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Bank Results Season: Humpty Dumpty dropped off the Bonds, and inside the slammer he went… Deutsche Bank Q2 2012

Asia - Satellite image - PlanetObserver

Deutsche Bank’s myriad investigations that started this quarter coincided ith a more moderate but equally urgent delveraging of its Market Risk and Credit Risk books and trading revenues fortunately fell only 35% but profits were down 63%

Trader Anshu Jain’s team(DB:US) was apparently not immune to the vagaries of trading which having recovered in Q1 of 2012 globally were still down on 2011 year ago comparisons by a third. Q2 income at most Wall Street players has dropped off the imaginary cliff as neither High yield nor corporate debt could hold on in the face of European deleveraging compounded by the ultimate breakdown of the single currency. OF course, when I say ultimate breakdown I only mean the improving chances of a Grexit, taken seruiously for the first time in February / March 2012 wwhen it was apparent Greece had hardly any collateral left to partake of the sanctioned aid and election blues left its detractors and that of the Euro singing from the top of the Alamo

However, Deutsche Bank could have been worse off from where it is right now. Deutsche Borse listed DB appointed twin CEOs in London and Germany who took charge at the end of this quarter in June 2012 and has been revamping its Asia Pacific Board as well, Ravneet Singh Gill taking over as CEO today from a bonded warehouse regular Srinath Bolluju showing a likely strong tying of the india operations to its Singapore regional office from here.

Q2 Income before Income Taxes fell from EUR 1.8B in Q1 and 1.9 B in June 2011 to almost half at EUR 960M Like other European Banks, DB is shorn to reporting a single digit pre tax return of equity at 6.8% almost on par with its Tier I common under the new rules Net profits have fallen from 1.2B to 661M

The EUR 960 M was almost equally split between Private Banking, Global Transaction Banking and Corporate Banking & Securities with Asset management reporting a IBIT of just 35 m

The bank’s revenues are intact from H1 2011 with Q2 billing EUR 8 B much to the EUR 8.5 B in june 2011 After Sal ppenheim and Postbank impacts in Q2 2011, Revenues were more or less consistent in Retail Banking (PBC) and Asset management (just 891 M)

Sales and Trading revenues were yet EUR 3.5 B of the EUR 4.9 B in Corporate Investment Banking in 2011 June Now Corporate Banking and Securities, earlier CIB is a totalof EUR 3.5 B and investment banking just showing results in Debt origination somewhat in Asia. GTB revenues were up 10% Y/Y to nearly EUR 1B  and profits above 305m

The Bank’s assets remained EUR2.2T, higher by 7% from June 2011

German investigations into LIBORGATE may also result in some Criminal action at the bank. Debt Origination was 284 M, and Debt Trading EUR 2.18B. Thebank, courtesy of Postbank roots carries $3.94B in PIIGS exposure

UBS also reported a profit slump of nearly 60% as $300 M losses in Facebook’s IPO goaded the bank to initiate due legal action against Morgan Stanley and the NASDAQ

1000 people from Investment Banking are likely to be put on notice at the bank’s trading units , probably Londona nd a select few in Asia. Asia Pac operations were being restructured at a faster pace earlier. The bank also scrapped its plan to sell $350 Bln worth of fund management asssets as talks with Guggenheim failed earlier this year

Deutsche Bank thus added only 7% of the Revenue added by Top 5 US Banks at $161Bln Th ebank is cutting off 1900 jobs according to the latest reports

 

 

 

 

 

 

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This entry was posted on July 31, 2012 by in Amitonomics, Banking, Emerging Markets, European Sovereign Debt crisis, Financial Services, Global.

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