Group financial results in 3Q2001
Despite a difficult business environment, Deutsche Bank's 3Q2001 revenues of EUR 6.1 bn almost equalled the EUR 6.2 bn in 3Q2000. Net income after tax was EUR 303 mn. Diluted earnings per share (excluding goodwill amortization) were EUR 0.77 (3Q2000: EUR 1.17).
Trading profit (including IAS 39 gain of EUR 457 mn) rose 50 % to EUR 2,347 mn. Excluding IAS 39, trading profit increased 19 % over 3Q2000, an outstanding result given the difficult market conditions. This result is attributed to trading in debt securities (up 45% over 3Q2000) as well as trading in OTC derivatives/swaps (up 95 %) and foreign exchange trading (up 49 %).
Weak markets and the restraint shown by our private clients in their securities orders depressed net commission income which came in with EUR 2,445 mn 12 % lower than in 3Q2000. However, commission income remained the biggest revenue source. Net interest income of EUR 1,624 mn remained stable compared with 3Q2000, but increased slightly (2 %) over 2Q2001. The relatively low risk provisioning of EUR 132 mn (after some releases of general value adjustments) reflects the high quality of our assets.
The capital market conditions and falling share-prices led to corresponding changes in the value of our investments which are reflected in the negative 3Q results of EUR 408 mn in net income from investment and in the increased negative balance of other income and expenses.
The results from our cost containment program are encouraging. Compared with 2Q2001 operating expenses of EUR 5,047 mn were reduced by 8 %.
The annualized Return on Equity after tax (excluding goodwill amortization) for the reported quarter was 7.4 % compared with 13.2 % in 3Q2000.
As mentioned above, our cost containment program is well under way. We have delivered ahead of schedule on our initial headcount reduction goal and have targeted significant additional savings:
These identified additional measures - leading to a further 4,500 reduction headcount - bring our total targeted net headcount reduction to 7,100 to be completed in the next 24 months. Finally, we are working on further concrete steps, the outcome and objectives of which will be communicated as soon as they have been finalized.
Development in Group Divisions
Group Corporate and Investment Bank (CIB)
CIB delivered strong financial results in 3Q2001 despite increasingly difficult market conditions. CIB again proved its competitive strength as one of the leading global investment banks. It strengthened its market position, underlined by market share gains and top awards received:
Global Transaction Banking (GTB)
In GTB we received in August two EUROMONEY awards for Excellence in Global Cash Management and for Transaction Services in Western Europe. We are also now No. 1 arranger of Global Trade Finance. These accolades underline the strength of our franchise in Transaction Banking.
Conditions following 11 September will obviously be challenging for all market participants. Nevertheless, we are committed to playing our part in restoring stability to world financial markets and to providing continuous, high quality advice and execution. In the few weeks following the World Trade Center attacks, Deutsche Bank was the most active underwriter in international bond markets, lead managing no less than 51 transactions.
Group Private Clients and Asset Management (PCAM)
In volatile market conditions PCAM revenues have held up well, and the first phase of cost containment has begun to show results. Profits, however, were affected by adverse market conditions and the funding of strategic growth initiatives. The integration of Scudder will represent a quantum leap forward in scale, profitability, global positioning and breadth of offering. Deeper cuts in the expense base, and targeted cost-efficiency, will result from a reengineering of PCAM's business model along the value chain, driving synergies, and economies of scale, in production, distribution and infrastructure. PCAM will be one of Europe's leading asset gatherers vis-à-vis the European retirement provision opportunity, in particular with the affluent segment.
In order to achieve cost-efficiency in PCAM's organic business, three initiatives are underway:
We will continue to report three business P&Ls to the market: Personal Banking, Private Banking, and Asset Management.
Corporate Investments (CI)
CI was affected by deteriorating capital markets conditions, especially after the terrorist acts of September 11. Accordingly, we sustained write-downs on our real estate and private equity portfolios, and recorded, in P/L, impairments on certain industrial holdings. This segment's results also reflect a loss on the sale of NDB.com.
For further detail on the third quarter performance of CIB, PCAM and CI please refer to the segmental reporting of the Interim Report.
Although the tense general economic environment and the politically unstable world situation makes it particularly difficult at this time to give an outlook, the Board does not see any necessity to revise Deutsche Bank's communicated financial targets through 2003. On the Group level our target is to grow Earnings per Share over the years 2000 - 2003 at a compound annual growth rate by more than 15 %. The target for annual post-tax Return on Equity is an average of more than 15 % through 2003. Both targets are excluding capital gains from industrial holdings. Also the financial targets set for CIB and PCAM remain unchanged. Our long-term commitment, to grow the asset gathering side of the DB Group's business, remains absolute.
Live-Broadcast of the Conference Call
In order to discuss the financial results we invite you to follow a conference call with our CFO Dr. Clemens Börsig on
|Thursday, 1 November 2001|
2.00 - 3.00 p.m. (CET).