Deutsche Bank Posts Weak Q1 Results, Plans Job Cuts In CIB Unit; Stock Down

Shares of Deutsche Bank (DB) were losing around 2 percent in German trading after the banking giant reported lower profit and revenues in its first quarter with weakness in all segments, mainly Corporate & Investment Bank. Separately, the bank announced actions to reshape its Corporate & Investment Bank and additional cost-cutting measures, including job cuts.

Deutsche Bank said it aims to shift more decisively to more stable revenue sources and to strengthen those core business lines which are most important for its European and multi-national clients. Commitment to sectors in the US and Asia, in which cross-border activity is limited, will be reduced.

The bank intends to reduce front, middle and back office costs in the Corporate & Investment Bank and related infrastructure functions significantly. It will be undertaking a review of its Global Equities business with the expectation of reducing its platform.

As part of the actions, the company sees a significant reduction in workforce through the rest of the year, in particular stemming from the right-sizing of the Corporate & Investment Bank and the supporting infrastructure functions.

Christian Sewing, Chief Executive Officer, said, “We are on a good track both in the DWS asset management business and in our Private & Commercial Bank, although we need to substantially improve profitability in both. Our Corporate & Investment Bank is also doing well in some areas and held or gained market share in certain areas. However, we are not strong enough in other areas of this business. Therefore we have to act decisively and to adjust our strategy. There is no time to lose as the current returns for our shareholders are not acceptable.”

For the first quarter, net income declined to 120 million euros from 575 million euros in the prior year period. Income before income taxes was 432 million euros, down from 878 million euros a year ago.

In the first quarter, net revenues were 6.98 billion euros, down 5 percent from 7.35 billion euros a year ago. The company said the weak results primarily reflected exchange rate movements, notably the appreciation of the euro against the US dollar, and lower revenues in the Corporate & Investment Bank. The prior year quarter was negatively impacted by Debt Valuation Adjustments.

In the quarter, Corporate & Investment Bank revenues were 3.8 billion euros, down 13 percent year-on-year, with weak revenues in all business units.

Private & Commercial Bank revenues were 2.6 billion euros, down 2 percent, and asset management revenues were 545 million euros, 10 percent lower year-on-year.

Provision for credit losses of 88 million euros declined 34 percent, partly reflecting releases in the Corporate & Investment Bank, driven primarily by favourable developments in the shipping segment.

The Common Equity Tier 1 or CET1 ratio was 13.4 percent at the end of the first quarter, versus 14.0 percent at the end of 2017.

In Germany, Deutsche Bank shares were trading at 11.74 euros, down 2.06 percent.

by RTTNews Staff Writer

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