Deutsche Bank, the biggest private German bank, today posted a stronger third quarter net profit as one-off items and retail and asset management operations helped it overcome a global banking crisis.
Deutsche Bank thus escaped the situation of competitors like Swiss bank UBS, or US groups Merrill Lynch and Citigroup, which have been hit hard by the effects of the US subprime mortgage market meltdown.
From July to September, the German bank's net profit grew by 31% to €1.62 billion, exceeding an estimate provided earlier this month of €1.4 billion.
Solid returns from the bank's retail, asset management and transaction banking operations along with around €600m in one-off gains from the sale of industrial holdings partly offset charges of €603m on leveraged loans and loan commitments, as well as charges of €1.560 billion related to trading in structured credit products and mortgage-backed securities.
But pre-tax profit fell by almost 19% to €1.45 billion, in line with market expectations. Profitability was also weaker than in the same time a year earlier, however, with return on equity of 12%, compared with 26% in 2006.
'The third quarter of 2007 was a period of exceptional turbulence in financial markets,' a bank statement quoted chairman Josef Ackermann as saying.
'In investment banking our performance was significantly impacted by this extremely challenging environment, however, our 'stable' businesses performed and we reaped the benefits of some recent investments,' he added.
Deutsche Bank is aiming for a pre-tax profit of $8.4 billion excluding exceptional items in 2008, compared with $7.98 billion in 2006.
Ackermann said that the situation which emerged from a credit crunch that followed the subprime crisis 'is also a time of opportunity for Deutsche Bank.'
Owing to its strong positions in investment banking, 'we stand to benefit from the flight to quality,' he forecast.
