The market share of the investing unit of Germany’s biggest lender, Deutsche Bank, dwindled across an array of key services during the second quarter, according to data available from Dealogic, which highlighted the fragile recovery at the bank.
At the beginning of 2021, the bank posted its strongest quarter in seven years driven by the performance of the investment banking unit which is the biggest revenue generator of the group. But investors are concerned about the sustainability of the performance of the bank with it still continuing to try and increase its profitability following continuous years of losses.
Currently its restructuring process is on with cutting down of 18,000 employees of the bank globally, a strategy employed by the lender to bring in sustainability in its profits.
Deutsche Bank is scheduled to report its second quarter earnings next week and analysts expect the bank to report profits for the second quarter even in the face of a decline in revenues from its as investment banking business.
Despite a return to more normal business after the initial pandemic-induced trading boom, the revenue from its investment banking for the entire year will be “very close” to last year, Deutsche has said.
The numbers compiled by financial data company Dealogic spanned a period of 20 years and included business lines that help companies and governments to issue bonds, sustainable financing and syndicated loans.
Data available from Dealogic showed that even though the fall in market share in most cases is minimal and the quarterly tallies can be choppy, the data is disappointing for the bank. Executives of the bank had previously said that the bank expects to at least hold on to the market share that it had gained under Christian Sewing, appointed chief executive of the lender in 2018 to turn around the bank after a series of embarrassing and costly regulatory failings. Those had caused a hit to the company of losses of 8.2 billion euros over the past 10 years.
There were no comments available from Deutsche Bank on the data.
“We feel reassured in our view that a substantial portion of our investment bank growth since 2019 is sustainable,” Sewing had told analysts in April.
One of the catches in the data is that it does not take into account fixed-income and currency sales and trading – which are huge sources of revenues for the lender, and therefore provides only a partial picture. However, according to recent earnings reports by competing American banks, there has been a decline in such trading during the second quarter.
“Deutsche Bank will not have been able to maintain the very good performance of fixed-income trading in the second quarter,” said Benjardin Gaertner, a fund manager at Union Investment, a big shareholder in the bank.
It is expected that the investment bank will have performed well for the second quarter “on the whole”, said Andreas Thomae, a portfolio manager with Deka.
(Adapted from Nasdaq.com)