German lender Deutsche Bank has announced that its second-quarter bottom-line earnings fell significantly, disappointing investors. The bank blamed the result partly on resources it had to set aside for lawsuits.
Deutsche Bank reported July 30 that its net profit dropped by nearly 50 percent in the second quarter. Earnings fell to 335 million euros ($445 million) from 666 million euros in the same period a year earlier.
Bottom-line profit was lowered in no small way by expenses for lawsuits against the company. The lender continued to face legal challenges related to US mortgage bonds and a scandal over the rigging of a key interest rate benchmark by a number of banks.
Deutsche Bank reported that it had set aside an additional 630 million euros to cover lawsuit-related losses, bringing the total to some 3 billion euros.
Meeting regulatory requirements
Co-CEOs Jürgen Fitschen and Anshu Jain also said that the bank saw its effective tax rate jump to 58 percent from just 31 percent a year ago, which also ate into the company's earnings.
Profit before tax came in at 792 million euros, a drop of 18 percent year-on-year and also far below analysts' expectations. Fitschen and Jain were nonetheless satisfied with the results, considering the financial burdens the bank had been facing.
They insisted that the lender had made good progress in strengthening its finances to meet new regulatory demands and hold down costs. Deutsche Bank reported that it had a number of options to consolidate this drive, for instance by altering its credit lines and reducing its internal bad bank risks.
hg/mkg (Reuters, AP)