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- Deutsche Bank reported its most profitable quarter since 2014 in Q1 2021, boosted by its investment bank.
- The firm's investment banking arm's net revenue was up 32%.
- Deutsche Bank avoided fallout from the blowup of the Archegos fund and adjusted to a normalizing economy.
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Deutsche Bank had its most profitable quarter since 2014 in the first quarter of 2021, the bank's earnings release on Wednesday showed. In large part, this was due to the firm's investment banking arm, which reported a 32% rise in net revenue in the first three months of the year.
The investment bank's revenue growth, paired with a 23% jump in net revenue in the asset management division and a stable performance by the private and corporate banking arms resulted in total new revenue growth of 14% to 7.2 billion euros ($8.695 billion).
"Our first quarter is further evidence that Deutsche Bank is on the right path in all four core businesses, and is building sustainable profitability," Christian Sewing, chief executive officer said.
He was confident that the bank would reach its 2022 targets, which widely focus on increasing profit and cost cutting. Noninterest expenses were lowered by 1% in the first quarter of 2021 compared to Q1 2020. The bank also reduced its workforce by 3%.
All core businesses, that is, the investment bank, asset management, private bank and corporate bank, grew their profits. The capital release unit, which is not classified as a core business, recorded positive net revenues and a 46% reduction in pre-tax losses.
The group reported its highest quarterly profit before tax since 2014 at 1.6 billion euros ($1.932 billion), while net profit was 1 billion euros ($1.207 billion). A year ago, pre-tax profit was 206 million euros ($248 million) and net profit was 66 million euros ($79 million). Analysts had expected net profit of 1.298 billion euros ($1.57 billion) in the first quarter of the year.
The bank cut the amount it set aside to deal with bad debts by 86% year on year to 69 million euros ($83 million) in the quarter starting January 2021.
Deutsche Bank shares were last up 7.32% on the German Xetra exchange on Wednesday, rising to 10.91 euros ($13.17).
In 2019, Deutsche Bank announced it was slimming down its investment banking division after a series of quarterly losses. The investment banking division is now carrying much of Deutsche Bank's success and driving up its profits. This trend is a continuation of the bank's 2020 yearly results.
Unlike many of its competitors, Deutsche Bank avoided fallout from the Archegos hedge fund blowup, which took place in March and hit a number of large financial institutions.