Trading lags in first quarter at Deutsche Bank

Deutsche Bank’s trading trails US counterparts in the first quarter this year.

The global markets business at Deutsche Bank suffered an 8% decline in revenues in the first quarter this year with equities trading hit the hardest.

Revenue from equities trading fell 10% to €674 million which the bank said was due to higher funding costs and lower client balances.

In fixed income and currencies, sales increased 11% to €2.3 billion in the first quarter following an “improved market environment”.

Although the bank saw an increase in fixed income trading, the growth lags significantly behind its US counterparts who reported surges of almost 30% in the first quarter.

JP Morgan’s markets and investor services business saw a 17% increase in revenues in the first quarter this year, driven by a 17% surge in fixed income sales.

Similarly, at Bank of America Merrill Lynch, fixed income trading revenues soared a significant 29% in the first quarter to $2.9 billion.

Overall, Deutsche Bank reported a 9% decline in revenues year-on-year due to an increase in the value of its debt, without which the bank said revenues would have been flat.

John Cryan, CEO at Deutsche Bank, explained in a letter to employees: “The value of our liabilities rises as spreads narrow on our debt.

“Paradoxically, this initially has a negative accounting impact on our results. The same phenomenon also creates negative valuation adjustments in our global markets business.”

He added: “Our first quarter results were made weaker by Deutsche Bank getting stronger.”