Deutsche Bank swings to surprise profit in third quarter

·2 min read
FILE PHOTO: Germany's Deutsche Bank headquarters are pictured in Frankfurt
FILE PHOTO: Germany's Deutsche Bank headquarters are pictured in Frankfurt

FRANKFURT (Reuters) - Deutsche Bank AG on Wednesday reported a surprise swing into net profit in the third quarter and upgraded the revenue outlook for its investment bank, even as it navigates an ongoing restructuring and the coronavirus pandemic.

Profit attributable to shareholders of 182 million euros ($215 million) for July-September compared with a loss of 942 million euros in the same period a year earlier.

Germany's largest lender last posted a quarterly profit in January-March 2019, and this time was in part helped by strength at its investment banking division.

Deutsche has lost money for the past five years and is hoping to reverse its fortunes through an overhaul by shedding staff, exiting some businesses and cutting costs.

Analysts have said the overhaul is starting to show its benefits, although uncertainties linked to COVID-19 cloud its outlook.

"Our more focused business model is paying off and we see a substantial part of our revenue growth as sustainable," Chief Executive Officer Christian Sewing said.

A bright spot in Deutsche's earnings report was its investment bank, where revenue climbed 43%, boosted by a 47% rise in fixed income and currencies.

By comparison, investment banking revenue at U.S. banks rose 21% in the quarter, according to Barclays.

Deutsche said it now expects "significantly higher" revenue at the investment bank for 2020, compared with previous guidance of just "higher".

Investment bank revenue has been helped by volatility in markets that spurs trading.

"We see our revenue growth in the investment bank as much more than just market driven," Sewing plans to tell analysts later on Wednesday, according to a transcript of his comments.

Some Deutsche bankers have cautioned that investment bank revenues may slow somewhat next year. Executives are also closely watching how credit losses accumulate after government-run programs that have helped businesses and consumers through the pandemic begin to taper off.

Later on Wednesday, Chancellor Angela Merkel is slated to hold high-level talks to decide on new restrictions to break a second wave of coronavirus infections.

($1 = 0.8461 euros)

(Reporting by Tom Sims, Patricia Uhlig and Hans Seidenstuecker; Additional reporting by Douglas Busvine; Editing by Thomas Seythal and Christopher Cushing and Himani Sarkar)