Deutsche Bank surprises investors with profit beat

In an unscheduled update, Germany’s biggest bank told investors to expect pre-tax income of €700m and €400m of net income. Analysts’ second-quarter consensus forecasts were for pre-tax income of €321m and net income of €159m.

Group revenue will be about €200m higher than expected at €6.6bn and non-interest costs will be €200m lower than forecast at €5.8bn.

Costs will include about €200m of restructuring costs after cuts “progressed rapidly”. Headcount fell by about 1,700 to just more than 95,400 in the second quarter.

The profit surprise is a fillip for new chief executive Christian Sewing, who took over from John Cryan three months ago. Sewing has pledged to cut costs and take tougher measures to overhaul Deutsche’s investment bank, whose trading revenue fell 15% in the second quarter.

“The results are considerably above the average consensus estimate,” Deutsche Bank said. “Management believes that these results demonstrate the resilience of the franchise.”

Deutsche Bank shares were up 7.4% to €10.32 at 12:09 BST.

Analysts said though the statement was a positive surprise after a series of warnings from Deutsche, Sewing still had his work cut out to turn the ailing bank around.

Neil Wilson, chief market analyst at Markets.com, said: “While restructuring can deliver important cost reductions, it is less clear what Deutsche’s plans are to grow revenues thereafter. Deutsche has been slow to restructure and now it’s got to sprint to catch up.”