|The entrance of the German bank IKB Deutsche Industriebank AG in Berlin (AFP photo)|
FRANKFURT (AFP) – Deutsche Bank, the biggest German bank, presented crisis-beating results on Thursday, cutting provisions against bad loans and reporting its third big net profit in a row.
Net profit for the third quarter was 1.4 billion euros, the third in a row to exceed one billion euros (1.47 billion dollars).
"All our business segments were profitable in the quarter," chairman Josef Ackermann was quoted by a statement as saying.
A strong contribution came from the Corporate Banking and Securities division which showed earnings of 4.4 billion euros, four times the amount posted in the third quarter of 2008.
Provisions against bad loans, an indicator of how the bank views the near-term future, were cut almost in half to 544 million euros from the previous three-month period.
Provisions, a critical variable factor in bank results, represent money put aside in case of problems. They reduce declarable profit, but may boost profits later if all the problems do not arise.
Deutsche Bank had booked one billion euros in provisions against bad loans in the second quarter of the year.
"The low risk provisions figure indicates that the quality of Deutsche Bank?s loan portfolio is better than expected," Merck Finck analyst Konrad Becker said.
Analysts polled by Dow Jones Newswires had expected the sum to come to 689 million euros this time around.
Compared with the third quarter of 2008 however, provisions were more than double the 236 million euros reported by the bank.
And on a nine-month basis, they came to 2.1 billion euros, compared with 485 million in the same period in 2008.
German banks in general are bracing for losses from bad loans, which has made them wary of expanding credit to businesses and households.
But Deutsche Bank finance director Stefan Krause told a telephone news conference: "We don't foresee an additional increase in provisions" next year.
Meanwhile, Deutsche Bank also confirmed its third-quarter net profit of 1.4 billion euros, the third quarterly figure in a row exceeding a billion euros.
"Deutsche Bank has proved its resilience in an exceptionally tough environment, and has indeed emerged stronger from the crisis," Ackermann said.
Investors seemed to agree, and shares in the bank gained 1.71 percent to 49.73 euros in morning trading on the Frankfurt stock exchange, while the DAX index of leading shares was 0.07 percent higher overall.
On Wednesday, Deutsche Bank said it would buy Sal. Oppenheim, a Luxembourg-based private banking group, for 1.0 billion euros, a price deemed interesting by the markets.
Deutsche Bank said it would not have to increase its capital to finance the deal, which it intended to pay for with its own shares.