On Thursday, February 2, 2023, the sign of Deutsche Bank AG, located at a bank branch in the financial district of Frankfurt, Germany.
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Germany’s largest lender, Deutsche Bank, posted first-quarter earnings on Tuesday, higher than expected on the performance of robust investment banks as lenders in Europe’s largest economy navigate the wider market turbulence incited by US tariff policies.
According to a Reuters poll, net income attributable to shareholders reached 1.775 billion euros ($2.019 billion) in the first quarter, raising analyst expectations of more than 39% year-on-year to around 1.644 billion euros. The bank reported profits of 106 million euros for the December quarter.
Revenue reached 8.524 billion euros over the period, up 10% year-on-year, surpassing 722.4 billion euros in the fourth quarter.
In a statement accompanying the outcome, Deutsche Bank CEO Christian Sewing Machine said the printing “gets us on track for delivery with all goals for 2025,” marking “highest quarterly profit of 14 years.”
Includes other quarter highlights.
Pre-tax profit of 283.7 billion euros increased 39% from the previous year. CET1 capital ratio, the measure of bank solvency was 13.8% since the fourth quarter.
Lenders’ core investment banking division posted a 10% increase in net revenue in the first quarter at 3.4 billion euros.
Asset Management Net Revenue increased 730 million euros from 18% in the first quarter.
Deutsche Bank relies on its investment sector to bridge the decline in profits from loans as interest rates have fallen. The backbone of growth, a lender’s investment banking business, grew from 30% to 2.4 billion euros per year in the fourth quarter, up 15% year-on-year to 10.6 billion euros for 2024.
German banks can benefit from the country’s political environment calming under the potential management of the Centrist Union led by Christian Democrat Union Friedrich Merz after culminating in the snap elections earlier this year in late 2024.
Berlin has since signed to reform its groundbreaking debt fiscal policy, looking to strengthen its regional investment expectations, and boosting German stocks, aiming to achieve higher defensive spending.
“In Germany, the stock market is actually stronger, and again supports investors’ beliefs and beliefs in the German and European economies, the upcoming government and the policies they laid out,” Stephen Simon, CEO of Deutsche Bank’s Americas, said in an interview with Bloomberg Television last week. He noted that Europe’s competitiveness must be “strengthened” in a broader call for awakening to the continent, which is tackling a potential trade war under President Donald Trump.
Under the White House’s latest protectionist measures, the European Union has been slapped at 20% tariffs, but these have now fallen to 10% until July 9th, paving the way for additional trade negotiations.
“It is safe to say that the US and America are one of Deutsche Bank’s major regions, particularly in growth expectations,” Simon said, adding that the banks are looking at the potential for growth on the M&A side of margin trading, fees and corporate finance.
Speaking to CNBC in January, James von Moltke, chief financial officer at Deutsche Bank, estimates that lenders’ operations in the US accounted for around 20% of their operations at the time, emphasizing that operations in the region still have “environmental space in the future.”
