FRANKFURT—Deutsche Bank is to cut 800 jobs in a new cost-saving drive after reporting a bigger than expected rise in profit for the first quarter, a volatile period globally for finance companies.
Germany’s biggest bank produced solid earnings at a time when banks had to be rescued in the United States and in Switzerland. The turmoil caused investors to panic and customers to withdraw deposits, and the turbulence is continuing.
The latest effort to trim Deutsche’s workforce reverses a staff buildup of recent quarters.
“We need to further speed up and that’s what we are doing,” Deutsche Bank Chief Executive Officer Christian Sewing told reporters when asked about the cuts.
The jobs will come from across the bank but will be focused on senior non-client facing roles, executives said, describing the move as one of several measures to cut costs by an additional 500 million euros over the next few years. Deutsche’s staff totaled 86,712 at the end of the first quarter.
Deutsche’s performance reflected a quarterly increase in income from higher interest rates that offset a slump in revenues at its investment bank.
The results marked the bank’s 11th consecutive quarter of profit, marking its longest streak in the black after years of losses.
Mixed Bag
Deutsche’s investment banking revenue dropped 19 percent, which was worse than expected, while revenues at the corporate bank and retail divisions beat expectations.Analysts at JPMorgan called the results “mixed.”
Deutsche’s shares were 1.7 percent higher by mid-morning. The shares had dropped 15 percent in a single day in late March on fears of contagion from the banking troubles, spooking global markets and prompting a rare intervention by Germany’s Chancellor Olaf Scholz, who said: “There’s no reason to worry.”
Deutsche’s deposits dropped 5 percent in the first quarter from the end of last year, but executives said they have been increasing during the month of April.
Analysts said Deutsche, which ranks as one of the world’s most systematically important banks, is vulnerable to a slowing economy, high inflation, and regulatory issues that have plagued it over the years.
Deutsche has just announced a major revamp of its management board that includes changes at the top of its retail business and its U.S. operations, a critical hub for the investment bank.
Investment Bank
Deutsche Bank set out in 2019 to reduce dependence on its volatile investment bank and rely instead on more stable businesses that serve companies and retail customers as a way to restore profitability.Revenue at the investment bank fell 19 percent to 2.7 billion euros in the first quarter from a year earlier, below expectations of 2.8 billion euros.
Revenue dropped 31 percent at the investment bank’s origination and advisory business, mirroring slumps at rivals such as JPMorgan and Goldman Sachs.
Revenue for fixed-income and currency trading, one of the bank’s largest divisions, fell 17 percent to 2.4 billion euros. Analysts had expected 2.5 billion euros in revenues.
The investment bank’s revenue decrease was countered by gains at the corporate bank and retail bank, which produced revenue increases of 35 percent and 10 percent.
($1 = 0.9050 euros)
