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'Very hard' to say when revenues will pick up again, Deutsche Bank CFO says

  • Deutsche Bank reported an almost 10 percent drop in revenue in the three months through September on Thursday, versus the quarter before, amid a weak market and the ongoing turmoil of a major restructuring program
  • When asked when exactly investors could expect revenues to pick up, Deutsche Bank's Chief Financial Officer, James von Moltke, said Thursday that this would be "very hard to answer"
  • Mario Draghi, the president of the European Central Bank (ECB), is poised to unveil the details of a reduction in monetary stimulus on Thursday

Germany's flagship lender is struggling to predict when revenues will improve.

Deutsche Bank reported an almost 10 percent drop in revenue in the three months through September on Thursday, versus the year before, amid a weak market and the ongoing turmoil of a major restructuring program.

When asked when exactly investors could expect revenues to pick up, Deutsche Bank's Chief Financial Officer, James von Moltke, said Thursday that this would be "very hard to answer."

"We swim in a pool with our competitors and particularly the capital markets environment has been weak in the past couple of quarters, so we're looking for that to pick up," he added.

The bank posted a strong increase in third-quarter net profit Thursday, beating analyst expectations despite a significant drop in investment bank revenue. Further cost reductions had helped profits more than double to 649 million euros ($768 million) in the quarter. For the same period last year net profit came in at 278 million euros.

'Manage costs carefully'

Meantime, revenues at the bank slipped 9.6 percent to 6.8 billion euros. And von Moltke said that while an improvement in the bank's revenues depended on investor engagement, as well as other events, Deutsche Bank would need to "manage costs carefully" until that time.

The decline in revenues had been widely expected as low market volatility, depressed trading volumes and a stubbornly low-interest rate environment have hit banks globally in recent months.

A red traffic light is seen next to the headquarters of Germany's Deutsche Bank in Frankfurt, Germany, January 26, 2016.
Kai Pfaffenbach | Reuters
A red traffic light is seen next to the headquarters of Germany's Deutsche Bank in Frankfurt, Germany, January 26, 2016.

Deutsche Bank's third-quarter revenues also showed the German bank was lagging behind its U.S. peers. When asked about its performance in relation to the lender's U.S. rivals, von Moltke insisted that Deutsche Bank's fixed income performance in the third quarter was "very much in line" with the bank's stateside peers.

However, he conceded that in terms of equities the lender had fallen behind its rivals in the three months through to September.

Major U.S. investment banks' bond trading revenues dipped 22 percent on average, Reuters reported, when compared to the same period in 2016. Revenues in Deutsche Bank's bond trading division slumped 36 percent in the third quarter due to reduced market volatility and decreased client activity.

'Uncertainty' over ECB decision could help Deutsche Bank

Elsewhere, Mario Draghi, the president of the European Central Bank (ECB), is poised to unveil the details of a reduction in monetary stimulus on Thursday in what could be the most eventful meeting of the central bank this year.

And while von Moltke confirmed the Frankfurt-based lender was positively exposed to a rise in interest rates, he cautioned over the manner in which the ECB appeared set to unveil the fate of its massive bond-buying program.

Deutsche Bank's CFO said he believed the Federal Reserve had been "very successful" in signalling to the market how the U.S. central bank was likely to remove such stimulus. However, in Europe, there was still uncertainty over how the ECB would act on Thursday.

"There's uncertainty as to how that will play out — that uncertainty could certainly help our businesses because again we are talking about volatility being low in the markets. And that's been a dampener on revenues in the last several quarters," he concluded.