Deutsche Bank has warned that its 2021 profit could hit 300 million euros as Germany’s largest creditor digested the financial backlash of a court ruling that overturned a previous increase in current account payments in its domestic market.
The warning is the second in the last two months, which reduces the bank’s year-over-year forecasts. In April, he said he would lose his € 2021 spending cut by € 400 million as he would have to pay more than expected to bail out EU banks. It will also repay € 70 million to Germany’s private bank deposit insurance scheme, which has suffered more than € 3 billion in losses since the collapse of Greensil Bank.
Prior to Thursday’s announcement, analysts expected that in 2021. The pre-tax will have a profit of 2.7 billion euros in 2010, compared to 1 billion euros in the previous year. Shares of the lender, which have risen more than a third this year, fell 0.6 percent in midday trading in Frankfurt.
Financial ames von Moltke, chief financial officer, said he was “decreasingly optimistic” that mandatory payments to rescue banks in EU banks would be reduced next year. Deutsche and other lenders are lobbying in Brussels to reduce those investments.
“I do not think there is a political consensus on a change in that tax,” von Moltken told a conference on European finance at Goldman Sachs.
As a result, Deutsche may also miss its 2022 run. The purpose of the spending cut, which was raised by 300 million euros in December alone, is partly due to the assumption that the bank fee will fall next year.
Thursday’s warning follows a ruling by the German Supreme Court on April 27, which ruled that past increases in current account payments were illegal. The judges overturned a ten-year practice in which banks unilaterally changed their terms and treated customer irresponsibility as an agreement.
The lawsuit was filed by a consumer rights group against Deutsche Bank’s Postbank retail brand. The decision could cut half of the German banking sector’s annual profits, the country’s banking observer BaFin warned last month.
Von Moltke told analysts on Thursday that Deutsche would provide € 100 million in possible compensation in the second quarter for possible compensation claims. In addition, retail revenues will be lower by 200 million euros this year, he said.
“We expect that by Q4, we will renew those payment agreements [that were nullified by the court ruling]”So we consider the lost income to be temporary.”
Despite the additional winds, von Moltke is optimistic about the prospects for Deutsche, which is on a three-year turning point. At the beginning of the year, the lender recorded its highest quarterly profit since 2014 due to the bond trading boom, strong asset management results, and a net exit from the impact of the Archegos Capital family office occupation.
“We have reached a point where the momentum is in our favor,” he said, adding that performance would be “normalized” in the second quarter. However, von Moltke stressed that the “underlying trend” of the improving investment bank “still exists”.