Deutsche Bank profit plummets 94%
by Gill Montia
Story link: Deutsche Bank profit plummets 94%
Deutsche Bank posted a profit in the third quarter of 2008, but only after adopting EU accounting rules that allowed it to apply a new method of valuing its assets.
Germany’s largest lender reported a 94% fall in profit, to €93 million, in the three months to the end of September, narrowly avoiding a loss by making so-called “mark-to-market” valuations of its investments.
Taking into account tax credits, the bank’s post-tax earnings stood at €414 million, compared to €1.4 billion in the same period of 2007.
The group’s chairman, Josef Ackermann, described the third quarter of 2008 as characterised by a considerable intensification of the credit crisis, in September.
The deepening of the crisis and Mr Ackermann’s prediction of a further fall in profitability in 2009 means Deutsche Bank is being cautious with its cash.
The bank says its Tier one capital ratio now stands at 10.3%, up from 9.3%.
Deutsche Bank wrote down €1.2 billion in the third quarter and expects to write down a similar amount in the months ahead, although it has not yet needed to tap the bank rescue fund set up by the German government.
Its senior executives will not be paid bonuses this year and shareholders have been warned that future dividend payouts will be affected by falling profitability this year and next.
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