Deutsche Bank CEO defends 'mixed' results; shares close down 6.5%

The chief executive of Deutsche Bank has defended the bank's mixed bag of results as markets reacted negatively to lower-than-expected second-quarter revenues.

Speaking to CNBC on Thursday as Deutsche Bank's shares traded sharply lower, Chief Executive John Cryan said that the market reaction was "largely driven by the composition of our results" but that lower revenues reflected work the bank was doing to lower overall costs. The bank's shares closed down 6.5 percent.

"The revenues are a bit lower than I think the market was expecting but then the costs are even lower, so the profits are higher so I think the results are a bit mixed," he said.

"The lower level of revenues does reflect a lot of the restructuring work that we've done over the past year or two. We have shrunk the business a little bit, we've sold off some businesses, our non-core unit is completely gone," he said.

"But I wouldn't want to suggest that this is the level of revenues that we're happy with because we do want to grow the business but if you look at the quarter, client activity levels really were low."

John Cryan
Thomas Lohnes | Getty Images
John Cryan

On Thursday, Deutsche Bank reported an unexpected surge in profits in the second quarter, beating market estimates and doubling its pre-tax profit figure from last year.

Profit was aided by lower restructuring and litigation charges, but revenues in the second quarter fell 10 percent year-on-year, to 6.6 billion euros. Cryan said three factors had impacted revenues, notably:

"Client activity levels were low, volatility - which is a factor which does affect trading revenues was historically low - and then there were the negative interest rates which really impact a number of our other banking businesses."

'It's good to be in Europe'

While it was difficult to predict whether the level of client activity in the rest of the year would pick up, Cryan said the macro-economic picture was more positive.

"Macro-economically, it's good to be in Europe," he said, although he added that it was hard to tell how and when the European Central Bank (ECB) would start raising interest rates but that the bank was "positively exposed to interest rates going up."

"At the moment in Europe we're seeing economic growth, GDP (gross domestic product) growth, but not much inflation so how the central bank responds to that low inflation but higher growth is hard to say."

Turning to ongoing negotiations regarding the U.K.'s departure from the European Union, Cryan said that the bank - which has around 9,000 staff in London – needed to plan ahead for any outcome from the Brexit discussions.

"We need to build contingency plans that are workable. We need to make sure that everything we can do in London today, we can do comfortably in Germany tomorrow i.e. April 2019, safely so we can respond to whatever our clients - particularly institutional clients – would require of us."

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