Deutsche Bank AG (DBK), Europe’s biggest bank, said third-quarter profit unexpectedly rose after investment banking revenue exceeded targets.
Net income climbed an annual three percent to 747 million euros ($964 million) in the three months through September, the Frankfurt-based company said in a statement today. That beat all seven analyst estimates compiled by Bloomberg and the 563.9 million-euro average.
“The more favorable environment combined with persistently high central bank liquidity benefited both the stock markets, which reached their highest levels in over a year, and the issuance of equity and debt capital,” Deutsche Bank said in the statement. “Therefore it is likely that investment banking and asset management revenues achieved moderate growth in spite of a decline in trading volumes.”
Deutsche Bank is seeking to increase its share of income from investment banking among the world’s largest banks, helping offset costs associated with firing employees and restructuring. The lender, which is cutting 1,900 jobs, has said it will incur 4 billion euros in costs to achieve annual targeted savings of 4.5 billion euros by 2015.
The investment bank’s revenue from trading in the debt markets surged an annual 67 percent to 2.5 billion euros, Deutsche Bank said. The average estimate of six analysts was for revenue of 2 billion euros. Revenue from trading in equities jumped 67 percent to 642 million euros, beating a 473 million- euro forecast.
Shares Climb
Deutsche Bank advanced 13 percent this year in Frankfurt trading, outperforming the 4 percent gain in the 28-company Euro Stoxx Bank Index. (SX7E)
Banks are firing staff and reviewing businesses as Europe’s sovereign-debt crisis reduces trading and rising capital demands weigh on profitability.
The German lender set a target last month of boosting its after-tax return on equity, a key measure of profitability, to at least 12 percent by 2015 from 8.2 percent in 2011. Deutsche Bank scrapped its profit goal for last year after Europe’s debt crisis raised questions about the future of the euro and battered financial markets.
European Central Bank President Mario Draghi has since helped buoy markets and spurred a surge in sales of securities in the third quarter by pledging in August to conduct bond purchases to prop up some euro-region countries.
Deutsche Bank benefited from that environment and was hired for 5.8 percent of the $1 trillion of stock and corporate bond offerings in the three months through September, compared with 4.3 percent a year earlier, the data from Bloomberg Industries showed.
Bloomberg
