FRANKFURT, April 27 (Xinhua) -- Deutsche Bank, Germany's biggest lender, said it expects better-than-expected pre-tax profit and net income for the first quarter of 2020 but warned of credit losses amid the coronavirus pandemic, according to a statement issued late Sunday.
The bank said it expects to report profit before tax of 206 million euros (223 million U.S dollars) and net income of 66 million euros, both beating market expectations. Revenues are expected to be 6.4 billion euros, it added.
The bank also expected to set aside provisions of credit losses of 500 million euros to support its clients during the pandemic. "This extraordinary economic environment suggests that we will see a higher level of credit defaults. Nevertheless, Deutsche Bank's loan book is of high quality and well diversified," the bank explained in a separate statement on Monday.
Furthermore, the bank said it may fall "modestly and temporarily" below its target for CET1 ratio, a key indicator of capital strength, which was set at 12.5 percent at the minimum. It is also likely to miss the fully-loaded leverage ratio target of 4.5 percent by the end of 2020.
Deutsche Bank's CET1 ratio was 12.8 percent at quarter-end, down from 13.6 percent at the end of 2019. The decline was caused partly by a revised securitization framework and partly by the pandemic, it said. The ratio is still above the European Central Bank's current requirement of 10.42 percent at the end of Q1.
As the regulators lowered capital requirements on banks already before the crisis and now also reacted to the pandemic, the bank has "gained additional headroom," it said. Some pending regulatory adjustments may also improve the reported ratio, it added.
The announcement came three days ahead of Deutsche Bank's scheduled publication of first-quarter results on Wednesday, as the management seeks to "address uncertainties around market expectations on the bank's earnings" and also to inform the market about the updated outlook, it said in the statement.
A detailed report of individual businesses will be released on Wednesday, it said. (1 euro = 1.084 U.S. dollars) Enditem
