Daily Management Review

Strong Investment Banking Performance Helped Deutsche Bank To Q1 Profit


Strong Investment Banking Performance Helped Deutsche Bank To Q1 Profit
The strong performance at the investment bank Deutsche Bank helped the lender to offset the headwinds of an ongoing restructuring programme as well as the hit of the Covid-19 pandemic – prompting the firm to report better than expected net profits for the first quarter of 2021.
Deutsche also made appositive outlook for the entire of 2021 and said that it now expects its annual revenues to be "essentially flat" whereas it had previously announced an estimate of it being "marginally lower".
The first quarter net profit of the bank attributable to shareholders was 908 million euros ($1.10 billion), said the German lender on Wednesday, in comparison to a loss of 43 million euros for the same period a year ago. A profit of almost 600 million euros was expected by the market.
The latest completed quarter of the bank was also its strongest since the first quarter of 2014. There was a surge in the revenues from its fixed-income trading business and origination and advisory services surged – which has also helped the company to lift profits of competing banks.
For the Chief Executive Officer of the company Christian Sewing, this strong quarterly performance was good news because Sewing had initiated a radical restructuring of the company two years back that included cutting down of about 18,000 jobs with the aim of taking the bank to the path of profitability.
"These results give us confidence that we'll reach our 2022 targets," Sewing said in a statement.
The fact that the turnaround plans of the company were [paying off was evident last year when the bank was able to force a small profit for 2020 which was a first for the bank in the previous give years when the company had reported continuous losses.
However there are critics who have questioned how long the investment banking boom will continue to benefit the company. However, according to expectations of analysts, 2021 will also be a profitable year for Deutsche, showed a consensus forecast of the analysts.  
 The performance of the key fixed-income and currency sales and trading business of the bank, where a 34 per cent rise in profits was reported at almost 2.5 billion euros, during the latest completed quarter was also the best for the company for any quarter since 2015.
The growth reported by Deutsche was better than those reported by some of its investment rivals of the United States. A 31 per cent jump in such trading for the first quarter was reported by Goldman Sachs while a 15 per cent rise in the same figure was reported by JPMorgan.
During the latest completed quarter, there was 40 per cent rise in the revenue from the firm’s origination and advisory services which also the best quarter for the business unit since 2017.
However revenue generation in the other divisions of the lender came under pressure because of low interest rates and a slowdown in global trade. Such business divisions included its corporate and retail segment. Howevfer there was a 23 per cent growth in the revenues of the bank from its asset management business.