Money Matters, Simplified.
Deutsche Bank 3Q net profit estimate trebles
by Ishita Sood - October 21, 2009 - comments
Tax benefits increase estimated profit figures for Deutsche Bank
Frankfurt, Germany, October 21 -- Germany’s largest bank, Deutsche Bank AG, said in a surprise statement Wednesday that it expected its net profit to rise to 1.4bn-euro ($2.1bn), helped by tax benefits.
The tax exemptions and credit were seen as a result of wrapping up of earlier years’ audits which led to an increase of 100bn euro, the full report of which will be issued on Oct. 29. The bank, however, did not give any details as to where its profits came from.
“Tax issues are maybe not the best reasons for an unexpected profit,” said Mr.Gattiker, research and strategy chief at Julius Baer in Zurich. But he said with the bank shares rising over the last couple of weeks, “It may be a case of ‘buy the rumor, sell the fact.’”
Estimates still thwart investors
Shares of Deutsche Bank plunged 3.3 percent to euro53.64 at Frankfurt trading as investors got worried over bank’s profitability and feat of its investment banking unit.
“The results are solid but its not a blow out-either. Results at investment banking were probably not as robust as U.S. peers', with all due caution as we don't know much detail yet,” said Stefan Stalmann, analyst at UniCredit.
Rivals JP Morgan and Goldman Sachs both declared net profits of 1.8euro ($3bn) in the third quarters last week.
“I suspect that the market had secretly anticipated even better figures. JP Morgan and Goldman Sachs figures could have led some to expect that,” said Christian Hamann at Hamburger Sparkasse.
Acquisitions under way
Deutsche bank also announced Tuesday that it would be buying parts of ABN AMRO’s commercial banking operations in Netherlands.
The sale was announced last year and, at the same time, the bank announced it would pay euro709 million for the same. The acquisition would, in turn, strengthen the bank’s commercial operations, leading to higher profits.
The bank is also expected to acquire Luxembourg-based private bank Sal. Oppenheim Jr. & Cie's wealth management business. Further stakes in Deutsche Postbank AG are also expected to be purchased.