Frankfurt: The biggest German bank, Deutsche Bank, posted Wednesday a sharp third-quarter loss linked to its purchase of Postbank, while underlying results were not quite as bad.
Deutsche Bank reported a net loss of €1.2 billion ($1.66 billion) that included a one-off charge stemming from its takeover of Postbank, a deal meant to broaden Deutsche Bank’s revenue base.
Analysts polled by Dow Jones Newswires had forecast a deeper net loss of €1.47 billion.
Deutsche Bank warned on 21 September that it would incur a charge of €2.3 billion as part of its reevaluation of the holding in Postbank, which has Germany’s largest retail banking network.
The new calculation was required because Deutsche Bank has offered to buy all of the shares in Postbank as part of an increase in its stake from nearly 30% to more than 50% by the end of this year.
Excluding the Postbank charge, Deutsche Bank said it made a net profit of €1.1 billion in the three-month period, which was nonetheless down by about 21% from its profit of 1.4 billion in the third quarter of 2009.
The bank reported net revenues of €5.0 billion including the charge and a pre-tax operating loss of €1.0 billion.
Without the charge, Deutsche Bank posted a pre-tax operating profit of €1.3 billion, the same amount as in the third quarter of 2009.
A statement quoted chairman Josef Ackerman as saying that “the third quarter results again prove the robustness of our recalibrated business model despite the difficult ongoing macro-economic and market conditions.”
Deutsche Bank is buying Postbank to add a strong retail banking pole to its traditional investment bank activities.
Deutsche Bank raised €10.2 billion early this month, its biggest capital increase ever, to finance the Postbank takeover and reinforce its shareholder capital base in view of proposals from international banking regulators in response to the global financial crisis.
“Our retail banking operation is vastly increasing its footprint in Germany, which will balance our earnings towards an even more stable business,” Ackermann said.
The bank booked €362 million in loss provisions in the quarter, less than the €544 million recorded in the same period of 2009 but more than the €243 million seen in the second quarter of 2010.
It reported a Tier 1 capital ratio of 11.5% and a core Tier 1 ratio of 7.6%, both well within so-called Basel III guidelines being drafted to ensure banks are not vulnerable to another financial crisis.
Deutsche Bank did not provide an outlook for the full year, but has already targetted a pre-tax profit of €10 billion in 2011.