Deutsche Bank CEO warns of deeper cuts
Deutsche Bank warned that deeper cuts may be needed to turn itself around, after revenue fell sharply in the second quarter as the low interest rate environment and volatile markets weighed on the business.
“If the current weak economic environment persists, we will need to be yet more ambitious in the timing and intensity of our restructuring,” Chief Executive John Cryan said yesterday.
“We will not deviate from tough decisions just to flatter earnings in short term.” Shares in Germany’s largest lender fell 4.2 per cent by 0850 GMT, making them the biggest decliner in Germany’s DAX index of blue chip companies.
Cryan said Deutsche was making progress on restructuring, removing risks from its books and investing in better IT infrastructure, but analysts said they had expected more focus on cost cutting given falling revenue in several business areas.
“We are disappointed that Deutsche Bank is not adjusting its cost target ... considering the lower revenue environment,” JP Morgan analysts wrote in a note.
Quarterly net profit dropped to €20 million (Dh80.7 million) from 798 million a year earlier, but was ahead of forecasts for a 105 million loss.
Revenue was down 20 per cent in volatile markets, in part related to Britain’s vote to leave the European Union, with the investment bank sliding 28 per cent.
KBW analysts said they expected Deutsche would probably not be able to exceed the cost targets it set for 2018 and therefore would have trouble generating needed capital.