By Pierre Bertrand
Deutsche Bank said it anticipates being able to accelerate and expand shareholder returns to 2025 and beyond after third-quarter revenue rose but net profit fell on rising costs and taxes.
The German bank said Wednesday that it anticipated being able to free up around 3 billion euros ($3.18 billion) of additional capital as it expects to further reduce risk-weighted assets and foresees a lower Basel III impact than originally estimated.
The freed funds will enable the bank to invest in growth and contribute to its commitment to return, in 2026, EUR8 billion to shareholders for the years 2021 to 2025, it said.
“We see upside to that but to be very clear, we are not saying that number is now EUR11 billion. It’s going to take some time to see what the new capital plan will look like,” Chief Financial Officer James von Moltke said n a post-earnings media call, adding it was still too early to be precise about amounts and timings, but that the company would expect to buyback shares next year beyond what it previously planned.
Deutsche Bank, which began an up to EUR450 million buyback in August, said Wednesday that it had distributed around EUR1.57 billion in both share repurchases and dividends to shareholders over 2022 and the first nine months of 2023.
It said it is on track to reach its target of more than EUR1 billion in returns in 2023 and EUR1.75 billion across 2022 and 2023.
The bank added it expects to achieve EUR29 billion in net revenue for the year, but warned that earnings in the fourth quarter will likely reflect a number of both positive and negative one-off items.
In the third quarter it made EUR1.03 billion in attributable net profit for the period compared with EUR1.12 billion a year ago, on revenue that grew 3% to EUR7.13 billion, it said.
The result compares with expectations of EUR1.07 billion in net profit and EUR7.1 billion in third-quarter revenue, according to a bank-provided consensus of analysts’ average views.
Deutsche Bank said its third-quarter after-tax profit was down 3% on year, reflective of a 30% effective tax rate compared with 23% in the prior year.
Net interest income, the difference between what lenders earn from loans and pay for deposits, and a key profit driver for retail banks, came to EUR3.34 billion–a 9% decline compared with a year prior and a 7% fall compared with the second quarter.
Deutsche Bank said non-interest expenses in the quarter rose 4% on year to EUR5.16 billion, comprising non-operating costs such as litigation and restructuring charges.
Loan loss provisions fell on quarter to EUR245 million from EUR401 million in the second quarter and remain in line with the bank’s full-year guidance.
The bank said it saw EUR11 billion of inflows across its private bank and asset-management businesses, it said.
The bank continues to anticipate that its deposit revenues will normalize in coming quarters which will be partially offset by rising noninterest rate revenue streams, such as commissions and fees, it said.
Write to Pierre Bertrand at [email protected]
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