Deutsche Bank AG, Germany's biggest lender, reported an unexpected 9 percent rise in second-quarter earnings on Tuesday as gains at its transaction banking and asset management operations helped counter a weaker investment banking performance.
The company, based in Frankfurt, said net earnings were up to nearly 1.2 billion euros ($1.55 billion) from 1.1 billion euros a year earlier — beating analysts' forecast of 1.05 billion euros.
Pretax earnings rose 16 percent, to 1.5 billion euros from 1.3 billion euros.
Deutsche Bank said overall revenue declined in the April-June period — a volatile quarter that included the peak of the eurozone debt crisis — to 7.2 billion euros from 7.9 billion euros a year earlier. However, loan loss provisions declined sharply to 243 million euros from 1 billion euros in last year's second quarter.
"In a quarter which was characterized by increased investor uncertainty and higher market volatility, Deutsche Bank's investment banking business followed the industry-wide trend of weaker profitability," CEO Josef Ackermann said in a statement.
However, he pointed to "very solid" performances from other divisions and said the bank's private and business client segment had its best quarterly result since the peak of the financial crisis — demonstrating "the strength of our diversified business portfolio."
The result pushed Deutsche Bank's shares up 2.2 percent at 51.47 euros in morning Frankfurt trading.
Deutsche Bank's corporate and investment bank unit saw revenues decline to 4.7 billion euros from 5.3 billion euros.
However, revenues in global transaction banking rose to 1.1 billion euros from 654 million euros — bolstered by 338 euros in extra revenue from Deutsche's acquisition of parts of ABN Amro Bank NV's commercial banking activities in the Netherlands.
Revenues at the asset and wealth management division were up 57 percent at 969 million euros, helped by 148 million euros from private bank Sal. Oppenheim Jr. & Cie S.C.A. Group, which Deutsche Bank acquired last year. Private and business client revenues were up 2 percent at 1.4 billion euros, the company said.
"Global economic activity is likely to strengthen and the new regulatory framework is finally taking shape," Ackermann said. He added that "Deutsche Bank considers itself well positioned to continuously creating sustainable value for its shareholders."
The bank said its tier 1 capital ratio, a key barometer of financial health, was 11.3 percent at the end of the second quarter — up from 11 percent a year earlier and 11.2 percent at the end of the first quarter. The figure was above the bank's target of 10 percent.
Deutsche Bank was one of 14 lenders in Germany that underwent recent European "stress tests" to determine how they would fare in a deeper economic and debt crisis.
It passed easily — the tests determined that, in a worst-case scenario, its capital ratio would slip to 9.7 percent, far above the 6 percent pass mark.
For the January-June period, Deutsche Bank's net profit was up 31 percent to more than 2.9 billion euros from last year's 2.25 billion euros. Pretax earnings rose to 4.3 billion euros from 3.1 billion euros.
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