Deutsche Bank seeks buyback approval after securities unit’s outperformance
DEUTSCHE Bank is seeking approval for further share buybacks after revenue at the investment bank rose and the lender largely settled a legacy dispute.
Revenue from buying and selling fixed-income securities and currencies rose 11 per cent, outperforming peers such as JPMorgan, Goldman Sachs or Citigroup. Income from advising on deals and stock and bond sales increased 24 per cent.
The better-than-expected performance in the securities unit offset lower revenue in the corporate and private bank, where falling interest rates weighed on income, and higher loan-loss provisions.
Chief executive officer Christian Sewing has vowed to improve profitability and return more than eight billion euros (S$11.4 billion) to shareholders over the medium term. The buyback plan comes after Deutsche Bank settled a majority of legal disputes related to its acquisition of retail lender Postbank years ago, which allowed it to release about 440 million euros in litigation provisions.
“We made important progress in putting legacy litigation matters behind us, while also producing a record third-quarter profit in our operating business,” Sewing said. “This reinforces our confidence that we will continue on our path of profitable growth and exceed our original goals for capital distributions to shareholders.”
Deutsche Bank did not specify how much stock it plans to buy back, or when.
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The lender has previously ruled out getting involved in the battle for cross-town rival Commerzbank, saying it still has work to do to deliver on the promises it made to its investors.
Revenue at the corporate bank declined 3 per cent from a year earlier, while it fell 1 per cent at the private bank, which combines the retail and wealth units. Provisions for souring loans doubled from a year earlier, driven by the private bank.
They “included residual effects from remaining impacts from Postbank integration which are expected to normalise in the coming quarters, while overall portfolio quality remained largely stable”, Deutsche Bank said. Provisions for commercial real estate fell from the prior quarter.
Revenue at the investment bank, the biggest contributor to the group’s top line, rose 11 per cent from a year earlier, the same increase as in the asset management business. Sewing has built out the advisory business with last year’s purchase of Numis to boost fee income.
Deutsche Bank is also one of the few lenders to take advantage of a downturn in dealmaking by picking up marquee bankers from peers such as Bank of America, Credit Suisse, Morgan Stanley and Lazard. Last week, Bloomberg reported that Deutsche Bank hired a UBS Group banker as head of North American mergers and acquisitions. BLOOMBERG
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