FRANKFURT: Deutsche Bank reported a net loss in the third quarter as heavy legal costs weighed on earnings, while a modest rise in investment banking results lagged many of the big gains seen by its peers. Germany's top lender reported quarterly net loss of 92 million euros as heavy charges for expected fines and settlements ate into a modest 2 percent increase in net revenue.
The group's important investment banking division saw a 9 percent rise in revenue as debt trading surged 15 percent, a relatively modest increase compared with its US-based rivals. Morgan Stanley reported an 87 percent rise in earnings due to increased trading.
Deutsche Bank spent 894 million euros on litigation costs in the quarter. In total, it has spent around 7 billion euros on fines and settlements since 2012.
The bank also sounded a note of caution on some of its revised 2015 profit goals, saying conditions remained challenging in several areas including transaction banking.
But Deutsche Bank said it was "broadly on track" to deliver on its promise of a 13-15 percent profit gain in its investment banking division.
Deutsche Bank shares were indicated down 2.2 percent in pre-market trading on Wednesday. The bank is two years into a turnaround plan launched in 2012 that has seen costs fall and operating profit leap, but the threat of further penalties from alleged misconduct has cast a shadow over its share price and management's success claims.
The risk of additional legal costs has burdened Deutsche Bank as regulators in the United States, Germany and the UK press investigations into possible attempts at interest-rate and forex-benchmark manipulation, high-frequency trading, possible violations of US sanctions on Iran and other activities. With the threat looming of fines and settlement costs, as well as European banking stress tests year, Germany's largest lender raised 8.5 billion euros in June to strengthen its balance sheet.
The bank originally hoped to clear the decks of legal issues in 2014 but has guided that 2015 will likely be the year instead when the majority of investigations are concluded.
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