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Deutsche Bank’s new co-chief executives reported a 46 per cent decline in net income in the second quarter, the first since they took over, as clients remained cautious amid the eurozone crisis.
Jürgen Fitschen and Anshu Jain said: “In the second quarter, the bank’s performance was impacted by a volatile environment. The European sovereign debt crisis continues to weigh on investor confidence and client activity across the bank.”
Germany’s largest bank by assets warned last week that its profits would fall short of market estimates, becoming the latest global bank to provide evidence of severe market headwinds in the three months to the end of June.
Deutsche’s net revenues declined from €8.5bn in the second quarter of 2011 to €8bn this year as companies and investors remained on the sidelines in the face of market volatility.
Net income fell from €1.2bn to €661m year-on-year after a 63 per cent decline in pre-tax profit at its corporate banking and securities unit. Non-interest expenses rose by €345m to €6.6bn largely because of currency movements that did not favour its high dollar and sterling costs.
Mr Jain, former head of the corporate and investment bank, and Mr Fitschen, the bank’s head in Germany, took over on June 1 after Josef Ackermann’s decade as chief executive.
They are set to brief investors on their strategy review on Thursday afternoon when the bank will also publish its full interim report. Analysts will pay close attention for details on global regulatory probes into interbank lending rates.
Deutsche plans to take extra steps to cut its risk because of the lower than expected income, which affects its plans to reach capital targets through retained earnings.
The reported earlier this month that Deutsche is set to lay off about 1,000 staff from its investment bank.
Revenues in corporate banking and securities fell 11 per cent to €3.5bn after Deutsche lowered its fixed income risk exposure amid lower trading volumes and as companies elected not to pursue initial public offerings.
The bank’s core tier one capital ratio – a key measure of financial strength – was 10.2 per cent at the end of the second quarter, up from 10 per cent a year ago.
Its return on average active equity was 6.8 per cent compared with 13.9 per cent in the second quarter of 2011.
In the first quarter Deutsche’s net income fell by one-third and revenues by 12 per cent compared with the same period in 2011.