Deutsche Bank reports third quarter earnings

FRANKFURT

Deutsche Bank today reported results for the third quarter 2012. Income before income taxes was EUR 1.1 billion in the third quarter 2012 versus EUR 942 million in the third quarter 2011, an increase of EUR 185 million, or 20%.

Net income for the quarter was EUR 755 million, versus a net income of EUR 777 million in the third quarter 2011. Diluted earnings per share for the quarter were EUR 0.78, compared to EUR 0.74 in the third quarter 2011. Pre-tax return on average active equity was 7.9%, versus 7.2% in the third quarter 2011. Jürgen Fitschen and Anshu Jain, CoChairmen of the Management Board and the Group Executive Committee, said: "In the third quarter, we delivered a strong operating result which was supported by an improvement in market conditions. We accelerated our de-risking and capital formation initiatives and, based on our increased Core Tier 1 capital ratio of 10.7%, we are on track to achieve our Basel 3 capital ambitions. As importantly, we laid the foundations for the Bank's longer term future by concluding our 100-day strategy review and by launching Strategy 2015+. In the near term, the macro environment remains uncertain, and we will maintain a cautious and risk-focused approach." Our net revenues in the third quarter 2012 were EUR 8.7 billion compared to EUR 7.3 billion in the third quarter 2011, an increase of 18%. Revenues in Corporate Banking & Securities (CB&S) were EUR 4.3 billion, up EUR 1.7 billion, or 65%, versus the third quarter 2011, reflecting improved market conditions and increased market activity. Revenues in Global Transaction Banking (GTB) in-creased to EUR 1.0 billion, up EUR 60 million, or 6%, from the third quarter 2011 reflecting continued growth and strong business volumes. Asset and Wealth Management (AWM) revenues increased by EUR 95 million, or 11%, to EUR 971 million, mainly reflecting a gain on sale of an investment and higher revenues driven by market appreciation and higher performance fees. Private & Business Clients (PBC) revenues were EUR 2.6 billion in the current quarter, up EUR 128 million, or 5%, versus EUR 2.4 billion in the third quarter 2011. Despite lower investment activity by retail clients, revenues were broadly unchanged versus the third quarter 2011, which was negatively impacted by impairments of Greek government bonds. The aforementioned revenue increases were partly offset by lower revenues in Consolidation & Adjustment (C&A), resulting from timing differences attributable to different accounting methods used for management accounting and IFRS.

Provision for credit losses was EUR 555 million in the quarter versus EUR 463 million in the third quarter 2011, with the increase of 20% being attribut-able to higher provision for credit losses recorded in CB&S that were partially off-set by lower provision recorded in PBC. The increase in CB&S came from our IAS 39 reclassified portfolio including EUR 61 million triggered through de- risking. Noninterest expenses were EUR 7.0 billion in the quarter, up EUR 1.1 billion, or 18%, compared to the third quarter 2011. The increase is related to several items, including higher compensation- related expenses attributable to improved operating performance, restructuring activities resulting from our Operational Excellence Program, increased policyholder benefits and claims in Abbey Life as well as higher litigation related expenses. Partly offsetting these items was the non-recurrence of the impairment of a German VAT claim recorded in the third quarter 2011.