Deutsche Bank’s Trading Revenue Set to Drop for Third Quarter

Deutsche Bank AG is on track for a third consecutive quarter of declining revenue from trading, the firm’s former growth engine.

(Bloomberg) — Deutsche Bank AG is on track for a third consecutive quarter of declining revenue from trading, the firm’s former growth engine. 

The fixed-income unit will see a “normalization” between July and September compared with the strong performance a year ago, Chief Financial Officer James von Moltke said at a conference hosted by Bank of America Corp. on Thursday. Overall investment banking revenue in the period is set to decline as a result, even though income from advising on deals and underwriting debt and equity issuance will likely be higher, he also indicated.

Deutsche Bank’s securities unit was by far the biggest growth driver for Chief Executive Officer Christian Sewing for the past several years, but it has recently been replaced in that role by the corporate and private banking unit, which are benefiting from higher interest rates. Germany’s largest lender is seeking to boost those businesses further, with von Moltke saying Thursday that any allocation of new capital to the investment bank will be limited while the retail and commercial banking divisions are set to get more. 

Investment banking revenue in the third quarter will likely be in line with current analyst expectations, von Moltke said. The Bloomberg-compiled consensus sees about €2.25 billion ($2.4 billion), which would be equivalent to a year-on-year decline of roughly 5%. 

Von Moltke also said that the lender is on track to meet or exceed its 2025 financial targets, largely because rising interest rates have boosted the divisions outside the investment bank more than Deutsche Bank expected when it presented the goals. He also said that inflation had exceeded estimates and there is “a lot of work to do” on keeping costs in check. 

More stories like this are available on bloomberg.com

©2023 Bloomberg L.P.