Earnings

Deutsche Bank posts 832 million euro loss amid major restructuring plan

Key Points
  • "Our net loss is a little better than our internal planning," Deutsche Bank's CFO told CNBC.
  • Earlier this year, Deutsche Bank announced a wide restructuring plan in an attempt to revive its business.
  • Shares of Deutsche Bank are down by about 16% from a year ago.
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Deutsche Bank CFO: Third-quarter results 'entirely in line' with plans

Deutsche Bank reported a net loss that missed market expectations on Wednesday as a major restructuring plan continues to weigh on the German lender.

It reported a net loss of 832 million euros ($924 million) for the third quarter of 2019. Analysts were expecting a loss of 778 million euros, according to data from Refinitiv. It had reported a net profit of 229 million euros in the third quarter of 2018, but a loss of 3.15 billion euros in the second quarter of this year.

Here are some of the key highlights:

  • Total net revenues: 5.3 billion euros in the third quarter vs. 6.2 billion euros a year ago.
  • Common equity tier 1 ratio stood at 13.4% in the third quarter, vs. 14% a year ago.
  • Total non interest expenses: 5.8 billion euros in the third quarter, vs. 5.6 billion euros a year ago.

"Our results in the quarter are entirely in line with our plans. We are executing, I think, well against the strategic changes we announced in the summer," James von Moltke, chief financial officer at Deutsche Bank, told CNBC's Annette Weisbach.

He added: "Our net loss is a little better than our internal planning and our capital ratio at 13.4% stable quarter-on-quarter demonstrates what we set out."

The embattled German lender has struggled since the global financial crisis of 2008 and the subsequent debt crisis in the euro area. The bank has faced billion-dollar fines, increased market competition, a lower market share in both commercial and investment banking, as well as a series of management changes.

I wouldn't expect (a) big announcement of headcount reductions, but (a) steady execution of our plans.
James von Moltke
Chief financial officer at Deutsche Bank

Earlier this year, Deutsche Bank announced a wide restructuring plan in an attempt to revive its business. At the time, Christian Sewing, CEO of Deutsche Bank, said the lender would be exiting its global equities business, scale back investment banking and slash thousands of jobs. The German bank plans to cut 18,000 jobs worldwide by 2022.

At the end of the third quarter of 2019, Deutsche Bank reported that it had 89,958 employees — a 5% drop from a year ago.

Speaking to CNBC, von Moltke explained that the job cuts are "rolling through the company." He added: "I wouldn't expect (a) big announcement of headcount reductions, but (a) steady execution of our plans."

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What is Deutsche Bank?

Higher costs

Net revenues in investment banking fell 5% from a year ago. The private bank business also saw a 3% fall in net revenues and net revenues in asset management also decreased by 4% from a year ago.

Deutsche Bank cited higher expenses in its corporate, investment and private banking units. These included higher spending on controls, technology and internal services. Meanwhile, assets under management for its asset management unit rose to 754 billion euros in the third quarter — a 9% increase from a year ago.

Shares of Deutsche Bank fell by 2% in early European trading hours. Its stock price is down by about 16% from a year ago.

Statues stand outside a Deutsche Bank AG branch in Frankfurt, Germany.
Krisztian Bocsi | Bloomberg | Getty Images