Deutsche Bank has reported the best quarterly profit since 2014 aided by investment banking, while evading the fallout from insolvent US hedge fund Archegos Capital that hit its peers.
A cost-cutting strategy helped, and so was its decision to sell off its exposure to Archegos quickly and emerging out relatively unscathed.
Also, a factor helping Deutsche Bank duck the Archegos hit was its decision in 2019 to shift its prime brokerage operations to French lender BNP Paribas.
The German lender has registered a €908m ($1.1bn) profit in Q1 2021, surpassing forecasts, compared to a loss of €43m in the same quarter of 2020.
Net revenues increased to €7.2bn from 6.35bn over the period.
Provisions for credit losses were €69m in the January-March quarter, down 86% from €506m in the prior year.
The bank’s CET1 ratio, a key measure of strength, stood at 13.7% at the end of March 2021. A year ago, the ratio was 12.8%.
The unit’s revenues surged 32% year-on-year to €3.1bn. The unit’s pre-tax profit of €1.5bn was 134% higher than a year ago.
Fixed Income & Currency (FIC) Sales & Trading net revenues jumped 34% year on year to €2.5bn. Origination & Advisory net revenues soared 40% to €644m.
The unit’s profit before tax was €274m for the quarter to March 2021, a 92% increase from €143m a year ago.
Net revenues remained flat at €2.2bn. Private Bank Germany reported net revenues of €1.3bn, a 1% rise from the previous year. International Private Bank’s net revenues dipped 1% to €831m.
Noninterest expenses of €1.8bn were 4% lower from a year ago.
Profit before tax in the division soared 66% year-on-year to €183m, while net revenues increased 23% to €637m on higher performance fees.
Net inflows of €1bn in Q1 2021 were driven by Passive, Alternatives and Active (ex-cash) products.
Deutsche Bank CEO Christian Sewing said: “In addition to substantial revenue growth over an already strong prior year quarter, we demonstrated cost and risk discipline.
“We achieved a post-tax return on tangible equity of above 7%, and returns in the Core Bank are already ahead of our ambition for next year. These results give us confidence that we’ll reach our 2022 targets.”