Deutsche Bank swings to net loss as bad debts surge

Deutsche Bank's reported a net loss of €43m as Germany's biggest lender more than tripled its bad debt charge after the Covid-19 emergency hit its business.

Deutsche swung to a loss attributable to shareholders of €43m (£37m) from a net profit of €97m a year earlier in the three months to the end of March. Revenue was unchanged at €6.35bn

The bank reported the loss as its results were hit by a €506m provision for expected credit losses – up from €140m a year earlier. The bank said about half the increase was caused by the Covid-19 emergency.

Deutsche had already revealed most of its figures in an unscheduled update on Monday evening but omitted the net loss. Pretax profit, down 85% to €206m, was above market expectations.

Like other banks such as Barclays and HSBC, Deutsche's investment bank benefited from frenzied trading as clients reacted to the economic effects of the coronavirus outbreak. Investment banking revenue rose 18% to €2.3bn driven by a surge in fixed income and currencies dealing.

The Covid-19 emergency has hit the bank in the middle of a giant restructuring plan which includes cutting about 18,000 jobs by 2022. Deutsche said its pretax profit was after bank levies of €503m, transformation costs of €172m and costs at its bad bank unit.

Deutsche's core bank's adjusted pretax profit rose 32% to €1.1bn as revenues rose faster than costs. The capital release unit bad bank posted a €767m loss as it cut risk weighted assets by €2bn to €44bn.

Christian Sewing, Deutsche's chief executive, said: “In the current crisis, we have shown robust numbers and demonstrated strong performance in support of our clients across all core businesses. Conservative balance sheet management enables us to navigate the current environment from a position of strength as the leading bank in Europe's strongest economy."

Deutsche's common equity tier 1 capital ratio shrank to 12.8% from 13.6% at the end of December because of new regulations, Covid-19 impacts and business growth. The ratio remains well above the 10.4% regulatory minimum.