Deutsche Bank Reports Higher Profit in Tumultuous Quarter Despite a momentary panic by investors in March, the bank’s bread-and-butter lending business offset declines at the investment bank By Patricia Kowsmann April 27, 2023 2:09 am ET A Deutsche Bank branch in Berlin in March. PHOTO: MICHAEL KUENNE/ZUMA PRESS Deutsche Bank AG DB 3.50%increase; green up pointing triangle said its business held up well during March’s banking turmoil, with first-quarter profit rising 8% as it continued to benefit from rising interest rates. The performance of its bread-and-butter lending and deposit-taking business offset a weaker performance for its investment-banking operation, which continued to be hit by a drought in deal-making and capital raising by clients. The strong performance came despite a momentary panic by the bank’s investors in the days after the forced takeover of Credit Suisse Group AG CS 1.45%increase; green up pointing triangle last month. Deutsche Bank reported a profit for the quarter ended March 31 of €1.32 billion—the equivalent of $1.45 billion—up from €1.23 billion a year earlier. The results came in above an analyst consensus of €1.17 billion. Pretax profit was the highest since 2013. Revenue rose 5%, including an increase of 35% in its corporate banking division. NEWSLETTER SIGN-UP Markets A.M. A pre-markets primer packed with news, trends and ideas. Plus, up-to-the-minute market data. Subscribed The bank said deposits declined 4.7% in the quarter, driven by competition and market volatility at the end of the period. A key liquidity ratio increased in the first three months of the year despite the stress faced by regional American lenders and Credit Suisse. The liquidity coverage ratio measures how many easy-to-sell assets a bank has versus its deposits, an important metric for banks that face deposit outflows. It stood at 143% in the first quarter, above the 100% minimum requirement. Days after Credit Suisse was rescued by rival UBS Group AG, Deutsche Bank faced its own wobble. Its shares sank and the cost to insure against default soared as investors looked for the next weak link in Europe’s banking. The episode was short lived. The stock bounced back quickly though it remains below pre-March levels. Deutsche Bank has a rocky past filled with legal troubles and low profitability, which makes it vulnerable when investors get nervous more broadly about weakness in the financial system. Its performance has improved considerably since Christian Sewing took over as chief executive of the bank in 2018 and launched a restructuring drive that included spending cuts, an exit from equity trading in the U.S. and a refocus on serving German clients. Unlike Credit Suisse, the bank has been steadily profitable. In a sign the bank remains committed to its strategy, it said it plans further cost cuts and a boost in revenue from targeted investments. It said it expects to begin buying back its shares in the second half of the year. Deutsche Bank says its mix of global investment banking with a lending and deposit-taking operation focused in Germany means one can offset the other depending on the environment. During the Covid-19 pandemic, investment banking was the star of the results. Now, the bank’s retail and corporate business is leading the charge, helped by rising interest rates. The German lender said revenue at its corporate banking and retail business rose 35% and 10%, respectively, in the first quarter. At its investment bank, it fell 19%. The drop was in line with Wall Street peers.