Deutsche Bank beats expectations despite 27% drop in profit, jump in costs

cnbc.com:

Deutsche Bank on Wednesday reported a net profit of 763 million euros ($842 million) for the second quarter of 2023, narrowly beating expectations despite a 27% year-on-year decline.

The bank's net profit attributable to shareholders slightly topped a prediction of 737 million euros in a Reuters poll of analysts, though marked a significant drop from the 1.046 billion euros reported in the same quarter of 2022, while net revenues rose 11% year-on-year to 7.4 billion euros.

However, second-quarter non-interest expenses rose 15% year-on-year to 5.6 billion euros, with adjusted costs up 4% to 4.9 billion euros. Nonoperating costs includes 395 million euros in litigation charges and 260 million euros in «restructuring and severance related to execution of strategy.»

In its first-quarter report, the bank flagged job cuts for its non-client facing staff and reported a sharper-than-expected year-on-year fall in investment bank revenues.

Deutsche's corporate and private banking divisions enjoyed a strong quarter with revenues up 25% and 11% year-on-year, respectively, benefiting from the higher interest rate environment. However, its businesses more closely tied to the financial market backdrop — the investment banking and asset management divisions — saw revenues fall 11% and 6%, respectively.

Deutsche Bank CFO James von Moltke told CNBC that this could be attributed to an unusually strong second quarter of 2022, as market volatility boosted trading volumes and revenues.

Speaking to CNBC's Silvia Amaro on Wednesday, von Moltke said the bank had upped its target for cost savings from 2 billion euros to 2.5 billion euros in a bid to offset the impact of inflation, and was also making substantial business investments to «support