Deutsche Bank Rises as Jain Says Lender Had Solid Quarter
Deutsche Bank AG (DBK) advanced in Frankfurt trading after co-Chief Executive Officer Anshu Jain said the performance of continental Europe’s biggest bank was “solid” in the first quarter, helped by lower costs.
The shares climbed as much as 2 percent to 33.1 euros and traded 0.8 percent higher at 32.7 euros as of 11:19 a.m., valuing the company at 30.4 billion euros ($39 billion). Europe’s benchmark Stoxx 600 Banks Index (SX7P) fell 0.2 percent.
“We expect our first quarter to be solid across all businesses, driven by robust revenues similar to last year’s performance,” Jain, 50, said at a conference in London today. “More encouragingly, we expect a positive development for expenses in the first quarter, driven by effects from our cost- reduction effort in the second half of 2012.”
The world’s biggest investment banks profited from a market rally after the European Central Bank stepped in to stem the debt crisis. Deutsche Bank unveiled a plan in September to cut an annual 4.5 billion euros ($5.8 billion) in costs by 2015 by firing staff and combining units to bolster profits.
Deutsche Bank, based in Frankfurt, is scheduled to report first-quarter earnings April 30. The first quarter accounted for the highest quarterly share of the firm’s revenue in the last two years. It reported profit of 1.38 billion euros in the first three months of 2012 from revenue of 9.19 billion euros.
The ECB’s actions, which included defending the euro and pledging to buy the bonds of distressed nations provided they sign up to a bailout, have “led to relatively robust volumes especially in foreign exchange and fixed income,” Jain said.
“Clearly there’s been an increase in corporate activity as well,” he said.
While volatility “picked up a little bit over the last few days” because of uncertainty over the rescue of Cyprus, the risk of Europe’s sovereign debt crisis shocking markets has declined, Jain said.
“Our fundamental outlook remains the same,” he said. “While the possibility of an extremely disruptive event in Europe has not been eliminated completely, the risk of a tail event has been truncated quite substantially.”
The bank has boosted capital levels this year by reducing risk, Jain said.
Deutsche Bank, which is the least capitalized of Europe’s four biggest investment banks, will reach a goal of raising its core Tier 1 capital ratio to 8.5 percent at the end of March from 7.8 percent three months earlier, Jain said.
Jain, who has a masters degree in finance from the University of Massachusetts in Amherst, became co-CEO in June last year. He previously headed Deutsche Bank’s investment banking unit.
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