Deutsche Bank shares fall amid disappointing profits, new investment banking plans

Deutsche Bank shares are lower Thursday after the bank reported disappointing Q1 earnings and also announced fresh restructure plans and deeper headcount cuts.

Deutsche Bank shares fall amid disappointing profits, new investment banking plans

Deutsche Bank shares are in the red Thursday after the German bank announced a 79% drop in profits in the first-quarter of the year. New CEO Christian Sewing also announced fresh restructure details in which the bank will reduce its investment bank commitments to clients outside of Europe.

By 1240 BST, Deutsche Bank share were 1.97% lower at €11.75. The stock had moved into positive territory earlier in the session, reaching €12.18 around the mid-morning.

Deutsche Bank earnings details

The bank’s earnings report showed the German firm achieved net income of €120 million in Q1, a 79% decline from the same period a year earlier. Revenues, meanwhile, were just 5% down from 2017 after being hit by exchange rate movements.

Corporate and investment bank revenues were 13% lower in Q1 from a year earlier, while private and commercial business fell 2% over the same period.

Deutsche Bank’s adjusted costs for the first three months of the year, meanwhile, were €6.3 billion, little changed from a year earlier.

“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,” CEO Sewing said.

“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,” he added.

Bank to “act decisively”

At the same time as releasing its disappointing Q1 earnings, Deutsche Bank’s Sewing said the performance wasn’t good enough and that the bank must “act decisively and to adjust our strategy. There is no time to lose as the current returns for our shareholders are not acceptable.”

Additional cost-reduction measures will be implemented on top of those already planned. That includes the reduction of its investment banking business outside of its core client area of Europe.

“Deutsche Bank is deeply rooted in Europe…. This is what we will focus on more decisively going forward,” Sewing said. And, while staff reduction will be “painful” they are “regrettably unavoidable,” he added.

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