London, United Kingdom – Deutsche Bank experienced a setback after a 15-quarter profit streak when it reported a narrower-than-expected loss on Wednesday. The financial institution made a provision for an ongoing lawsuit related to its Postbank division, leading to a net loss of 143 million euros, slightly better than the predicted loss of 145 million euros according to analysts.
The controversy surrounding Deutsche Bank stems from a long-running lawsuit involving investors who claim the bank underpaid during its takeover of the retail banking giant, Postbank, in 2010. This lawsuit resulted in a provision of 1.3 billion euros that impacted the bank’s second-quarter performance.
Despite the challenges, Deutsche Bank reported a 2% increase in net revenue to 7.6 billion euros for the second quarter, with efficiency savings reaching 1.5 billion euros. The bank’s investment bank division also saw a significant boost, with revenue jumping 10% year-on-year to 2.6 billion euros.
Deutsche Bank’s CEO, Christian Sewing, expressed confidence in the bank’s performance, highlighting a profit before tax of 1.7 billion euros excluding the Postbank provision. This figure marked an improvement from the previous year’s second quarter, showcasing the bank’s overall operational strength.
In addition to the financial results, Deutsche Bank’s CET 1 capital ratio increased slightly to 13.5%, indicating its solvency and financial stability. Sewing emphasized the bank’s strategic execution, leading to the highest underlying profitability since 2011.
Despite these positive trends, Deutsche Bank faced criticism from German regulators for a financial reporting error in its 2019 financial statement. The discrepancy involved deferred tax assets, estimated at 2.076 billion euros, which were not properly disclosed for the bank’s U.S. business, failing to meet international accounting standards.
Overall, Deutsche Bank continues to navigate challenges and opportunities in the financial landscape, aiming to maintain its position as a key player in the global banking industry.