Deutsche Bank falls after missing out on rally that lifted peers

Deutsche Bank AG’s debt traders held up better than most amid an industrywide slump. They just needed more help from other parts of the investment bank.

Deutsche Bank AG’s debt traders held up better than most amid an industrywide slump. They just needed more help from other parts of the investment bank.

The German lender’s dealmaking and trading unit saw a drop in profit and revenue as fixed-income trading slipped 12 per cent. Advisory fees and a rally in equity trading were enough to provide revenue jumps at the investment banking units of UBS Group AG and Barclays Plc, but Deutsche Bank posted smaller gains in deal fees than U.S. rivals and has already gotten out of stock trading.

The results underscore urgency for Chief Executive Officer Christian Sewing to come up with alternative sources of growth, after relying on a boom in fixed income for much of his turnaround so far. But the lending businesses that were initially at the center of his strategy are still suffering from negative interest rates. Unexpected expenses, meanwhile, have forced the CEO to scrap the cost-reduction targets for this year and next, and prompted the bank to book a 583 million-euro transformation charge in the quarter.

While Deutsche Bank raised the outlook for the investment bank slightly, its shares fell as lower provisions for bad loans explained why third-quarter profit beat estimates.

“Deutsche Bank has reported another solid quarter,” analysts at Citigroup Inc. led by Andrew Coombs wrote in a note, pointing to a beat on pretax profit. “However this is primarily the function of lower loan losses.”