Deutsche AM attributed the revenue drop to a non-recurrence of performance fees in alternatives, partially offset by revenues in active fund management.
Wealth Management
Deutsche’s Private, Wealth & Commercial Clients (PW&CC) division reported a revenue decrease of 17% to €1.7bn, down from €2.1bn in 1Q15.
The wealth management segment reported revenue of €498m, down 8% on last year, reflecting lower fee income due to reduced client activity and lower market levels, although this was partly offset by higher net interest revenues and deposits.
Group results
As a group, Deutsche Bank reported a net revenue decline of 22% to €8.1bn during 1Q16, “reflecting a challenging environment and the impact of strategic decision to downsize and exit certain businesses”, the company said.
Non-interest expenses declined 17% to €7.2bn, largely from lower litigation charges, although pending legal challenges could see the company’s litigation bill rise again in coming quarters.
Group net income for the quarter was €236m, a year-on-year decrease of 58%.Despite the sharp decline, Deutsche Bank beat analysts’ average expectations of a net loss of €249m, with the bank’s shares rising 2.6% in early trading against a market that was down 1.2%, reports Reuters.
Client activity decline
Co-chief executive officer, John Cryan, said: “Financial markets were challenging during the first quarter, largely reflecting concerns about the outlook for the global economy. This uncertainty led to a decline in client activity in the capital markets, and our revenues fell from the prior year, most notably in our trading and corporate finance businesses.
“Our results reflect these challenging conditions as well as the impact of our strategic decisions to exit or reduce significantly selected businesses.”
“Despite this, we made progress on a number of fronts including […] the continued disposal of non-core assets and the ongoing closure or downsizing of our operations in selected countries.”
Deutsche AM completed the sale of Asset Management India to PGIM during 1Q16, while rumours continue to circle that the bank’s UK insurance unit Abbey Life is to be sold, with Phoenix Group believed to be the frontrunner to buy it.
“Implementing our strategy remains our core focus and 2016 will be the peak year for our restructuring efforts,” Cryan said.
