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German financial multinational Deutsche Bank says it is “well on track to meet 2022 goals” following a sound Q3 2022 outing.
Deutsche Bank recently posted its Q3 2022 financial report, which logged its ninth consecutive quarter of profit. For the third quarter, the Frankfurt-based German banking giant comfortably beat the projected estimates of analysts. Deutsche Bank reported 1.115 billion euros ($1.11 billion) in net income for the period ended September 30th, compared to analysts’ estimate of 827 million euros. Furthermore, the bank’s earnings which came amid higher interest rates and turbulent market trading, rose 15% year-over-year (YoY) to 6.92 billion euros. Meanwhile, its bank solvency-measuring Common Equity Tier 1 ratio for the quarter is 13.3% from 13% a year ago.
Weighing in on the Deutsche Bank Q3 2022 outing, the organization’s chief executive officer Christian Sewing said in a statement:
“We have significantly improved Deutsche Bank’s earnings power and we are well on track to meet our 2022 goals.”
The leading bank also revealed in its report that it aims to achieve returns on average tangible equity of more than 10% in the medium term by 2025.
In addition to this, Deutsche Bank’s chief financial officer James von Moltke also explained in a media session:
“We are seeing the benefit of interest rates come through in our corporate bank and private bank, essentially those with large deposit books and we are seeing our FIC [fixed income and currencies] business managing this environment extremely well.”
Deeper Dive into Deutsche Bank Q3 2022 Earnings Report
Insight into Deutsche Bank’s individual divisions shows that investment banking revenues increased by 6% from a year ago. Furthermore, there was a 38% YoY increase in revenues for Fixed Income and Currencies, which helped offset lower performance in Credit Trading. However, Deutsche Bank also added that revenues in Origination and Advisory declined 85% from a year ago due to lower deal-making. This referenced drop in the number of deals is also endemic to several similar-sized banks in the United States.
Deutsche Bank’s Corporate Banking recorded the biggest climb in revenue for the third quarter compared to its individual divisions. This division jumped 25% from the same period last year.
Deutsche Bank has been cutting its ties with Russia over several months now for its role in the war in Ukraine. According to the investment bank and financial services company, it further reduced exposure to Russian credit during the third quarter. Consequently, additional contingent risk fell from the 0.6 billion euros logged in the second quarter of this year to 0.2 billion euros.
Due to the recent spate of interest rate hikes, Deutsche Bank’s third-quarter phase saw increased provisions. For Q3, the German multinational investment bank reported higher provisions of 350 million euros compared to the year-ago quarter of 117 million euros. Regarding interest rate increases, CFO von Moltke doubled down on his expectation of a 2023 recession in Germany and the rest of Europe. He also added that he believes the European Central Bank will continue to hike rates.