Deutsche Bank Profit Falls 58% Amid Overhaul

http://www.nytimes.com/2016/04/29/business/dealbook/deutsche-bank-earnings-q1.html

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LONDON — Deutsche Bank said on Thursday that its profit fell 58 percent in the first quarter compared with a year earlier, because of challenging conditions in the financial markets at the beginning of the year and its decision to exit some businesses.

The bank, which is Germany’s largest, is in the midst of an overhaul. John Cryan, who joined the lender as co-chief executive in July, seeks to simplify the company and improve its returns.

In October, Mr. Cryan announced plans to eliminate as many as 35,000 jobs through internal cuts, shutter its operations in 10 countries and cut the number of its investment banking customers in half.

For the three months ended March 31, Deutsche Bank reported a profit of 236 million euros, or about $268 million, compared with a profit of €559 million, or $634 million, in the first quarter of 2015.

“Financial markets were challenging during the first quarter, largely reflecting concerns about the outlook for the global economy,” Mr. Cryan said in a news release.

“This uncertainty led to a decline in client activity in the capital markets, and our revenues fell from the prior year, most notably in our trading and corporate finance businesses,” he added. “Our results reflect these challenging conditions as well as the impact of our strategic decisions to exit or reduce significantly selected businesses.”

Revenue declined 22 percent to €8.07 billion, or about $9 billion, in the first quarter, from €10.4 billion, or about $11.8 billion, in the same period a year earlier.

The bank fell to a huge annual loss in 2015 as it took about €5.2 billion, or about $5.9 billion, in charges last year in legal costs for past wrongdoing. The many lawsuits and financial settlements involving the bank related to a number of issues: accusations that it colluded with other banks to fix benchmark interest rates, that it violated international sanctions against countries like Iran, and that it duped clients in its currency trading operations.

Deutsche Bank said on Thursday that it took only €187 million, or $212 million, in litigation charges in the first quarter, down from €1.54 billion, or $1.7 billion, in the first quarter of last year.

Deutsche Bank set aside €304 million, or $344 million, for credit losses in the quarter, reflecting provisions in its corporate and investment bank for its leveraged finance and emerging markets portfolios. The bank had credit loss provisions of €218 million, or $247 million, in the first quarter of 2015.

In its sales and trading business, Deutsche Bank reported a pretax profit of €380 million, or $431 million, in the first quarter, from a pretax loss of €16 million, or $18 million, in the same period a year earlier. Noninterest expenses in the business declined by 34 percent in the quarter, primarily reflecting lower litigation charges.

In its corporate and investment bank, Deutsche Bank reported a pretax profit of €316 million, or $358 million, in the quarter, down from €722 million, or $819 million, in the first quarter of 2015.