Deutsche reports GTB profits despite mounting margin and competition pressures
Pre-tax income from Deutsche Bank’s global transaction banking (GTB) business grew 15% in the first quarter compared with a year earlier, despite being hit by “intense margin and competitive pressure”.
Announcing the results on Tuesday, Deutsche said a
combination of factors buffeted the GTB business in the first three months of
the year, dragging revenues down marginally 1%, or €6 million, to €1 billion.
Persistently low interest rates and a “still highly
competitive environment” were the main factors impacting revenues, with a
difficult geopolitical backdrop adding additional pressure to the GTB business.
The bank nevertheless reported that pre-tax income rose
15%, or €49 million, to €367 million due to what it described as “lower
provision for credit losses”, although this was “offset partially by a higher
The bank said provision for credit losses fell to €24
million in the first quarter compared with €92 million a year earlier, due
largely to the “non-recurrence of single client credit event in trade finance”
last year as well as lower provisions in its Netherlands commercial banking
Higher costs in Deutsche’s GTB business related to non-interest
expenses, which increased 2%, or €14 million, compared with a year earlier. The
bank also said that first quarter included higher costs related to the “OpEx
programme of €19 million” compared with €7 million last year.
Breaking down business performance further, Deutsche
said revenues in trade finance increased due to strong volumes, while revenues
from cash management came under pressure, impacted by low interest rates.
Revenues in trust and securities services “showed a
solid development”, according to Deutsche, based on growing volumes and
included a gain on the sale of registrar services GmbH.
In other core businesses, Deutsche said pre-tax income
from corporate banking and securities (CB&S) fell 22% to €1.5 billion
compared with a year earlier, while pre-tax income from private and business
clients rose 8% to €520 million. In asset and wealth management, Deutsche said
pre-tax income fell 23% to €169 million and suffered a 14% decline from “lower
non-recurring fund management revenues and higher cost-to-achieve”.
Jürgen Fitschen and Anshu Jain, Deutsche co-chief executives
Deutsche’s non-core operations unit reported a loss
before income tax of €532 million, which included a loss of €191 million from
the special commodities group, which was transferred from CB&S in the
Commenting on the results, Jürgen Fitschen and Anshu
Jain, co-chief executives, said: “Our core businesses all contributed to a
resilient performance in the quarter, which enabled us to grow our common equity
base by over €1 billion.
“Corporate banking and securities performed well in
challenging markets, private and business clients produced first-quarter
profitability, which was amongst its best ever, global transaction banking grew
pre-tax profit despite intense margin and competitive pressure, while Deutsche
asset and wealth management produced solid underlying results and positive net
money flows while simultaneously progressing business integration.”