Shares of Deutsche Bank (NYSE:DB) fell around 2% intra-day on Wednesday after the bank reported higher-than-anticipated loan losses in its third-quarter results, raising concerns among investors despite exceeding profit expectations.
The bank saw a sharp rise in loan loss provisions, which amounted to €494 million, surpassing analysts’ forecast of €441 million. The increase was driven largely by a surge in Stage 3 provisions, which reached €482 million, as the bank faced challenges in specific portfolios, including commercial real estate and costs related to Postbank integration.
Despite the disappointing rise in loan losses, Deutsche Bank reassured investors by reiterating its capital distribution plan, signaling confidence that these setbacks wouldn’t derail its long-term financial goals.
The bank posted a net profit of €1.633 billion for the quarter, surpassing the consensus estimate of €1.523 billion. Pre-tax profit also exceeded expectations, coming in at €2.262 billion. Underlying pre-provision profit beat expectations by 6%, with revenues from core divisions 2% higher than anticipated.
However, there was some softness in the corporate and private banking divisions. Corporate bank revenues dropped 3% year-on-year, largely due to shrinking deposit margins, while loan volumes across both corporate and private banking fell by 1%.
In contrast, Deutsche Bank’s investment banking division delivered strong results, with revenues up 11% year-over-year. The performance was driven by a robust showing in fixed income and a 24% surge in origination and advisory fees, helping to offset some of the weaker segments.