Deutsche Bank quarterly profits fall despite 11% increase in net revenues

The investment bank revenues fell by 11% in Q2 compared to 2022 results, which the bank said were impacted by the continued events surrounding Russia-Ukraine.

Deutsche Bank has reported a €2.3 billion post-tax profit for the first half of 2023, a decrease of 9% compared to Q2 2022 and a 7% fall for the overall half of the year, attributing the fall to higher tax rates.

The bank posted an 11% increase year on year in net revenues for the second quarter at €7.4 billion. The results represent the highest revenue for a second quarter since 2016, said the bank, with revenue for the first half of the year up 8% overall – at €15.1 billion.

Despite overall profits in some areas of the bank, the investment bank revenues fell by 11% in the second quarter compared to the Q2 2022 results. According to the bank, this compares to a prior year quarter where “extreme market activity in the wake of uncertainty surrounding the war in Ukraine” affected results.

Net revenue for ‘fixed income, currency (FIC) sales and trading’ within the investment bank fell by 9% compared to the second quarter in 2022.

In the second quarter, Deutsche Bank’s asset management business DWS saw more than nine billion euros in net inflows, which were primarily in passive and alternative investment products, according to the business. Despite a 6% revenue decrease in the second quarter, the bank has stated that it remains in a good position to grow as financial markets improve.

Assets under management (AuM) increased by €19 billion to €859 billion this quarter, with fixed income making up 23% of the AuM for the quarter, compared to 25% in Q2 2022. Equities AuM remained consistent at 12%, unchanged since last year.

Christian Sewing, chief executive of Deutsche Bank, highlighted the bank’s stability stemming from its balanced business model across four divisions: “The results for the second quarter impressively underpin our resilience: we were able to increase our Common Equity Tier 1 capital ratio to 13.8 percent, we have ample liquidity reserves and our deposits rose slightly again in the second quarter.

[…] The momentum is on our side: we have a strong business model and a strategy that works. Quarter for quarter, we have proven how much earnings power there is in our bank, and we are making good progress in terms of profitability.” 

At the end of April, Deutsche Bank agreed to acquire institutional broker Numis for £410 million in an all-cash transaction in a bid to “unlock significant value” within their respective franchises.

Speaking to the future outlook following these results, Sewing said: “This puts us on a good track towards our 2025 financial targets. Our planned share repurchases enable us to deliver on our goals to distribute capital to our shareholders. We are determined to continue on this path while accelerating the execution of our Global Hausbank strategy as we promised.”