Deutsche Bank Ends Hard Year With Profit Gains
Deutsche Bank AG, Germanys largest bank, on Tuesday reported a 4.8 per cent rise in net profit in 1996, a year in which its earnings and image were pummelled by a string of blows including the debacle at Morgan Grenfell Asset Management (MGAM).
But the bank reported sharply higher-than-expected operating profit after risk provisions which jumped 37 per cent to 5.8 billion marks ($3.4 billion). Most analysts had expected a figure closer to five billion marks.
Net income rose to 2.2 billion marks from 2.1 billion marks, trailing behind a 22 per cent rise reported by Frankfurt rival Commerzbank AG and lower than an expected 30 per cent surge at Germanys Number Two bank, Dresdner Bank AG , which reports its results on Thursday. Deutsches shares responded by rising to a three-year high of 87.70 marks in early electronic trade, up 0.60 marks or 0.7 per cent from Mondays close.
Deutsche did not provide a breakdown of 1996 earnings but analysts expect its operating profit was in part boosted by gains in trading income fuelled by rallying financial markets. Full 1996 will be announced at a news conference on March 26.
In a brief statement, Deutsche said its balance sheet total jumped 23 per cent to 886 billion marks in 1996 due to increased trading activities as part of its expanding investment banking business.
The loan volume rose by 8.2 per cent to 410 billion marks, while customer deposits grew by 25 per cent to 375 billion marks.
While 1996 is unlikely to have been as bad as for Deutsche as 1994, when it was heavily criticised for its role in the five billion-mark collapse of the Schneider real estate group, the bank suffered its fair share of mishaps last year.
It faces the estimated 200 million cost of compensating investors for alleged mismanagement at three unit trusts run by London-based Morgan Grenfell Asset Management (MGAM). The compensation for the affair, which came to light in September, comes on top of a 180 million net injection by Deutsche to shore up the unit trusts.