Deutsche Bank dodged the second quarter fixed income trading slump, with revenues shrinking by 11% as fees from mergers and acquisitions advice more than doubled.
The German lender made revenues of €2.4bn in its investment bank during the second quarter, a decline of 11%, as its dominant fixed income unit fell by the same percentage. But this was better than most of its rivals, with top US investment banks’ fixed income units falling by an average of 43% during the second quarter.
Fixed income trading at Deutsche came in at €1.8bn, accounting for 76% of revenues within its investment bank. Wall Street banks JPMorgan and Goldman Sachs saw 45% and 44% declines respectively within their fixed income trading units over the second quarter. Deutsche executives have recently pointed to market share gains in the unit leading to growth within its investment bank.
Revenues across the bank were €6.2bn, slightly ahead of analyst consensus, while net profits of €692m, compared to a €77m loss for the same period in 2020, were also better than market expectations. The second quarter was the best overall for the bank since 2015, prompting it to raise its revenue target.
“All our businesses have contributed to the year-on-year profit growth, gained further relevance for our clients and continued to capture market share. Once again, our cost and risk management provided us with firm foundations,” said Deutsche chief executive Christian Sewing in a statement.
Deutsche’s traditional investment banking unit increased by 2% during the quarter to €624m as sharp gains in M&A were offset by a slowdown in equity and debt capital markets. The German lender’s M&A fees were €111m, up by 166% as a deal boom pushed many of its Wall Street rivals to new highs during the second quarter.
The year-on-year increase outpaced many major US banks, with Goldman’s 83% rise in M&A fees the sharpest among the top Wall Street firms. European rival UBS posted a 223% gain in fees advising on M&A during a record second quarter.
The $60bn investment banks have pulled in during the first half of 2021 in fees is their best ever performance, according to data provider Dealogic. However, despite sharper relative increases at European banks, as a group they have lost market share to Wall Street rivals during the first six months of the year.
Deutsche is growing its traditional investment banking business again, making key hires across Europe and the US in a bid to gain share in key areas including M&A and equity capital markets. It ranked ninth in the global investment banking fee league tables in the first half of 2021, according to Dealogic, with $1.6bn — down from eighth at the same point last year.
Revenues across Deutsche’s investment bank during the first half were €5.5bn, up by 9% on the same period in 2020 when its fixed income trading unit boomed during the early days of the Covid-19 crisis. However, compensation costs of €982m were up by just 2% on last year as the bank continues to focus on costs. There were 4,212 front line employees in the unit, a decline of around 100 people on the same period in 2020.
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