Deutsche Bank side-stepped the US sub-prime mortgage lending crisis to beef up profit in the second quarter on the back of strong sales and trading. As credit concerns knocked markets lower around Europe, the chief executive of Germany's flagship bank told investors the business would continue to thrive even in the current rocky environment.
Deutsche Bank's net profit grew by roughly a third to 1.77 billion euros ($2.43 billion) - a second-quarter record that beat what most analysts had expected. "Some areas of the credit markets may continue to experience turbulent conditions," said Josef Ackermann, referring to the crisis sparked by American homeowners not being able to pay their mortgages. "Our business model ... is structured to deliver performance in the face of such challenges," he added.
The bank's finance chief also said its involvement in the sub-prime market was limited, and that it was cautious about getting involved with hedge funds and private equity.
But the words failed to calm investor nerves, jittery after a US mortgage lender and two Australian funds became the latest casualties of a credit crunch rippling across the globe. Deutsche Bank's shares were down 2.5 percent at 98.40 euros at 0940 GMT, broadly in line with market falls.
"Who would buy an investment bank today?" said Alan Webborn, an analyst with Societe Generale. "People have a vision that there are big risks and nobody knows when the music is going to stop and who will be left without a chay investment banking has done well." "Other areas such as retail banking and transaction banking - which are the predictable and sustainable earners - are better than expected."
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