After a series of events led Deutsche Bank shares to drop to almost 7.5% on concerns that they will not be able to settle cases being filed against the bank in the middle of dwindling money reserves, the company is now reporting a rise in their profits that would ease the weight of the fines imposed by the U.S Department of Justice in settlement of the bond packaged select mortgages allegations.
Despite the increasing concern for the bank’s investors over the U.S. Justice fines, Deutsche Bank shares experience a little recovery recently after investors from the Middle East and China signified their intentions to back the bank up in case it would need help with their cash reserves.
Going beyond analysts forecast, Deutsche Bank reported this Thursday that they have earned a net income of €278 million ($303.1 million) for the third quarter from an expected €610 million net loss which is significantly a huge amount compared to last year’s €6 billion net loss during the same quarter.
Aside from their net income the troubled German bank also reported an additional €501 million for the third quarter for their litigation reserves with the purpose of reaching an agreement with the U.S. Justice Department. Deutsche Bank initially reported a litigation reserve amount of €5.9 billion from a €5.5 billion from June. This is caused by the bank scratching our cash bonuses for the year in their efforts to increase their settlement with the Department of Justice.
The bank is also posting costs for their restructuring and their litigation reserves with lower numbers compared to what the expectations from the analysts.
Following Deutsche Bank’s third-quarter earnings report, shares rose to 0.71% during early Thursday trading before proceeding to a rally of 2.03% closing at 14.56 considerably higher compared to the decline in the price of the bank’s stocks last September 29 to a closing price of 11.48.
The German lender’s shares also increased by 4% following the news that Middle Easter and Chinese investors would back the bank’s financial reserves marking the start of a much stable investor confidence.
Despite the amount of good news the third quarter report showed, Deutsche Bank shares were unaffected significantly posting only a 2% gain at Wednesday’s close but should rally the next session since the announcement was made late Wednesday evening and considering the bank has been under some negative light for the past two months, this is great news for investors. Germany’s chancellor Angela Merkel also stated that Deutsche Bank would get no help from the country’s government.
According to Deutsche Bank CEO John Cryan, the recent issues regarding the Justice Department fines covered up the bank’s progress in their restructuring program in response to the market’s reaction regarding their recent Q3 earnings report.
Cryan also stated that the bank’s operations are not affected by the current share price clearly referring to the lack of development in the direction of the company’s stocks price.