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Deutsche Bank’s Operating Expenses See a 19% Rise in 4Q15

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Segmental earnings

In this part of the series, we’ll analyze the performance of Deutsche Bank’s (DB) segments in 4Q15.

The Corporate Banking & Securities segment posted revenues of 2.1 billion euros in 4Q15, a fall of 30% compared to the same period last year. This fall in revenues was a reflection of lower client activity, a challenging trading environment, and valuation adjustments in debt sales and trading.

Operating expenses, however, rose by 19% to 5.9 billion euros in the period, mainly due to litigation charges of 335 million euros, regulatory related expenditure, and exchange rate–related movements.

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Private and Business Clients segment revenues fell 7% year- over-year to 2.2 billion euros. This reflected impairment in the company’s 20.0% stake in Hua Xia Bank, transaction-related expenses, and lower deposit revenues. Non-interest expenses for the segment rose 26% to 2.8 billion euros due to 669 million euros worth of restructuring expenses.

The Global Transaction Banking segment delivers commercial banking products and services to corporate clients and financial institutions. During 4Q15, its revenues rose 13% to 1.2 billion euros. This rise was driven by strength in its Trade Finance and Cash Management teams and its Institutional Cash & Securities Services unit, along with positive foreign exchange impact.

Deutsche Bank’s non-interest expenses were down 2% in 4Q15, reflecting lower regulatory expenses despite unfavorable foreign exchange impact.

The company’s Asset and Wealth Management segment generated revenues of 1.4 billion euros for the quarter, up by 14% year-over-year. This rise reflected positive inflows of 70 billion euros and increased business activity in active, passive, and alternative products along with positive foreign exchange impact. Invested assets rose 8% in 4Q15 compared to 4Q14.

ETF exposure

European banks (EUFN) have been struggling to recover from the sovereign debt crisis in a challenging market environment. The largest Europe-based investment banks are UBS, Credit Suisse (CS) and Barclays (BCS).

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