Deutsche Bank shares slide on disappointing revenues

on Oct 26, 2017

Deutsche Bank shares moved lower Thursday, as investors focus on a 10% slump in revenues, amid it’s mixed earnings update.

By midday trade, Deutsche Bank shares were some 1.9% lower at €14.28. However, that was a mild recovery from the low point of €14.12 it hit earlier in the session.

The earnings update comes as the German lender is in the process of a major restructuring plan. It also reflects a weaker backdrop that its competitors are facing, too. Commerzbank shares were also trading lower, Thursday.

Earnings details

The Deutsche Bank earnings report didn’t just hold disappointment on it’s third-quarter performance.

Highlighting that the cost-cutting element of the restructuring process is bearing some fruit, were profits. Third quarter net profits at the German bank, hit €649 million. That was more than double the €278 million profit, achieved on Q3 2016.

“While the revenue environment remained challenging, we have made significant progress on our key initiatives,” said John Cryan, Deutsche Bank’s CEO in his introduction to the latest earnings update.

“We are convinced that the benefits of our efforts will step-by-step become more apparent in the coming quarters and years,” Cryan added.

Restructuring plans

The cost-cutting details of the German bank’s restructuring efforts proved positive, with regards to profits. However, investors remain unconvinced that its efforts – which have already been re-set once – won’t provide the broader success the bank needs.

As part of the bank restructure, Deutsche Bank is now attempting to re-gain some of the market share it previously lost.

But, while strategic hires and re-starting its bonus payment programme is a step in the right direction, on the one hand. On the other, unions are unhappy with the bank’s cost-cutting measures that will result in job cuts and branch closures, on the retail banking side of the business.

Deutsche Bank still has a long way to go in its restructure process. And whether or not it will complete it successfully and in a way that is acceptable to enough people, including investors, remains to be seen.


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