subject: Deutsche Bank: Q3 losses on weaker sales [print this page] Deutsche Bank AG reported a considerable decline in the sales in the third-quarter on weak investment banking earnings and write-down over its $3bn deal with the rival Postbank, the largest retail bank of Germany by clients.
Deutsche Bank anticipated that its acquisition over Postbank may stabilize its earnings and help promote the Deutsche Bank's position as a leader in the retail banking sector of Germany. However, the low trading activity over the summer season and gloomy Postbank prospects have created a bitter situation for the Deutsche Bank, making it suffer more after the share fall.
Deutsche Bank had a plan to increase its capital by 10.2 billion euros but a series of negative events hurt the business strategy of the German bank, sending the stocks down by 4.5%. Along with Deutsche shares, declining stocks of other banks like HSBC and Credit Suisse and low volumes of cash equities dragged the Stoxx Europe 600 index down by 0.8% on Tuesday.
Seasonal falls in the months of July and August pulled down the sales and trading revenues of Deutsche's CB&S Businesses (Corporate Baking & Securities). Moreover, Deutsche Bank's annual sales fell by 9.5% on the Europe Stoxx index. The level of the revenue decline was substantially below the level of the last year's third quarter revenues making the situation more jittery for the Deutsche Bank.
However, a Hamburg-based analyst M.M.Warburg said, "Despite the seasonally weak performance, Deutsche Bank's strength remains investment banking and demand will rebound at some point." Invest banking business has turned volatile over the time and addition of the stronger and stable component is very much a need of the time, according to Warburg.
In the view of the Deutsche Bank, the pretax profit in the months of July and August in the global transaction banking and the private and business clients division were higher than in the year-earlier period; however, not really sufficient to avert declines in other divisions.
