Deutsche Bank CFO Lauds German Economy as Lender Focuses on Home
Deutsche Bank doesn’t find Germany so bad after all.
(Bloomberg) -- Deutsche Bank AG doesn’t find Germany so bad after all.
Two decades after deciding U.S. capital markets were more lucrative than medium-sized companies in its home country, the lender is going back to its roots. And the economy isn’t doing as badly as some of its critics say, according to Chief Financial Officer James von Moltke.
“We’re not taking that pessimistic a view on the German economy and are seeing some signs of stability in the European economy,” Von Moltke said in an interview with Bloomberg Television’s Guy Johnson. “We’re aligned with the strengths of the German economy, which are really trade and investment.”
Deutsche Bank is scaling back trading businesses built up around the turn of the century after a slump in revenue eroded the lender’s profitability. That increases its relative exposure to Germany’s export-oriented economy, which has shown signs of being hit by global trade uncertainty.
Still, the bank’s finance chief struck an upbeat tone on the Germany economy, saying “some of the data has actually surprised on the upside recently.” He also said the European Central Bank’s monetary policy has become more supportive, which should help.
Deutsche Bank expects to set aside more money for souring loans after the “relatively low levels” seen in 2018 and so far this year, Von Moltke said. “But we feel that we’ve been underwriting conservatively, and even in some amount of change in the credit environment, that should serve us well.”
The bank is focusing on its strengths in managing cash and risk as well as foreign exchange -- services German corporate clients want, Von Moltke said. The decision to withdraw from trading stocks and related derivatives was a difficult one, and Deutsche Bank’s management recognized that it would have wider implications.
“Frankly we will keep a fair number of our clients, we think, and continue to be able to serve their needs,” he said. “We will of course reduce our client franchise as we attempt to focus on those core clients where we want to devote our resources. But the impact, if you like, of clients who are uniquely served by us in equities sales and trading is actually surprisingly small.”
To contact the reporter on this story: Nicholas Comfort in Frankfurt at ncomfort1@bloomberg.net
To contact the editors responsible for this story: Dale Crofts at dcrofts@bloomberg.net, Daniel Taub, Linus Chua
©2019 Bloomberg L.P.