Deutsche Bank posted a sharp rise in second-quarter net profit to €466 million on Thursday, benefiting from lower legal costs for past misdeeds that outweighed a dip in debt trading.
Germany’s flagship lender beat the expectations of analysts, who had forecast net income of €273 million after just €20 million in the second quarter of last year, according to a Reuters poll.
Nonetheless, chief executive John Cryan said group's profitability fell short of its longer-term goals.
“Revenues were not as universally strong as we would have liked, in large measure because of muted client activity in many of the capital markets,” he said in a statement.
Revenues at Deutsche Bank’s cash-cow bond-trading division were down 12 per cent in the quarter as decreased market volatility led to lower client activity in trading interest rate products and foreign exchange (FIC), while sales were down 28 per cent in equity trading.
Total revenues were down 10 per cent at €6.6 billion in the quarter, and Deutsche said it expects revenues of its operating businesses to be lower in 2017 than last year.
“This reflects our expectation that market volatility and related client activity remain muted, whereas our macro outlook remains broadly positive,” Deutsche said, adding that credit loss provisions are likely to increase in the second half after an unusually low first half of 2017.
It also said it expected its legal costs to be higher in the second half of the year. Its post-tax return on average tangible equity for the full year 2017 will improve moderately, it said.
-(Reuters)
