Deutsche Bank AG (NYSE:DB) (ETR:DBK) reported its third quarter earnings this morning, posting declining profits because of uncertainty in the markets and also because it set aside more funds to pay for litigation expenses. The bank’s shares fell 2% in premarket trading at the New York Stock Exchange.
Deutsche Bank posts €51 million in net income
According to this morning’s release, Deutsche Bank AG (NYSE:DB) (ETR:DBK) posted net income of €51 million for the quarter. Diluted earnings per share were €.04. Group income before taxes was €18 million, including €1.2 billion in litigation expenses. Group net revenues fell 10% to €7.7 billion compared to the same quarter a year ago.
Core bank net revenues were €7.4 billion. The bank’s non-interest expenses were €7.2 billion—a 4% increase over last year’s third quarter mostly because of legal expenses.
Deutsche Bank struggles with legal problems
During the third quarter, Deutsche Bank AG (NYSE:DB) (ETR:DBK) increased its litigation reserves to €4.1 billion, which includes €1.2 billion in additional provisions taken during the quarter. The bank was one of several banks facing investigations and lawsuits from various angles. It is one of those suspected of manipulating Libor, a key benchmark for interest rates.
Deutsche Bank is also one of 13 named by the European Commission that’s accused of blocking the CDS market and faces scrutiny from the U.S. Department of Justice because of its sales of mortgage-backed securities.
Deutsche Bank reports falling investment revenue
In addition to legal expenses, Deutsche Bank AG (NYSE:DB) (ETR:DBK) also said its investment banking division performed poorly during the quarter. According to the bank’s statement, part of the decline in profits was due to fears that the Federal Reserve will begin tapering its bond buying program in the U.S. The bank reported that revenue from trading and sales, which included bonds and other types of debt, dropped by almost 50% during the third quarter to €1.3 billion.
The bank’s private and business clients division posted a 5% decline in revenue, which fell to €2.3 billion for the quarter. The unit’s pretax profits fell to €347 million—a decline of 14%.
