Frankfurt am Main 27 October 2021
Profit before tax rises 15% year on year despite significant rise in transformation charges¹
- Adjusted profit before tax¹ rises 39% to € 1.2 billion
- Transformation charges¹ of € 583 million versus € 104 million in prior year quarter
- Core Bank profit before tax of € 898 million, in line with prior year quarter
- Capital Release Unit improves result: loss before taxes down 19% to € 344 million
- Group net income rises 6% to € 329 million
Net revenues rise 2% to € 6.0 billion as business growth offsets normalising markets
- Loan growth of € 11 billion in the quarter
- Private Bank: business growth of € 9 billion lifts year to date total to € 38 billion
- Asset Management: net inflows of € 12 billion drive assets under management to a record € 880 billion
Adjusted costs reduced while transformation charges impact noninterest expenses
- Noninterest expenses rise 4% year on year to € 5.4 billion
- Adjusted costs ex-transformation charges¹ down 3% year on year to € 4.7 billion
- 90% of total expected transformation-related effects¹ now recognised
Capital, risk and balance sheet discipline maintained
- Common Equity Tier 1 (CET1) capital ratio of 13.0%, in line with guidance
- Provision for credit losses down 57% year on year to € 117 million
- Capital Release Unit further reduces RWAs to € 30 billion, ahead of end-2022 target
Full-year 2021 sustainability targets exceeded after nine months
- Third quarter ESG financing and investment volumes of € 27 billion
- Cumulative volumes since beginning of 2020 rise to € 125 billion, above year-end 2021 target of € 100 billion
First nine months of 2021: significant year on year profit growth
- Net income of € 2.2 billion, up more than fivefold
- Group profit before tax rises nearly fourfold to € 3.3 billion, reflecting:
- 5% growth in net revenues to € 19.5 billion
- 4% reduction in adjusted costs ex-transformation charges1 to € 14.6 billion
- 83% reduction in provision for credit losses to € 261 million
- Core Bank profit before tax up 64% to € 4.3 billion
- Post-tax RoTE¹ rises from 4.3% to 7.5% with cost/income ratio of 76%
¹ For a description of this and other non-GAAP financial measures, see ‘Use of non-GAAP financial measures’ on pp 17-25 of the third quarter 2021 Financial Data Supplement
In the third quarter, we again demonstrated the operating strength of our business: our revenues have proven to be resilient, we have increased our pre-tax profit despite additional transformation charges, and we have already exceeded our full year 2021 sustainability target. We are focused on driving efficiencies while maintaining strong controls, and we are confident of achieving Deutsche Bank’s 2022 targets.
Deutsche Bank (XETRA: DBKGn.DB / NYSE: DB) today reported a 15% year on year rise in pre-tax profit to € 554 million in the third quarter of 2021 after recognising a further € 583 million in transformation charges. Adjusted profit before tax(1), which excludes transformation-related effects and specific revenue items, rose 39% year on year to € 1.2 billion and net income in the quarter rose 6% year on year to € 329 million.
Transformation charges recognised in the quarter consisted predominantly of technology-related items, including approximately € 450 million relating to a contract settlement and software impairments, principally triggered by the bank’s migration to the cloud.
90% of the total transformation-related effects anticipated through year-end 2022 are now fully recognised. Deutsche Bank reaffirmed its intention to recognise most of the remaining transformation-related effects by year-end 2021.
Third quarter profit before tax and adjusted profit before tax1 include an impact of € 98 million, predominantly in foregone revenues, from the ruling in April 2021 by the German Federal Court of Justice (‘BGH ruling’) requiring active customer consent for pricing changes on current accounts. This impact is expected to be considerably lower from the fourth quarter of 2021 onwards, as approximately two-thirds of the accounts affected now have the necessary consent agreements in place. These will become effective in the fourth quarter.
For the first nine months of 2021, profit before tax was € 3.3 billion, despite € 798 million in transformation charges and € 324 million relating to the BGH ruling. The year-to-date impact of the BGH ruling comprised € 192 million in foregone revenues and € 131 million in litigation provisions. In the first nine months of 2020, profit before tax was € 846 million after € 283 million in transformation charges. Adjusted profit before tax(1), which excludes transformation-related effects and specific revenue items but includes the impact of the BGH ruling, was €4.3 billion, up from € 1.5 billion in the prior year period.
Net income was € 2.2 billion in the first nine months, up more than five-fold from € 435 million in the prior year period. Post-tax return on average shareholders’ equity was 4.3%, up from 0.1% in the same period of 2020, while post-tax return on average tangible equity (RoTE)¹ was 4.8%, up from 0.2% in the prior year period. Adjusted post-tax RoTE¹ was 6.6%
The four core businesses contributed to growth in nine-month post-tax RoTE as follows:
- Corporate Bank: 7.0%, up from 3.2% year on year;
- Investment Bank: 13.5%, up from 10.6%;
- Private Bank: 2.7%, up from negative 1.8%;
- Asset Management: 28.3%, up from 20.3%.
Group cost/income ratio was 82%, down from 87% in the first nine months of 2020.
