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Deutsche Bank is doing just fine, says its top investment banker
THE chief of Deutsche Bank AG's embattled securities division says investors who have hammered the lender's shares to an all-time low have it wrong.
"The franchise has not been impaired," Garth Ritchie, a two-decade veteran at Deutsche Bank, said after the bank last week reported its worst third-quarter revenue in eight years. "I'm very confident that we'll remain Europe's number one investment bank for the foreseeable future."
Top officials at Deutsche Bank are struggling to convince investors that their plan for overhauling Europe's biggest investment bank - the fourth such attempt since 2015 - and ending a multi-year slump isn't causing more harm than good. Key to shareholders' concerns is whether chief executive officer Christian Sewing's aggressive cost-cutting is harming the lender's ability to increase revenue and fend off aggressive US and European rivals.
Revenue at the corporate and investment bank fell 13 per cent in the third quarter from a year earlier, and 15 per cent from the prior three months, contributing to Deutsche Bank's worst third quarter by revenue since 2010. But Mr Ritchie, who has helped lead the investment bank since 2016, said investors should instead focus on the 4 per cent drop in fixed income trading from the previous three months, which he said was better than the market average. He expects the business to start growing again under John Pipilis, and equities to follow next year.
"In important areas for our franchise, we have been gaining market share," he said. "We're competitive."
Mr Sewing, Mr Ritchie's third top boss in three years, has emphasised that Deutsche Bank is now ready to grow again, but investors have heard such promises before, under Mr Sewing's predecessor John Cryan. Some say the franchise may be too damaged by years of cost-cutting to end the contraction.
"Rather than costs, our greater concern is on revenues, where we believe management's targets are overly aspirational," Citigroup Inc analysts led by Andrew Coombs wrote last week. "The hope is that revenue attrition should now stabilise and the bank can 'build from here'. In contrast, we fear the bank could continue to cede sales and trading share based on current momentum."
Deutsche Bank shares tumbled after the firm reported earnings on Oct 24 and ended last week at a record low of 8.52 euros (S$13.40) per share. The stock has lost almost half its value this year, the second-worst performance among major European lenders. BLOOMBERG