Acquisition cost absorption drags Deutsche Bank profits
February 5, 2011‐ Frankfurt, Germany
Absorption of the cost of acquisition Deutsche Postbank and others has forced Deutsche Bank to report narrower profits for the fourth-quarter and the full-year. Postbank was acquired by Deutsche Bank last year. The core Tier 1 capital ratio increased to 12.3% at the end of the fourth quarter from 11.5% at the end of September, following a EUR10.2 billion rights issue and the consolidation of a majority stake in Deutsche Postbank AG. (DPB.XE).
The German major has reported it has earned euro605 million ($836 million) in the October-December quarter compared to euro 1.31 billion during the same period last year despite the net revenues moving up from euro7.43 billion ($10.2 billion) from euro5.54 billion. The drop in profits is 54% while the jump in revenues is 34%.
The record revenue is a little surprising despite the fact that sales and trading in fixed income, currencies and commodities rose 26%. Equities and corporate advisory services income has however compensated for the quarter-on-quarter drop in fixed-income sales.
The bank's full-year net income has come down euro2.33 billion compared to euro4.96 billion reported in 2009.
CEO Josef Ackermann said that the year 2010 is a year of transformation for the bank and that the year helped it to improve its market position. The bank is targeting a 2011 yearly profit of euro 10 billion.
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