.
The primary focal point of the impressive earnings recorded by Deutsche Bank came from its cost-cutting strategy, a move that followed the firm’s massive restructuring that began in 2019. The firm’s cost-cutting model has yielded profitability for at least two consecutive quarters and with the past quarter representing the 11th consecutive quarter of cutting its operating costs, the bank is positive it would meet its full-year 2020 target of 19.5 billion euros.
Despite the Deutsche Bank group’s impressive earnings, the firm’s stock price is down. With a 3.09% drop at the end of trading on Tuesday, it closed at $9.25.
Deutsche Bank Earnings Comes amid Firm’s Transformation
Just as the other multinational financial services firm, Deutsche Bank was impacted by the COVID-19 pandemic, and the firm’s recovery has been further compounded by its ongoing restructuring. Nonetheless, the Deutsche Bank group’s earnings have beaten analyst’s expectations both in Q2 and Q3 respectively.
While in the Q2, there was an expectation that the firm will post a net loss of 133 million euros but just 77 million euros was reported. The same trend was seen in the Q3 when according to CNBC, the bank posted a net profit of 182 million euros as against the 114 million euros projected by analysts. Deutsche Bank CEO Christian Sewing said in a statement:
“In the fifth quarter of our transformation, we not only demonstrated continued cost discipline, but also our ability to gain market share. Our more focused business model is paying off and we see a substantial part of our revenue growth as sustainable.”
Sewing further added that the strength of the bank’s Balance Sheet and its remarkably high-quality risk management strategies will enable the firm both to support clients in challenging times and to take advantage of new business opportunities that may present themselves moving forward.
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