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Deutsche Bank Q3 income before income taxes EUR 266 million

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Staff writer |
Deutsche Bank
Increase   Net revenues of EUR 7.9 billion, up 2%

Deutsche Bank reported results for Q3 2014. Group net revenues of EUR 7.9 billion, up 2% from the prior year, with noninterest expenses 2% higher at EUR 7.3 billion.

Income before income taxes was EUR 266 million in Q3 2014, compared to EUR 18 million in Q3 2013, as an increase in revenues and lower provision for credit losses were partially offset by higher noninterest expenses.

Group net revenues in Q3 2014 increased by 2%, or EUR 119 million to EUR 7.9 billion compared to EUR 7.7 billion in Q3 2013.

CB&S revenues were EUR 3.1 billion, up EUR 247 million, or 9%, versus Q3 2013. This was mainly attributable to a EUR 186 million, or 15%, increase in Debt Sales & Trading, resulting from improved market conditions and increased client activity.

PBC revenues were EUR 2.4 billion in Q3 2014, up EUR 69 million, or 3%, compared to Q3 2013. The increase was primarily driven by an increase in loan volumes and increased revenues from Investment & insurance products.

GTB revenues of EUR 1.0 billion were slightly higher compared to Q3 2013 with strong volumes offsetting the impact of the challenging market environment.

Deutsche AWM revenues of EUR 1.3 billion were stable compared to Q3 2013.

NCOU revenues were EUR 20 million, a decrease by EUR 382 million in Q3 2014, reflecting a significant reduction in revenue generating assets as a result of further de-risking.

Provision for credit losses was EUR 269 million in Q3 2014, a decrease of EUR 243 million, or 47%, compared to the same period 2013. This reduction was driven by improvements across all businesses especially lower provisioning for IAS 39 reclassified assets in NCOU.

Noninterest expenses were EUR 7.3 billion in Q3 2014, up EUR 113 million, or 2%, compared to Q3 2013. Compensation and benefits, which amounted to EUR 3.2 billion, were up EUR 285 million, or 10 %, compared to Q3 2013. This primarily reflects higher fixed compensation costs to comply with regulatory requirements, mainly in CB&S, as well as strategic hires in control functions.

General and administrative expenses of EUR 4.0 billion, were down EUR 60 million, or 1% compared to Q3 2013. The cost base further increased due to higher expenses from increased regulatory requirements and ongoing higher investments in platforms. Offsetting effects during the quarter include benefits from the ongoing implementation of the OpEx program and from the sale of BHF-BANK. Litigation related charges were EUR 894 million in Q3 2014, which was lower by EUR 270 million compared to Q3 2013.

Group income before income taxes was EUR 266 million in Q3 2014 versus EUR 18 million in Q3 2013, as an increase in revenues and lower provision for credit losses were partially offset by higher noninterest expenses.

Net loss for Q3 2014 was EUR 92 million, compared to a net income of EUR 51 million in Q3 2013. In Q3 2014 income tax expense was EUR 358 million, mainly reflecting the non tax deductibility of certain litigation charges. This compares to an income tax benefit of EUR 33 million in the prior year period.

The bank’s fully loaded CRR/CRD4 Common Equity Tier 1 (CET1) capital ratio was 11.5% as of 30 September 2014, unchanged compared to 30 June 2014. Fully loaded CRR/CRD4 CET1 capital as of 30 September 2014 remained also unchanged at EUR 46.0 billion compared to the end of Q2 2014. Fully loaded CRR/CRD4 risk-weighted assets (RWA) increased by EUR 3 billion to EUR 402 billion at the end of Q3 2014.

As of 30 September 2014 year-to-date capital markets issuance was EUR 36.2 billion at an average spread of 47 basis points over the relevant floating index (e.g. Libor) and an average tenor of 4.8 years. As a result the Group's 2014 issuance plan of EUR 30-35 billion has been completed. For the remainder of the year we continue to opportunistically source term funds.

Liquidity reserves were EUR 188 billion as of 30 September 2014, 43% of which being in cash and cash equivalents primarily held at central banks.

Total assets were EUR 1,709 billion as of 30 September 2014, reflecting an increase of EUR 44 billion, or 3%, versus 30 June 2014.

According to revised CRR/CRD4 rules, leverage exposure was EUR 1,526 billion as of 30 September 2014, a decrease of EUR 6 billion from 30 June 2014, even allowing for EUR 60 billion of FX effects. On a previous CRR/CRD4 rules basis, leverage exposure was EUR 1,478 billion as at 30 September 2014.

The leverage ratio, on a fully loaded basis according to revised CRR/CRD4, remained at 3.2% as of 30 September 2014.

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