Deutsche Bank weathers sub-prime storm
by Gill Montia
Story link: Deutsche Bank weathers sub-prime storm
Deutsche Bank, Germany’s largest bank, recorded third-quarter profits above market expectations, when taking into account the impact of the US sub-prime mortgage crisis.
Pre-tax profits for the three months to the end of September decreased 19% to €1.4 billion, reflecting in a pre-tax quarterly loss of €179 million from investment banking business.
The result included a €603 million charge in relation to leveraged loans, and losses of €1.56 billion on residential mortgage-backed securities and equity and debt investments.
In early October, Josef Ackermann, the bank’s chief executive, issued a warning that writedowns could total €2.2 billion.
At the same time, pre-tax profit for the third-quarter was estimated at €1.2 billion.
Despite the better than expected outcome, Dr Ackermann is aware that “challenges undoubtedly remain” after a period of “exceptional turbulence in financial markets”.
In view of a good performance from Deutsche Bank’s asset management, private and retail business, he believes that 2008 financial targets are attainable.
It should be noted that profit for the third-quarter reflected the tax benefits of a number of disposals that were booked during the period.
These include the sale of the bank’s interest in both Allianz, the insurance group, and the European trucks group, Linde.
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