Deutsche Bank (DB) on Sunday reported an about 50 percent decline in first-quarter profit, despite clocking double-digit revenue growth, as the German lender recorded hefty legal charges over allegations of rate-rigging.
In a statement, the bank said its results were hurt by litigation expenses of 1.5 billion euros, mainly reflecting a settlement with the U.S. and UK authorities relating to interbank offered rates and bank levy charges of 561 million euros.
As a result, the bank's quarterly net earnings plunged to 559 million euros or 0.38 euros per share from 1.1 billion or 0.98 euros per share a year ago.
Meanwhile, the bank's revenues increased 24 percent to 10.4 billion euros from 8.4 billion euros last year, helped by growth across key divisions as well as favourable foreign exchange movements.
"These results provide a snapshot of a Deutsche Bank which is much stronger than when we began our journey in 2012. We have delivered robust operating performance despite tight resource discipline and significant investments in regulatory compliance," said co-Chief Executive Officers Jürgen Fitschen and Anshu Jain.
The results come as the bank embarks on the next phase of its strategy, including plans to reduce leverage in Corporate Banking & Securities segment, deconsolidate Postbank, invest in transaction banking, asset and wealth management, and retail businesses.
Shedding further light on its financial performance, the bank said its
income before income taxes, or IBIT, was 1.48 billion euros for the quarter, a decline of 12 percent from 1.7 billion euros a year ago.
Core Bank IBIT, excluding the non-core operations unit, was 1.86 billion for the quarter, a decline of 16 percent from the prior year.
During the quarter, key businesses at the bank performed well from the revenue perspective.
Revenue at the bank's Corporate Banking & Securities segment rose 15 percent from the prior year to 4.7 billion euros, driven by an improved market environment, increased market volatility and favourable foreign exchange movements.
But profit at the segment was hurt by the litigation charge as well as adverse foreign exchange movements and regulatory required expenses, the bank said.
Revenue at Deutsche Asset & Wealth Management segment jumped 29 percent to 1.4 billion euros, helped by a stronger U.S. dollar. Revenue at Global Transaction Banking segment climbed 11 percent to 1.1 billion euros, also driven by favorable currency movements.
Private & Business Clients segment revenue was marginally up at 2.5 billion euros, and revenue at non-core operations unit increased by 273 million euros, driven by a litigation recovery.
Non interest expenses for the quarter increased 34 percent from a year ago to 8.7 billion euros.
The bank said its provision for credit losses for the quarter decreased 12 percent year-over-year to 218 million euros.
Recently, the bank said it would would set aside 1.5 billion euros in additional litigation reserves for the quarter, mostly to cover a $2.5 billion charge for settling with U.S. and U.K. regulators over allegations it manipulated the London interbank offered rate.
DB closed Friday at $34.26, up $0.11 or 0.32%, on a volume of 915k shares on the NYSE. In Germany, the stock closed at 31.58 euros, up 0.17 euros or 0.53%, on a volume of 6.2 million shares.
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