On Wednesday, Deutsche Bank posted a net profit of 763 million euros ($842 million) for the second quarter of 2023 -- a slight beat of the 737 million euros projected in a Reuters poll of analysts. Net revenues increased by 11% year-on-year to 7.4 billion euros. Non-interest expenses increased 15% on the year to 5.6 billion euros, while adjusted costs went up 4% to 4.9 billion euros. Nonetheless, Q2 profits were still 27% lower than the year before.
Deutsche Bank reported a net profit of 763 million euros ($842 million) for the second quarter of 2023, slightly surpassing analyst expectations of 737 million euros according to a Reuters poll. The figure marked a 27% decrease year-on-year from 1.046 billion euros in the same quarter of 2022, while net revenues rose 11% to 7.4 billion euros. Non-interest expenses increased 15% year-on-year to 5.6 billion euros, including 395 million euros in litigation charges and 260 million euros for restructuring and severance. Corporate and private banking divisions saw a surge in revenues of 25% and 11% respectively, due to the higher interest rate environment. In contrast, the investment banking and asset management divisions reported a decrease in revenues of 11% and 6%. On this trend, CFO James von Moltke commented to CNBC that the previous quarter had been exceptionally strong, with elevated market volatility leading to higher trading volumes and revenues.
In an interview with CNBC's Silvia Amaro on Wednesday, von Moltke said the goals for cost savings had been increased from 2 billion euros to 2.5 billion euros in response to inflation, and that substantial investments were being made to bolster future revenue, tech, and controls. He stated, "We have been successful in matching our guidance in respect to costs. It's basically been the same as the fourth quarter of last year." He then went on to say, "The progress we're making and the cost-cutting initiatives we are implementing are considerable and progressing rapidly."
Wednesday's outcome reflected Deutsche Bank's 12th consecutive profitable quarter since executing a sophisticated restructuring program which commenced in 2019 with the aim of cutting costs and improving profitability. Christian Sewing, the Bank's Chief Executive Officer, stated: "In the first half of 2023 we have demonstrated healthy growth in a various business areas and achieved a stronger bottom line and balance sheet. This places us in good stead to achieve our 2025 financial objectives." Furthermore, the Bank declared a plan to buy back shares up to 450 million euros this year, commencing in August. This should amount to distributing capital of more than 1 billion euros to shareholders in 2023, signifiantly higher than the 700 million euros planned for last year. During the quarter, total revenues rose up to 7.4 billion euros compared to 6.65 billion euros three months prior. Non-interest expenses increased to 5.6 billion euros, a 15% rise from 4.87 billion euros during the second quarter of 2022. Additionally, the CET1 capital ratio improved to 13.8% from 13.6% in the past quarter and13% from the same period in the previous year. Lastly, return on tangible equity dipped to 5.4% from 7.9% in the respective quarter from last year.
Aligning with the Credit Suisse collapse, Deutsche Bank's CFO, James von Moltke suggested that some of the advantages are already evident. He told CNBC that they have successfully acquired approximately 30 relationship managers in the past months to work in the fields of wealth management and origination and advisory. The ultimate revenue impact of these hires is yet to be determined, however, the Bank is certain that these exceptional talents will expand their business platform and guide them to tap into their full potential.
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