Deutsche Bank reports third quarter 2008 net income of EUR 414 million.
October 30, 2008
Deutsche Bank (XETRA: DBKGn.DE / NYSE: DB) today reported net income of EUR 414 million, versus EUR 1.6 billion in the third quarter 2007. Earnings per share on a diluted basis were EUR 0.83 for the third quarter 2008, versus EUR 3.31 per share in the prior year quarter. Income before income taxes was EUR 93 million, versus EUR 1.4 billion in the prior year quarter. Mark-downs of EUR 1.2 billion were recorded on leveraged loans and loan commitments, residential mortgage-backed securities, monoline insurers, commercial real estate and on available for sale positions. The Tier 1 capital ratio, reported under Basel II, was 10.3%, versus 9.3% at the end of the second quarter 2008.
- Income before income taxes of EUR 93 million
- Corporate Banking & Securities: loss before income taxes of EUR 789 million after mark-downs of EUR 1.2 billion
- Further reductions in key exposures
- 'Stable' businesses: income before income taxes of EUR 449 million
- Tier 1 ratio further improves to 10.3%
Dr. Josef Ackermann, Chairman of the Management Board, said: "The third quarter 2008 was characterised by a considerable intensification of the credit crisis in September. Despite these extraordinary conditions, Deutsche Bank reported a profit for the quarter. We also continued to bolster our solid capital position and strong funding base - both vital in times of acute market stress. Our agreement to acquire a stake in Deutsche Postbank underlined our determination to grow our core businesses."
He added: "After a period of exceptional market turbulence, the outlook for our business remains challenging. Conditions in the equity and credit markets remain extremely difficult and we continue to monitor our exposures in these areas. We raised our target Tier 1 capital ratio to 10%, and announced our firm commitment to reduce the size of our balance sheet, thereby improving our leverage ratio. I am confident that by the end of this year, we will see meaningful progress on this high-priority initiative. Furthermore, we will balance our dividend policy with our commitment to conserving capital strength in a highly uncertain environment."
In respect of the fair value option on own debt, Deutsche Bank, consistent with prior periods, elects this option only for a very small portion of its debt issuance, which resulted in a gain of EUR 146 million during the quarter. For comparative purposes, it is noted that election of the fair value option on all the bank's own debt would have resulted in a gain in excess of EUR 2 billion in the third quarter.
In October 2008 the European Union endorsed amendments to IAS 39 and IFRS 7, 'Reclassification of Financial Assets', which permit the reclassification of trading assets and assets available for sale in cases involving a clear change of management intent. In accordance with these amendments, Deutsche Bank reclassified certain assets, for which no active market existed in the third quarter and which management intends to hold for the foreseeable future, out of trading assets and assets available for sale, and into loans. If these reclassifications had not been made, the income statement for the quarter would have included negative fair value movements relating to the reclassified assets of EUR 845 million. Additionally, incremental net interest margin relating to reclassified assets was EUR 53 million for the quarter.