Frankfurt: Deutsche Bank said on Wednesday the German lender posted a larger-than-forecast loss of 3.15 billion euros ($3.51 billion) in the second quarter due to major restructuring costs.
Earlier this month, Deutsche Bank had flagged it would lose around 2.8 billion euros in the quarter when it announced that the lender’s restructuring plan will see 18,000 jobs go and cost 7.4 billion euros.
The second-quarter loss compared with a profit of 401 million euros a year earlier.
Deutsche is considered one of the most important banks for the global financial system, along with JPMorgan Chase, Bank of America and Citigroup. But the German lender has been plagued by losses and scandal, prompting it to embark on one of the biggest overhauls to an investment bank since the aftermath of the financial crisis.
The bank had already taken significant steps to implement its strategy, Chief Executive Officer Christian Sewing said on Wednesday.
“A substantial part of our restructuring costs is already digested in the second quarter,” he added.
Net revenue in the quarter fell 6 percent to 6.2 billion euros. Analysts on average had expected 6.3 billion euros in revenue, according to a consensus forecast posted on the bank’s website.
The bank now expects 2019 revenue to be lower than in 2018. The forecast marks a further scaling down in expectations from previous quarters.
Revenue at Deutsche’s cash-cow bond-trading division dropped 4 percent in the quarter, while equities sales and trading revenue dived 32 percent, underscoring continued weakness at the lender’s investment bank.
Deutsche’s woes peaked with a $7.2 billion US fine in 2017 for its role in the mortgage market crisis, in a major blow that spooked clients and drew regulatory concern.
A new leadership, with Sewing at the helm, has tried to revive Deutsche’s fortunes, but problems have persisted.
In April the bank called off nearly six weeks of talks to merge with cross-town rival Commerzbank. It then embarked on a plan for “tough cutbacks” to its investment bank, representing a major retreat from investment banking for Deutsche Bank, which for years had tried to compete as a major force on Wall Street.
Details of those plans were announced earlier this month. They include plans to scrap its global equities business and scale back its investment bank. It also reshuffled management.
The bank will set up a new so-called “bad bank” to wind down unwanted assets, with a value of 74 billion euros of risk-weighted assets.
Deutsche said on Wednesday that more than 900 employees had given notice or been told they would be made redundant as a result of the restructuring.
Updated Date: Jul 24, 2019 16:47:50 IST