FRANKFURT - Deutsche Bank on Wednesday said that it was on track to swing to a profit this year, its first since 2014, despite a steep decline in third quarter profit as it restructures under new leadership.
Germany’s flagship lender is trying to bounce back from three consecutive years of losses and a run of negative headlines earlier this year, including an abrupt management reshuffle, a downgrade by Standard & Poor’s and failing the US Federal Reserve’s stress test.
The bank said it was making progress, although it underscored a failure to turn around revenues.
“We have our costs under control and sufficient capital to grow. We are on track to be profitable in 2018, for the first time since 2014,” Chief Executive Christian Sewing said on Wednesday.
Deutsche’s shares were indicated to start trading 0.9 percent higher.
The bank posted a 65 percent decline in net profit in the third quarter. Net profit was $263 million (R3.7bn), down from 649 million euros a year ago but still beat the 149 million euros expected in a Reuters poll of analysts.
Revenue in the quarter was 6.175 billion euros, down 9 percent from 6.776 billion a year ago.
The quarter was marked by continued weakness in its key trading business amid lower volatility. Revenue at its cash-cow bond-trading division fell by 15 percent, while revenues from equities-trading were also down 15 percent.
“We have not yet achieved a turnaround in terms of revenues,” Sewing wrote in a memo to staff. “We must therefore sustain our efforts to grow revenues across our businesses.”
For 2018, Deutsche expects revenues to be slightly lower compared to 2017 due to the restructuring of its investment banking activities.
Sewing took over in April and has embarked on plans to cut more than 7 000 jobs in an overhaul of the bank.
Headcount at the end of the quarter was 94 717, down about 700 during the quarter.
In contrast to Deutsche’s drop in quarterly profit, some big US banks posted sharp gains.
Goldman Sachs reported a 20.5 percent increase in quarterly profit as growth in its equities trading and underwriting businesses made up for a fall in fixed income trading.
Deutsche’s shares are down 41 percent so far this year.