Revenue Woes

Deutsche Bank's Rocky Road to Recovery

  • Why it matters

    Why it matters

    Shares in Germany’s biggest bank lost almost 3 percent on Thursday after the bank’s first-quarter figures casted doubts on the bank’s ability to revive long-term growth.

  • Facts


    • Deutsche Bank posted a net profit of €571 million ($621 million) for the first quarter, but at the same time saw a 9-percent revenue decline.
    • While profit growth has largely been attributed to the bank’s cost-cutting efforts, sluggish revenues were seen as a sign of the lender losing market share to its competitors.
    • CEO Cryan last month promised to return the bank to growth and shareholders at the annual general meeting on May 18 will scrutinize the management’s growth strategy.
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Germany Deutsche Bank Earns
John Cryan can be relieved for now, but there's more work ahead if he wants to appease investors. Picture source: AP

When Germany’s largest lender presented its first-quarter earnings on Thursday, it declared a profit that more than doubled in the first three months of the year, but investors nevertheless sent shares down some 3 percent. They are worried over Deutsche Bank’s declining revenues which cast doubts over Chief Executive John Cryan’s pledge last month to focus on growth.

Mr. Cryan and supervisory board Chairman Paul Achleitner are likely to face tough questions by shareholders at the annual general meeting in mid-May. Stockholders expect the bank to switch as quickly as possible from crisis mode back to growth, following a series of legal woes that threatened to taint the lender’s image.

The first sign of trouble came Friday: Handelsblatt has learned that the influential shareholder advisor Glass Lewis is set to recommend a vote of no confidence in the bank’s executive and supervisory boards at the annual meeting on May 18. While transparency has improved under Mr. Cryan, Glass Lewis argues the legal woes of the past still indicate a widespread failure in leadership.

That failure extends to the bank’s growth prospects. At first glance, the first-quarter earnings looked quite positive with a 52-percent hike in net profit to €571 million ($621 million) – a figure that beat expectations. But revenues in the first three months of 2017 fell 9 percent to €7.3 billion, below the €8 billion analysts had hoped for on average. “The results are disappointing, due to the weakness on the income side,” Kian Abouhossein from JP Morgan wrote in a note.

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