By Pietro Lombardi
Deutsche Bank AG's investment bank posted another strong performance in the third quarter, helping the German bank swing to a quarterly profit and grow revenue.
The lender is undergoing a deep restructuring, which it launched last year after merger talks with Commerzbank AG failed, and recent results hint that it may be starting to pay off. Revenue is on track to be roughly flat this year, after shrinking for the past four years, and the bank's stock is up about 14% so far this year, compared with the sharp falls of many European peers.
Deutsche said Wednesday that its revenue grew 13% to 5.94 billion euros ($7.01 billion) in the quarter, above analysts' expectations of EUR5.62 billion, with the investment bank's revenue rising 43%, including a 47% increase in its key fixed-income and currency business. The investment-bank results mirror the positive performance of some of the largest banks in the U.S.
"Our more focused business model is paying off and we see a substantial part of our revenue growth as sustainable," Chief Executive Christian Sewing said.
The performance helped the bank post a quarterly profit of EUR278 million compared with a loss of EUR859 million a year earlier.
When including noncontrolling interests, the bank had an after-tax profit of EUR309 million. This compares with a EUR832 million loss a year earlier and analysts' expectations of a EUR12 million profit.
Deutsche Bank set aside EUR273 million to cover credit losses, higher than the same period last year but lower than the second quarter.
The bank has confirmed its provisions and cost targets for this year.
"In the fifth quarter of our transformation, we not only demonstrated continued cost discipline, but also our ability to gain market share," Mr. Sewing said.