Deutsche Bank on July 28, reported a bigger-than-expected jump in profit in the second quarter, as income from trading, investments and other businesses improved. Reporting net profit up 44 percent to 947 million euros ($1.14 billion) in the second quarter, Germany's biggest bank said it planned a "substantial increase" in its dividend and would buy back up to 10 percent of its shares.
Analysts polled by Reuters had expected on average 803 million for the bank's quarterly net.
"The result is surprisingly good," said Konrad Becker, an analyst with Merck Finck. "Wherever an improvement has been expected it has been better than predicted. It shows that Deutsche has earnings power even if trading income has fallen compared to the first quarter."
Becker noted Deutsche shareholders may be worried by the group's continued dependence on earnings from volatile businesses like trading and investment banking.
Despite recent gains, Deutsche stock has failed to keep pace with gains from its rivals - in the past year the DJ Stoxx index of European banks has risen by more than a fifth while Deutsche has managed a gain of only 9 percent.
Deutsche said a fall in bad debt provisions had helped in the second quarter, and restructuring costs in the period were also about half what some analysts had expected.
The bank, in the throes of heavy staff layoffs, said these had been lower in the first six months of the year as many employees left voluntarily.
INVESTOR WORRIES:
Investors have been disappointed by Deutsche Bank's sluggish share price and what they see as a failure to outline a clear strategy for growth.
Many would like to see the bank bolster its weakling retail banking arm by buying a rival to counter-balance its investment banking work, on which some say it has become too reliant.
The bank has been scouring Europe for an acquisition, which a senior Deutsche source described as one of Chief Executive Josef Ackermann's key tasks.
Second-quarter pretax profit at the private clients' division, which houses its German bank branch business, fell slightly.
Finding a partner though has not been easy, especially at home. A recent Deutsche Bank approach to German post-office bank Postbank was snubbed.
A year after walking away from talks to buy a then much-cheaper Postbank, Ackermann said in June he still saw the strategic sense of a merger. Postbank insisted it was not for sale.
But the pressure is mounting, with an increasing number of European competitors forging links.
UniCredito's planned take-over of Germany's second-biggest lender HVB Group and Santander's take-over of Britain's Abbey have pushed Deutsche down the international rankings.