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Deutsche Bank's Trading Business Swings to Loss

Reuters
Wednesday, 31 Oct 2007 | 4:33 AM ET

Deutsche Bank's investment banking business made a loss of 179 million euros ($258 million) in the third quarter as global market turmoil left its mark on Germany's biggest listed bank.

The bank said on Wednesday that its overall pretax profit reached 1.4billion euros, down 19 percent on the same period a year earlier.

Both results are slightly better than the bank had indicated about four weeks ago, when it said it was expecting a pretax profit of around 1.2 billion euros and a loss before taxes from its corporate banking and securities business of between 250 million euros and 350 million euros.

Chief Executive Josef Ackermann said the bank had a positive start to the fourth quarter and would hit its goal of a pretax profit of 8.4 billion euros next year if markets were "normal."

Still, the bank warned investors that investment banking revenues in the fourth quarter of the year should remain "significantly" below recent highs.

Unveiling the damage inflicted by weeks of turmoil in debt markets combined with tightening credit, Deutsche Bank said revenues in its corporate and investment bank dipped by more than a half to 1.9 billion euros in the third quarter.

Overall, however, windfalls from the sale of company stakes as well as offices on Wall Street helped boost pretax profit.

Its prized trading business made a loss of more than 800 million euros.

Buying and selling debt products, in particular, was badly affected by difficult market conditions. Revenues dipped by more than two thirds to less than 600 million euros.

Deutsche said it would take one-time hits from the subprime-mortgage-triggered crisis, such as a charge of more than 1.5 billion euros on investments including debt.

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