The biggest German bank, Deutsche Bank, today posted a sharp third-quarter loss linked to its purchase of Postbank, while underlying results were not quite as bad.
Deutsche Bank reported a net loss of €1.2 billion that included a once-off charge stemming from its takeover of Postbank, a deal meant to broaden Deutsche Bank's revenue base. Analysts had forecast a deeper net loss of €1.47 billion.
Deutsche Bank had warned on September 21 that it would incur a charge of €2.3 billion as part of its re-evaluation of the holding in Postbank, which has Germany's largest retail banking network.
The new calculation was required because Deutsche Bank has offered to buy all of the shares in Postbank as part of an increase in its stake from nearly 30% to more than 50% by the end of this year.
Excluding the Postbank charge, Deutsche Bank said it made a net profit of €1.1 billion in the three-month period, which was down by about 21% from its profit of €1.4 billion in the third quarter of 2009.
The bank reported net revenues of €5 billion including the charge and a pre-tax operating loss of €1 billion. Without the charge, Deutsche Bank posted a pre-tax operating profit of €1.3 billion, the same amount as in the third quarter of 2009.
'The third-quarter results again prove the robustness of our recalibrated business model despite the difficult ongoing macro-economic and market conditions,' chairman Josef Ackerman said.
Deutsche Bank is buying Postbank to add a strong retail banking pole to its traditional investment bank activities.
The bank raised €10.2 billion early this month, its biggest capital increase ever, to finance the Postbank takeover and reinforce its shareholder capital base in view of proposals from international banking regulators in response to the global financial crisis.
'Our retail banking operation is vastly increasing its footprint in Germany, which will balance our earnings towards an even more stable business,' Ackermann said.
The bank booked €362m in loss provisions in the quarter, less than the €544m recorded in the same time of 2009 but more than the €243m seen in the second quarter of 2010.
Deutsche Bank did not provide an outlook for the full year, but has already targetted a pre-tax profit of €10 billion in 2011.
