Germany's Deutsche Bank made a profit of 309 million euros in the third quarter
By DAVID McHUGH AP Business Writer
October 28, 2020, 9:27 AM
• 3 min read
FRANKFURT, Germany -- Deutsche Bank reported Wednesday its third straight quarterly profit as it saw fewer losses from selling off unwanted assets and revenues rose at its investment bank. The company's loan losses also diminished after the German government provided financial help during the pandemic.
The bank said it made a profit of 309 million euros ($363 million) for the July to September period, in sharp contrast to an 832 million-euro loss in the same quarter a year ago when the bank had a large restructuring charge.
CEO Christian Sewing said the bank was continuing to make progress on a long-term restructuring aimed at improving profits by shedding less profitable or riskier lines of business and cutting employee numbers.
“Our more focused business model is paying off and we see a substantial part of our revenue growth as sustainable,” Sewing said in a statement accompanying the earnings release on Wednesday.
Third-quarter results were boosted by lower losses from the capital release unit aimed at exiting businesses and investments the bank no long considers part of its long-term strategy. Revenues at the investment bank unit rose 43% to 2.4 billion euros. Money that had to be set aside to cover loans that aren't being repaid increased 56% to 273 million euros in the quarter from the year-ago quarter, but fell from 761 million euros in the previous quarter.
The bank said it was on target to reach all of its financial and strategic goals included in its restructuring, aimed at exiting a period of low profitability and regulatory and legal issues that cost the bank billions. It continued to shed employees, lowering headcount to 87,000 at the end of the July-September quarter from 90,000 a year earlier.
Chief financial officer James von Moltke said the government efforts to help businesses bridge the pandemic had helped. He said there was “no question it's been a supportive factor this year, for the economy as well as for the loan book.” He added that the bank was not seeing “cliff effects” as different support measures expire. “Will this support be a sufficient bridge... through the pandemic?," he said on a conference call with journalists. "The evidence so far gives cause for optimism.”
Help for businesses has included temporary furlough support programs that pay most of workers' wages so that companies can avoid layoffs, as well as a moratorium in Germany that allowed financially troubled companies to delay filing insolvency proceedings. Governments have suspended taxes and increased deficit spending, while the European Central Bank is pouring 1.35 trillion euros in newly printed money into the economy through regular bond purchases, a step which has helped prevent turmoil on financial markets.
