Deutsche Bank Reports 11th Consecutive Quarterly Profit, Announces Job Cuts

Deutsche Bank, one of the largest financial institutions in Europe, recently announced its 11th consecutive quarterly profit despite facing challenges in financial markets.

Bank reported a net profit of €1.158 billion ($1.28 billion) for the first quarter on Thursday, overcoming a turbulent period in which it became embroiled in concerns about a worldwide banking crisis.

The net profit attributable to shareholders exceeded the consensus estimate of €864.54 million produced by a Reuters survey of analysts and represented a rise from €1.06 billion for the first quarter of 2022. This marks the German lender's 11th consecutive quarter of profit following a comprehensive restructuring plan launched in 2019 to decrease expenses and boost profitability.

"Our first quarter results demonstrate the relevance of our Global Hausbank strategy to our clients and underscore that we are well on track to meeting or exceeding our 2025 targets," said CEO Christian Sewing.

"We aim to accelerate execution of our strategy through a number of measures announced today: raising our ambitions for operational efficiency, boosting capital efficiency to drive returns and support shareholder distributions, and seizing opportunities to outperform on our revenue growth targets."

Despite the positive net revenues of Deutsche's corporate bank, the Thursday report indicated a decline in deposits from 621.5 billion euros at the end of 2022 to 592 billion euros over the course of the quarter. This reduction, which the bank attributed to heightened pricing competition, a return to normal after two quarters of excessive levels, and market volatility at the conclusion of the quarter.

The net revenue of the corporate bank for the quarter reached 2 billion euros, showing a 35% YoY increase, the highest figure since the transformation program's launch. The growth was mainly driven by net interest income, which grew 71%. The bank reported a greater fall in investment bank revenues of 19% YoY and confirmed job cutbacks for non-client facing staff.

"The bank is currently implementing additional efficiency measures across the front office and infrastructure," it said in the report.

"These include strict limitations on hiring in non-client facing areas, focused reductions in management layers, streamlining the mortgage platform and further downsizing of the technology centre in Russia."

Despite the "challenging conditions in financial markets" experienced during the quarter, the bank managed to increase its revenues from 7.33 billion euros in the first quarter of 2022 to 7.7 billion euros.

The amount set aside for credit losses was 372 million euros, indicating an increase from 292 million euros recorded a year prior. Meanwhile, the CET 1 capital ratio, which serves as an indicator of a bank's solvency, improved to 13.6% from 12.8% a year ago and 13.4% in the previous quarter. After exceeding expectations with a net profit of 1.8 billion euros in the fourth quarter of 2022, leading to an annual net income of 5 billion euros, the bank's stock beat earnings expectations.

However, despite the strong financial position of Deutsche Bank, traders remained cautious due to the uncertain macroeconomic outlook and underperformance in the investment bank sector. In late March, the turmoil caused by the collapse of Silicon Valley Bank in the US briefly affected Deutsche Bank's stock, causing it to plummet while credit default swaps for the company's bondholders rose. To alleviate market concerns, German Chancellor Olaf Scholz publicly reassured investors.