Quick News
 Asia Pacific
 Special Reports
 TV Shows
 About Us

7 Day News Archive
M | T | W | T | F | S | S
7 Day News Search
Search Keywords:

Affiliate Sites
 NewsRadio 93.8
 Radio Singapore  International

Classified Ads
Garage Sale
 Place An Ad
more »

Mobile Mall
News & Info
more »

Products / Services
Email News Alert
News on PDA
TV Guide for PDA
Online Shopping

What's On
Stock Challenge
Get Rea!
GrowthPath Promotion
more »

 As a Homepage

 Business News »
Time is GMT + 8 hours
Posted: 30 October 2003 2255 hrs

Deutsche Bank's results signals worst is over for German banks

FRANKFURT : Deutsche Bank, the biggest bank in Germany, put in a better-than-expected performance in the third quarter, signalling the worst is probably over for the German financial sector, even if major challenges still remain.

In a generally positive interim report published Thursday, Deutsche Bank said it expected to achieve "very satisfactory" full-year earnings after cost-cutting and a substantial reduction in risk provisions enabled it to swing back into the black in the third quarter.


Only a day earlier, Deutsche Bank's closest rival, Munich-based HypoVereinsbank, had said it also returned to profit in the third quarter after four consecutive quarterly losses, not only thanks to windfall gains from divestments, but to an improved operating performance as well.

German banks described 2002 as their worst year since World War II.

But drastic restructuring, including massive job cuts, and strategic overhauls have helped banks get back on their feet.

Deutsche Bank chairman Josef Ackermann boasted that his group had made "good progress in strengthening its businesses and increasing its operational capacity. This progress was reflected in third-quarter results."

The bank's net profit outpaced analysts's expectations, rising to 576 million (674 million dollars) in the period from July to September from a net loss of 299 million euros in the corresponding period a year earlier.

Before taxes, too, the bank was back in the black with a pre-tax profit of 755 million euros in the third quarter, compared with a year-earlier loss of 181 million euros.

These were "solid numbers," said Sal. Oppenheim analyst Metehan San.

"The solid and sustained year-to-date performance, together with a better global economic environment, gives me and my colleagues great confidence that we can look forward to a full-year 2003 performance which will be very satisfying for our shareholders," Ackermann said.

Behind the improvement were the greatly reduced risk provisions, still much the bane of German banks as the long economic downturn led to a record number of corporate failures last year and probably this year as well.

Deutsche Bank succeeded in slashing its risk provisions to 174 million euros in the July-September period from 753 million euros a year earlier.

"We saw a further improvement in the quality of our loan book, giving rise to lower provisions for credit losses and a further reduction in problem loans," Ackermannn said.

Costs were also under control, with admiministrative costs falling by 13.5 percent to 4.232 billion euros.

But challenges remain and on the earnings side, things were not quite so rosy, with overall income falling by 5.5 percent to 5.161 billion euros and the bank's return on capital still far behind those of its interational rivals.

Among the different earnings components, net interest income before risk provisions fell by 5.8 percent to 1.612 billion euros in the third quarter and net commission income was down by five percent at 2.379 billion euros. And even though trading income rose by four percent to 940 million euros, it was down compared with the second quarter, a fact which disappointed analysts and investors.

"Trading income decreased significantly (on a quarterly basis). This is a major worry," cautioned Merck Finck analyst Konrad Becker.

Investors thought so, too, sending Deutsche Bank shares down to an intraday low of 55.96 euros on the Frankfurt stock exchange, a drop of 1.79 euros or three percent on the day, in a generally weaker market.

Deutsche Bank explained that trading volumes were traditionally low in July and August, while in the second quarter trading income was usually boosted by dividend payments.

Furthermore, the strong euro and the divestment of a number of businesses during the past 12 months have also had a negative on the revenue base.

There were also clouds on the horizon for Deutsche Bank, with the upcoming trial of chairman Josef Ackermann on charges of breach of trust in the so-called Mannesmann affair.

The trial is set to begin in January and could become one of the most spectacular corporate trials in Germany.


AFP text, photos, graphics and logos shall not be reproduced, published, broadcast, rewritten for broadcast or publication or redistributed directly or indirectly in any medium. AFP shall not be held liable for any delays, inaccuracies, errors or omissions in any AFP content, or for any actions taken in consequence.

Copyright � 2004 Agence France Presse. All rights reserved.

E-mail this page Print this page Forum
Live On
Channel NewsAsia
 Singapore Feed
International Feed
Video Guide

 Business News »
S Arabia signs gas deals with Chinese, Russian, Italian and Spanish firms
Thorny farm issues a key challenge in regional free-trade talks
Investors boost markets by recovering taste for risk: BIS
Germany's first IPO in year and a half ends in shambles
Garuda Indonesia to open three new routes to Singapore
DBS Thai Danu agrees merger terms with two other Thai banks
China forex chief warns against betting on yuan
Martha Stewart convicted by self-spun web of deceit: juror
China demands compensation for losses from EU enlargement
Nepal economy shows progress but will miss growth target
Hybrid cars accelerate into Europe thanks to the Japanese
Egyptian industry stages fair on Iraqi reconstruction
Chinese budget deficit a taste of worse to come: analysts
HK financial chief's first budget to be 'market friendly': analysts
Swiss motor insurers slate foreigners as high risk
Thai-made cars make inroads into Singapore
Oil cartel to reduce size of output cut: MEES
Chinese dotcoms look to multimedia messaging services for profit growth
France, Libya sign economic cooperation accords in Tripoli
Australia anxious about Pakistan reports on "tainted" wheat cargo
Former Samsung executive chosen to lead South Korea's state run group
Thai unions insist postponed energy privatisation plans be abandoned


  back to top ^
News: Asia Pacific, Singapore, World, Business, Technology, Sports, Latest News, Headlines, Summary, 7 Day News Archive Finance: Market Analysis, Market Insights, Currency Outlook, Property Watch, Unit Trusts Forum: Market Talk, Currency Talk, Futures Talk Information: Lifestyle, Newsbox, Job Links, Travel, Horoscope, Mobile Mall, TV Guide City Guide: Singapore, Hong Kong, Indonesia, Malaysia, New Zealand Weather: Singapore, Asia Pacific, World Services: Teletext, Chinese site, SMS News Alert, Video, CNA on WAP, MMS Services, E-mail News Alerts, News on PDA, Office Tools, Techstore, Bookstore, Giftstore Singapore: 4D, TOTO, Singapore Sweep About Us: Contact Us, Terms & Conditions, Site Map

Copyright � MCN International Pte Ltd. All Rights Reserved.
Use of this Site is subject to our terms and conditions of use.
Your continued use of this Site shall be construed as your agreement to abide by our terms and conditions of use.