Tax benefits spare Deutsche Bank’s profit blushes
Deutsche Bank recorded net profits of €1.6 billion for the third quarter, an improvement of 31% on the same period last year, as a result of tax reforms and rebates.
Both the pre- and post-tax results exceed the €1.2 billion profit expectation Deutsche announced at the start of October.
Despite the good overall headlines, various business units did take some punishment between July and September, mainly as a result of the firm’s holdings in mortgage-backed securities.
“The firm recorded writedown charges of €603 million on leveraged loans and loan commitments (net of related fees), and €1.56 billion on relative value trading in both debt and equity, structured credit products, and residential mortgage-backed securities. Reflecting these charges, corporate banking and securities reported a third-quarter pre-tax loss of €179 million,” the bank said in its earnings statement.
Deutsche’s shares rallied in the wake of the announcement, coming just a day after UBS, Europe’s biggest bank, declared pre-tax losses of SFr726 million and Merrill Lynch parted company with CEO Stan O’Neal after an $8 billion writedown.
See also: O'Neal 'retires' as Merrill CEO after $8 billion writedown
UBS warns of continuing subprime risk
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