BERLIN, July 16 (Xinhua) -- Profits at Deutsche Bank were significantly higher than analysts anticipated during the second quarter (Q2) of 2018, figures published on Monday by the embattled German lender show.
Deutsche Bank announced it would achieve pre-tax profits of 700 million euros (820 million U.S. dollars) and a net quarterly result of 400 million euros in the period between April and June. Most analysts had only expected Germany's largest financial institute to record net profits of 159 million euros in Q2.
Commenting on the surprisingly positive figures, chief executive officer (CEO) Christian Sewing said the quarterly reversal of fortunes was "evidence for the stability of the business model" of the Frankfurt-based lender.
Deutsche Bank is now forecasting an overall pre-tax profit of 1.15 billion euros during the first half of the year. The share price of the DAX-listed company rose by up to five percent on Monday in reaction to the news, despite the profits being below the level of 466 million euros recorded in the same period in 2017.
Nevertheless, the better-than-expected earnings performance was seemingly welcomed by investors as a glimmer of hope after several setbacks suffered by Deutsche Bank so far this year.
Most recently, the financial institute's U.S. subsidiary failed a U.S. stress-test due to what local regulatory authorities described as "significant weaknesses" in internal corporate risk management. The decision is likely to complicate Deutsche Bank's plans to move capital out of its U.S. branch as it reduces its investment banking presence on Wall Street.
Due to the expensive legal settlements in connection to accusations of criminal fraud, Deutsche Bank's annual profits have been deep in the red for the past three consecutive years. Cumulative losses since 2015 currently stand at 9 billion euros.
Speaking at the bank's latest annual general meeting, the newly-installed CEO consequently announced that the number of staff would fall from currently around 97,100 to significantly below 90,000 in the coming years. "The reduction in headcount is unavoidable if our bank is to return to a sustainable path of profitability," Sewing said.
Deutsche Bank intends to place a greater emphasis on its European home market in the future, reducing its investment and retail banking presence in the United States in particular. Sewing joined Deutsche Bank as a teenager and was named as the successor to the ousted ex-CEO John Cryan by the supervisory board in April.
Sewing subsequently wrote in a message to staff that he was "sick of the bad news" and emphasized that the company would have to act "swiftly and decisively" to improve its profitability. On Monday, Deutsche Bank attributed a first tentative success in this mission during Q2 to lower costs stemming from legal cases and a rise in gross quarterly earnings to 6.6 billion euros.
