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.
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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.
Key metrics
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.
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By GlobalDataThe 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%.
Investment Bank
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.
Private Bank
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.
Asset Management
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.”
