Deutsche Bank AG (USA) (NYSE:DB) has posted a surprise first quarter profit helped by declining legal expenses and improvements in the trading business. For the first three months of the year, the bank posted a net income of €236 million, a 58% drop from €544 million posted last year, same quarter. However, the same was enough to topple analyst’s estimates most of whom were expecting a net loss of €483.4 million.
Q1 Results
Net revenue was down by 22% to €8.1 billion with the bank’s global stock and bond trading businesses registering a 29% drop in returns. Revenue from global markets business was down 23% to lows of €2.8 billion. Just like other banks, Deutsche Bank AG (USA) (NYSE:DB) took a beating on the investment segment, Investment banking revenue having tanked by 15% to €1.8 billion.
Plunging commodity prices compounded by record low-interest rates and volatile markets continues` to derail Deutsche Bank plans that seeks to bolster earnings. Amidst the challenging environment, the global markets business was still able to post a pretax profit of €380 million from a loss of €16 million posted a year ago, same period.
Expenses were down 17% to €7.2 billion helped by Deutsche bank cost cutting drive. Costs from legal charges were also down to 187 million from 1.54 billion posted last year. The German lender has since warned of the impact of a challenging environment going forward.
Restructuring Process
Concerned by the health of the global economy the bank has since embarked on a restructuring process that seeks to shore up earnings. Spearheading the efforts is chief executive officer, John Cryan, who is under immense pressure to restore investors’ confidence.
Deutsche Bank AG (USA) (NYSE:DB) is planning to lay off up to 9,000 staff as part of the restructuring process. The lender is also considering offloading some riskier assets and scrap dividends as it seeks to maintain a stable capital base.
The lender’s common equity Tier 1 ratio is currently languishing at lows of 10.7 compared to 11.1 in the fourth quarter.