If this is what John Cryan calls fun, you'd have to wonder what a bad time might look like.
Deutsche Bank AG's CEO wants the bank to grow and shrink, to lift revenue even while it becomes more lean and mean, as my Gadfly colleague Lionel Laurent has pointed out. The lender's second-quarter earnings, released on Thursday, will do little to ease investor concern about his ability to perform this contortionist act.
Revenue fell 10 percent to 6.6 billion euros, falling short of analyst estimates. At the corporate and investment bank, income fell 16 percent. More troubling were the steep declines in fixed-income trading (down 12 percent), equity sales and trading (down 28 percent) and debt origination (down 24 percent.)
Granted, Cryan delivered on the efficiency side of his awkward balancing act. Costs fell 6 percent in absolute terms, and as a proportion of revenue they fell to 86.4 percent. That helped the lender post an actual profit in the quarter. But return on equity was still a meager 2.7 percent.
Cryan has successfully quelled fears about the bank's capital adequacy. He's making progress on chopping costs and crunching businesses together. Earlier this year, he merged Deutsche's advisory and trading businesses to try to win more business from clients. He told Bloomberg Markets magazine this week he is spending half his time with clients.
Cryan might joke that his work is more fun now, but the need to get the bank growing again is deadly serious. Shrinking the cost base while expanding the client base is one thing. Just shrinking is quite another.
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