Deutsche Bank has expressed optimism regarding its ability to accelerate and expand returns to shareholders beyond 2025. Although the bank experienced a decrease in net profit due to rising costs and taxes, its third-quarter revenue witnessed a 3% growth, amounting to €7.13 billion.
Compared to the previous year, the bank's attributable net profit for the period reached €1.03 billion, slightly lower than the expected €1.07 billion. Analysts projected third-quarter revenue of €7.1 billion, aligning closely with the actual result.
Deutsche Bank has successfully reduced its risk-weighted assets and plans to further reduce them by approximately €10 billion. This reduction, combined with a lower estimated Basel III impact, could potentially free up an additional €3 billion in capital.
Chief Executive Officer, Christian Sewing, expressed his confidence in the bank's enhanced capital outlook, stating that it would facilitate expanded distributions to shareholders while also strengthening its ability to invest in growth and profitability.
The bank has already distributed €1.57 billion to shareholders across 2022 and the first nine months of 2023. It remains on track to surpass its distribution target of over €1 billion in 2023, with a total distribution of €1.75 billion for 2022 and 2023. Furthermore, the possibility of further share buybacks in 2024 is being considered.
Deutsche Bank Reports 3% Decline in Third-Quarter Profit
Deutsche Bank has announced that its after-tax profit for the third quarter of the year has decreased by 3% compared to the previous year. The decline can be attributed to a higher effective tax rate of 30%, as opposed to 23% in the prior year.
Net Interest Income Falls by 9%
Net interest income, which is a crucial driver of profits for retail banks, has experienced a significant decline of 9% in comparison to the previous year. It also fell by 7% when compared to the second quarter of this year, amounting to EUR3.34 billion.
Increase in Non-Interest Expenses
Deutsche Bank has reported a 4% increase in non-interest expenses for the quarter. These expenses, totaling EUR5.16 billion, include various non-operating costs such as litigation and restructuring charges.
Loan Loss Provisions Remain Stable
The bank has witnessed a decrease in loan loss provisions for the quarter, dropping from EUR401 million in the second quarter to EUR245 million. This figure remains in line with the bank's full-year guidance.
Strong Inflows for Private Bank and Asset-Management Businesses
Deutsche Bank has seen a total of EUR11 billion in inflows across its private bank and asset-management businesses. This signals positive growth and market interest in these sectors.
Focus on Normalizing Deposit Revenues
Despite anticipating normalization of deposit revenues in the upcoming quarters, Deutsche Bank expects an offset from rising non-interest rate revenue streams including commissions and fees.
Earnings Outlook for Fourth Quarter
While the bank forecasts net revenues of EUR29 billion for the year, it warns that earnings in the fourth quarter may be impacted by a mix of both positive and negative one-off items.