Deutsche Bank warns of revenue headwind from currencies, funding

[FRANKFURT] Deutsche Bank AG, which runs Europe's biggest investment bank, said the euro's gain against the dollar and higher funding costs will weigh on revenue in the securities unit this quarter, a week after the lender voiced optimism about the outlook for the year.

The company's corporate and investment bank unit faces a 300 million-euro (S$485.86 million) headwind from the currency effect and 150 million euros from higher funding costs, chief financial officer James von Moltke said at an investor conference in London on Wednesday. Shares of the lender fell the most in a month in Frankfurt, leading European banks lower.

An otherwise constructive environment "means that we're sort of, depending on the business, flat to slightly down from last year," Mr von Moltke said. The first quarter of 2017 was "relatively strong," making for "a more difficult comparison." His comments come after the lender, in its annual report last week, predicted that volatile markets are here to stay and will help it arrest two years of declines at its debt-trading business.

The bank's executives have been pleading with investors for patience, with chief executive officer John Cryan saying in January that his work had entered a "third phase" in which revenue should start to grow again.

Marcus Schenck, co-head of the corporate and investment bank, said at a separate event in London Wednesday that the lender still has some work to do convincing its shareholders it's turnaround is on track.

"John has always made it very clear. Look, this is not a one-quarter journey. This is a several-year journey," Mr Schenck said. "We think we're on the right path with that journey. But we definitely are a show-me case."

BLOOMBERG