Deutsche Bank AG (DB) expects a loss in the third quarter of 2010. This is due to a €2.3 billion ($3 billion) charge from the revaluation of the company’s stake in Deutsche Postbank, which the company agreed to purchase in 2008. Weak market conditions during the third quarter have added to its woes.
Deutsche Bank’s corporate-banking and securities business, which is generally a strong contributor of its revenue, has suffered seasonal reductions, threatening a fall in performance from the year-ago quarter levels. Additionally, the company’s asset and wealth management division has also worsened during the current year’s third quarter.
These revelations came as the company filed a prospectus for its €10.2 billion share sale. Deutsche Bank intends to use this for bolstering capital levels in order to comply with regulatory requirements and support its Postbank takeover.
Regardless of third quarter loss expectations, the company claimed to be progressing well to meet its target of €10 billion in pre-tax profit in 2011. Beginning in 2011, it also expects around €1 billion in synergies from its Postbank takeover.
Shares of Deutsche Bank were down 2.72% during Tuesday’s regular trading session on the New York Stock Exchange. The negative sentiment over the poorer market conditions during the third quarter that Deutsche referred to also led to a fall in the stock price of its rivals such as UBS AG (UBS), Credit Suisse Group (CS) and HSBC Holdings plc (HBC), which were down 1.20%, 1.71% and 0.89%, respectively, during Tuesday’s regular trading session.
CREDIT SUISSE (CS): Free Stock Analysis Report
DEUTSCHE BK AG (DB): Free Stock Analysis Report
HSBC HOLDINGS (HBC): Free Stock Analysis Report
UBS AG (UBS): Free Stock Analysis Report
Zacks Investment Research
