|
Deutsche Bank profit leaps
|
 |
February 16, 2000: 7:42 a.m. ET
Buoyant trading income, Bankers Trust buy boost profit to $2.5B; costs jump
|
LONDON (CNNfn) - Deutsche Bank posted a better-than-expected increase of nearly 50 percent in 1999 profit Wednesday, though analysts remained wary about the pace of cost growth at Europe's largest bank by asset size.
Deutsche said net income climbed to a record 2.6 billion euros ($2.45 billion), ahead of the 2.5 billion-euro consensus among analysts polled by Reuters. The bank's preliminary earnings statement did not disclose comparative figures for the previous year, before the $9.1 billion purchase of Bankers Trust. Analysts credited Deutsche's new U.S. unit with contributing much of the growth in profit.
Profit in 1999 benefited from a 50 percent jump in net commission income to 8.1 billion euros, while buoyant capital markets last year boosted earnings in Deutsche's trading business by 170 percent to 4.8 billion euros. On the downside, operating expenses surged 55 percent.
"There is a bit of a mixed picture," said Adrian Pilz, banking analyst at Fox-Pitt Kelton in London. "4Q was definitely good to them, but the costs are definitely disappointing."
Pilz estimates that staff bonuses jumped 55 percent last year and accounted for 20 percent of total costs. Moreover, he expressed concern about the sustainability of the high level of commission income, some 40 percent of which comes from potentially volatile securities broking fees, according to Deutsche's third-quarter earnings report. Asset management, seen as a more stable source of fees, accounted for 27 percent of commission income.
The bank booked a 900 million euro charge for restructuring, including the integration of BT and measures to slim down its retail branch network. Deutsche recently unveiled plans to close 250 branches and axe 1,200 jobs.
A full breakdown of 1999 earnings will be released on April 6.
In midday trading in Frankfurt, Deutsche shares were fractionally higher at 81.28 euros. 
|
|
|
|
|
|
Deutsche Bank
|
Note: Pages will open in a new browser window
External sites are not endorsed by CNNmoney
|
|
|
|
 |
|
