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Deutsche Bank Reports Best Quarter in Seven Years

Germany’s bank saw a profit increase of 134% in the first quarter, avoiding damages from the collapse of Archegos.

Posted: 28th April 2021 by
Finance Monthly
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Deutsche Bank on Wednesday posted a pre-tax profit of €908 million for the first three months of 2020 – its best quarterly performance in seven years, and a notable increase on its profit of just €66 million for the same period in 2020.

Profits rose across all of the bank’s core divisions, though its investment banking arm performed most strongly with a 134% rise in pre-tax profits to €1.5 billion. Revenue across the bank grew 14% to €7.2 billion, its highest total since 2017.

CEO Christian Sewing attributed the strong results to effective risk management and tight control of costs. "Our first quarter is further evidence that Deutsche Bank is on the right path in all four core businesses, and is building sustainable profitability," he said. "In addition to substantial revenue growth over an already strong prior year quarter, we demonstrated cost and risk discipline."

Deutsche Bank’s strong quarterly performance is also significant in its avoidance of damage from the implosion of Archegos Capital Management. The family-run hedge fund collapsed in March and dragged down the profits of major banks tied to it. Credit Suisse made an immediate loss of $4.7 billion, while Morgan Stanley lost $1 billion and Nomura lost $1.43 billion.

However, Deutsche Bank made no mention of Archegos in its quarterly report despite being a client of the fund. The bank is understood to have conducted a relatively small amount of business with Archegos and exited positions quickly upon its collapse, minimising damages to its revenue.

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Shares in Deutsche Bank rose as much as 6% in early trading on Wednesday upon the release of the quarterly earnings report.

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