Deutsche Bank Q3 Profits Announced

by Stewart Douglas

Story link: Deutsche Bank Q3 Profits Announced

Investment giant Deutsche Bank has today announced its profit figures for the third quarter, highlighting a significant fall in earnings prior to tax as a result of its exposure to the US sub-prime mortgage lending crisis.

Profits, before charging to tax, were £1.12 billion for the third quarter, down just under 20% on the results of the same period last year as a result of devaluation in certain credit linked investments thanks to the sub-prime sector collapse.

The bank had, however, been expected to announce figures far below the actual outcome, leading to market analysts praising the bank for its handling of the situation. The news comes in the wake of similar negative results from UBS, Merrill Lynch, Bear Stearns and Citigroup all as a derivative of the sub-prime fallout.

The markets had been anticipating a loss overall of around 250 million euros, as a result largely of a writedown in connection with certain devaluations. However, the fact that the group managed to retain profitability over the period has given the market confidence in its ability to weather the storm.

Speaking today on the performance, executive Josef Ackermann said the group were delighted with the results in comparison to other losses in the market sustained over recent months, and that it hoped to continue its momentum into the final quarter.

Whilst there may still be some writedowns necessary in future months it now looks unlikely that Deutsche Bank will follow in Merrill Lynch’s footsteps and remove certain senior executives as a result, suggesting that it could have outperformed some of its most signficant competition over the period.

In trading today on the DAX in Frankfurt Deutsche Bank was up by well over 3% on share value as a result of the strong performance over the third quarter, as well as positive forecasts for year end returns.