“Trading helps lift Deutsche Bank to highest quarterly profit in 11 years…”

First-quarter net income increased 10% from a year earlier to €1.45bn

Trading and investment banking helped lift Deutsche Bank to its highest quarterly profits in 11 years in the first three months of 2024, as global dealmaking started to pick up after a two-year long slump.

Germany’s largest lender said on Thursday that first-quarter net income increased 10% from a year earlier to €1.45bn, slightly above analysts’ expectations.

The profits increase reflected a similar trend at its larger Wall Street rivals. Revenues at its investment bank rose 13% to €3bn, driven by a 7 per cent increase in fixed-income trading and a 54 per cent jump in origination and advisory. However, the lender’s private and corporate banks both suffered falling revenues. Chief executive Christian Sewing said Deutsche was on track to deliver ambitious 2025 targets for revenue growth, cost cuts and return on equity “on all dimensions”.

Nevertheless, Citigroup analyst Andrew Coombs wrote in a note to clients that while the results were “solid”, investors “may be cautious about extrapolating an investment bank-led beat” due to the fickle nature of the unit.

Costs fell 6% in the quarter to €5bn, pushing its cost-income ratio to its lowest level in more than a decade. The bank earmarked €439mn for bad loans in the quarter, a decrease from the €488mn it provisioned in the final quarter of last year.

The bank faced the wrath of thousands of customers and Germany’s financial watchdog BaFin as clients of its domestic retail division were locked out of their accounts for weeks, causing helplines to be overwhelmed and some internal operations to grind to a halt.

 With retail staffing temporarily reshuffled to sort out the issues, this led to a “disruption to collections activity” in retail lending, said von Moltke. As a result, some clients fell “behind in their payments more than would have been the case” under normal circumstances, he said. Deutsche is bracing for Postbank-related loan losses of €40mn and warned that some of the hit “may be permanent” as the impaired loans may not be recovered. Von Moltke said more retail loans would turn sour in the second quarter due to the Postbank woes. By the end of March, the bank had fixed all of the Postbank issues that were directly affecting customers.

However, von Moltke flagged that there were “some remaining non-client items that we’re cleaning up in Q2”. Return on tangible equity, an important measure of bank profitability, stood at 8.7 per cent, higher than a year before but below Deutsche’s medium-term target of more than 10 per cent. The lender’s common equity tier 1 ratio — a leading benchmark for its balance sheet strength — was 13.4 per cent, 0.3 percentage points lower than at the end of 2023 but well above the bank’s minimum target.

Its asset management unit, DWS Group, which is separately listed on the Frankfurt stock exchange, reported inflows that drove assets under management to a record high of €941bn as investors flocked to low-margin passively managed funds.

Malta:

Hili Properties plc records €15.7m revenue

Hili Properties, a subsidiary of Hili Ventures, announced its financial statements for the year ending December 2023, registering increased revenues across its varied portfolio of properties across Estonia, Latvia, Lithuania, Malta and Romania.

The company, which invests in high-quality property assets such as shopping centres, restaurants, office space and healthcare facilities, generated €15.7 million in revenue, compared to €12.2 million the previous year, an increase of over 28%.

This was primarily the result of realising income for a full reporting period from two recently acquired properties, Stirnu Shopping Centre in Latvia and MIRO Office in Romania, which is the company’s most valuable asset to date. The company also finalised the reconstruction of the second floor at the DOLE Shopping Centre in Riga, which attracted top-tier retailers that contributed to increased footfall.

The company’s entire portfolio was 99% occupied as at 31st December 2023, with an average lease term of 8.3 years. This growth was achieved despite the significant challenges faced by the commercial real estate market globally over the last year.

“Inflation and interest rates rising to unprecedented levels impacted all industries, including the property market, presenting hurdles such as increased borrowing costs and financial pressure on our tenants, which fall on property managers in turn. Despite these challenges, proactive management strategies and strong stakeholder relationships ensured stability when faced with uncertainties throughout the year,” said Hili Properties chairman Pier Luca Demajo.

Commenting on the company’s outlook for 2024, Managing Director George Kakouras said: “We will continue to navigate the challenges that commercial real estate currently faces, safe in the knowledge that we own a solid portfolio of property assets, which provide a steady revenue stream.  With interest rates now stabilized, we expect renewed interest in real estate transactions and will continue to monitor the market to identify opportunities for divestment or potential acquisitions in an agile manner.”

Malta Company Announcements:

Hili Properties plc  

On 6 May 2024, the Board of Directors of Hili Properties plc resolved to recommend a final net dividend of €0.0108 per share. Shareholders as at the close of trading on Friday 21 June 2024 will receive the payment on or around the second week of July, subject to approval at the upcoming Annual General Meeting to be held on Tuesday 25 June 2024.

GAP Group plc  

The Company announces that it purchased €3,998,400 of its 3.90% Secured Bonds 2024 – 2026 (MT0001231233) from its bondholders during the month of April 2024. In accordance to section 6.10 of the Securities Note forming part of the Company’s Prospectus dated 6 December 2021, the purchased Bonds will be cancelled and may not be re-issued or re-sold.

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