Deutsche Bank AG, Europe’s biggest bank, said third-quarter profit climbed after a rally in the bond and stock markets brought a surge in trading revenue. The shares jumped.
Net income unexpectedly rose an annual 3 percent to 747 million euros ($964 million) in the three months through September, the Frankfurt-based company said in a statement today. That beat all seven analyst estimates compiled by Bloomberg and the 563.9 million-euro average.
Deutsche Bank is seeking to increase its share of income from investment banking among the world’s largest banks as rivals such as UBS AG scale back their operations. European Central Bank President Mario Draghi buoyed markets and spurred more sales of securities in the third quarter by pledging in August to conduct bond purchases to prop up some euro-region countries.
“It was a good quarter and the stock is also benefitting from plans UBS announced today -- Deutsche Bank can win market share as competitors retrench,” Philipp Haessler, an Equinet AG analyst in Frankfurt who recommends investors buy the stock, said in a telephone interview.
Deutsche Bank advanced 4 percent to 34.64 euros at 9:40 a.m., gaining the most in two weeks. The share has increased 18 percent this year.
UBS AG, Switzerland’s biggest bank, announced plans for another 10,000 job cuts today as it scaled back on investment banking and focused on wealth management.
Revenue from trading in bonds at Deutsche Bank jumped an annual 67 percent in the third quarter to 2.5 billion euros. That beat the average estimate of six analysts of 2 billion euros. Revenue from equities trading rose 67 percent to 642 million euros.
Deutsche Bank has completed about 1,200 of the 1,500 job cuts at its investment bank and related areas as of the end of September, Stefan Krause, the company’s chief financial officer, said today on a conference call with analysts. It will wrap up the majority of its remaining headcount reduction by the end of the year, he said.
The bank, which is cutting a total of 1,993 jobs, has said it will incur 4 billion euros in costs to achieve annual targeted savings of 4.5 billion euros by 2015.
Banks are firing staff and reviewing businesses as Europe’s sovereign-debt crisis reduces trading and rising capital demands weigh on profitability.
The company earned 45 percent of its income from investment banking last year.
Deutsche Bank’s core tier 1 capital ratio climbed 57 basis points, or 0.57 percentage point, to 10.7 percent, according to the earnings statement. That means “we are on track to achieve our Basel III capital ambitions,” Juergen Fitschen and Anshu Jain, co-chief operating officers, said in an email today.
Net interest income was 3.72 billion euros in the third quarter compared with 4.3 billion euros a year ago and an average estimate among seven analysts of 4 billion euros.
Deutsche Bank’s pretax profit at its private and business clients unit rose to 492 million euros in the third quarter from 310 million euros a year ago. That beat the 329 million-euro average estimate of nine analysts surveyed by Bloomberg.