Deutsche Bank boosts bad loan provision, revenues jump

Deutsche Bank flagged a more uncertain macroeconomic outlook on Wednesday, after it boosted provisions for bad loans.

The German lender said second-quarter net revenues rose 11% to €7.4bn, helped by higher interest rates. Pre-tax profits fell 9% to €1.4bn year-on-year, after non-operating costs surged to €655m from €102m, while post-tax profits fell to €940m from €1.2bn.

The higher non-operating costs included €395m of litigation charges and €260m in restructuring and severance payments.

Pre-tax profits in the first half were €3.3bn, a 2% increase year-on-year and the highest interim figure for more than a decade.

The provision for credit losses, however, rose to €401m in the second quarter, from €372m in the first three months of the year and a 72% spike year-on-year.

The bank said the increase reflected "a more challenging environment".

It continued: "For the full year 2023, Deutsche bank expects provisions for credit losses to be at the higher end of its communicated range of 25 to 30 basis points, reflecting an uncertain macroeconomic environment."

Christian Sewing, chief executive, said: "In the first half of 2023 we again demonstrated a good growth momentum across a diversified business portfolio, underlying earnings power and balance sheet resilience.

"This puts us on good track towards our 2025 financial targets."