Deutsche Bank ekes out profit, refocuses investment bank
FRANKFURT — Deutsche Bank saw profits fall to 120 million euros ($146 million) in the first quarter and announced Thursday it was reshaping its global investment banking business to focus more on its European base.
The first-quarter result fell short of analyst expectations for 374 million euros profit and was sharply down from 575 million euros in the same quarter a year ago.
That was nonetheless an improvement from a 2.4 billion loss in the last quarter of 2017, when the company had a large one-time loss related to tax changes in the U.S. First-quarter revenues fell 5 per cent to 6.98 billion euros ($8.5 million). The bank said much of the decline resulted from the euro’s rise against the dollar.
Germany’s largest bank replaced CEO John Cryan April 9 after three straight full-year losses and slow progress in cutting costs and streamlining the bank’s operations.
New CEO Christian Sewing said in a statement that some areas of the bank’s business had done well in the first quarter, such as its DWS asset management business and some areas at the investment banking division.
“However, we are not strong enough in other areas of this business,” he said. “Therefore we have to act decisively and to adjust our strategy. There is no time to lose as the current returns for our shareholders are unacceptable.”
Deutsche Bank said in a statement that the investment banking business would be aimed at its core European client base and on underwriting and financing areas in which it has a strong competitive position against other banks. Business focused on just the United States or Asia would be reduced.
The bank said it would cut back on rates sales and trading in the US and shrink its global equities trading business. Such moves would be a step back from Deutsche Bank’s international expansion over the past several decades.
The changes would mean more stable revenue sources from steadier kinds of business such as retail banking and its asset management business, the bank said in its statement.
It said there would be job cuts but did not say how many or where.
The Frankfurt-based bank also said it would slim the top management body to nine executives from 12 and eliminate the practice of having co-heads of departments in an effort to speed decision-making.
Cryan became CEO in 2015 and led the bank through its efforts to cut costs and resolve legal misconduct cases that cost the bank billions, including a $7.2 billion settlement with U.S. authorities over securities based on mortgages to people with shaky credit. Progress was slow and though the bank restored its dividend last year, shareholders got only 11 cents per share.