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Deutsche Bank’s ambition to ride the global rebound in dealmaking paid off last quarter as Germany’s biggest lender doubled its revenues from advising on mergers and fundraisings.
Revenues from advising companies on deals, as well as on raising new debt and equity, climbed to €585mn in the second quarter from €291mn a year earlier, Deutsche Bank said on Wednesday.
The result vindicates the group’s attempt over the past 18 months to reboot its corporate finance advisory business and reduce its reliance on bond trading.
The jump in revenues was also a bright spot in a quarter marked by a €1.3bn provision tied to a lawsuit over its botched acquisition of German retail lender Postbank.
The provision, which Deutsche Bank had said in April it was likely to have to take, pushed the lender to a net loss of €143mn in the three months to the end of June, its first quarterly loss in almost four years. Its total revenues in the period edged up 2 per cent to €7.6bn, matching forecasts.
Analysts and investors had expected a better performance from the investment bank after Wall Street rivals had reported their best quarter in more than two years.
Pre-tax profits at the investment bank rose by a quarter to €746mn, short of analysts’ expectations. The bank’s trading revenues fell 3 per cent in the quarter from a year earlier.
Deutsche Bank also raised its provision for credit losses this year, saying it had been too optimistic on the pace of recovery in commercial property.
For the second quarter, its provision for credit losses rose by almost a fifth to €476mn, larger than even the gloomiest forecast.
The bank’s common equity tier one ratio — a key measure of its balance sheet strength — stood at 13.5 per cent of risk-weighted assets, up 10 basis points compared with the first quarter of the year.