Deutsche Bank posts quarterly profit beat
Net profit attributable to shareholders reached 1.485 billion euros ($1.748 billion) in the second quarter, compared with a 1.2 billion forecast from Reuters.
The lender's revenues over the period reached 7.804 billion euros, in line with a mean analyst forecast of 7.76 billion euros produced by LSEG.
The firm's core investment banking unit reported a 3% year-on-year hike in revenue to 2.687 billion euros in the June quarter.
European banks overall are facing the challenge of navigating a lower interest rate environment, with the European Central Bank most recently bringing its key interest rate down to 2% in June and expected to hold that monetary policy during its meeting later in the Thursday session.
A recent German and broader European defense spending push has been supporting gains within the industry and offering new investment opportunities for European lenders. Speaking to CNBC's Annette Weisbach in late June, Deutsche Bank CEO Christian Sewing said that "we have clearly, in particular on the European side, been underinvesting" and stressed the lender has sized up both its portfolio appetite and resourcing to advise clients on defense ventures.
Domestically, the tumult that gripped German politics at the end of last year has quietened after snap elections awarded stewardship to a new ruling coalition under Chancellor Friedrich Merz. But the European Union's largest economy — and the third largest exporter globally — is now mired in trade uncertainty as the 27-nation bloc races to agree a tariff deal with U.S. President Donald Trump by an Aug. 1 deadline.
"If tariffs materialise in August, a recession in Germany in 2025 cannot be ruled out," Bundesbank President Joachim Nagel said last week, according to Reuters.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Bloomberg
a few seconds ago
- Bloomberg
Stellantis Poaches Renault Design Chief to Lead Europe Revamp
Stellantis NV hired Gilles Vidal, one of Renault SA 's top design executives, as the maker of Peugeot cars seeks a makeover under its new chief executive officer. Vidal, who worked at Stellantis predecessor PSA before joining Renault in 2020, will head design for the group's European brands, replacing Jean-Pierre Ploué who is stepping down, Stellantis said Friday. He will start on Oct. 1 and work closely with Ralph Gilles, Stellantis' chief design officer, the manufacturer added.
CNBC
a few seconds ago
- CNBC
Intel drops 9% as chipmaker's foundry business axes projects, struggles to find customers
Intel's stock dropped 9% after the chipmaker said it would slash foundry costs in its latest attempt to turnaround its struggling business. Concerns about where that leaves Intel's chip manufacturing business overshadowed a better-than-expected earnings report late Wednesday. Intel beat on revenue and issued a sales forecast for the third quarter that also topped estimates. The company reported adjusted earnings of 10 cents per share, topping the average analyst estimate of a penny, according to LSEG. CEO Lip-Bu Tan, who was appointed to the job in March, wrote in a memo to employees that the company's forthcoming chip manufacturing process, called 14A, will be built out based on confirmed customer commitments and that there will be "no more blank checks." In a filing with the SEC on Thursday, Intel said it may "pause or discontinue" its foundry business entirely if it could not secure a customer on its next technology cycle. "We have been unsuccessful to date in securing any significant external foundry customers for any of our nodes and our prospects for securing a significant external foundry customer for Intel 14A are uncertain," the company said in the filing. Intel's drop on Friday wiped out most of its rally for the year. The shares lost 60% of their value in 2024, their worst year on record. The slump reflected Intel's inability to make much headway in the artificial intelligence market, which is dominated by Nvidia, as well as skepticism surrounding its foundry bet. The company said it's axing chip facility projects in Germany and Poland and slowing production at its Ohio plant. Intel depends on a large customer for its foundry business to succeed. "Management wants external customer commitments to pursue the node, but in the meantime, this adds more uncertainty to product roadmaps and makes customer adoption more unlikely," analysts at Barclays, who have the equivalent of a hold rating on the stock, wrote in a note to clients. Tan, who replaced Pat Gelsinger as CEO, said in the memo that his first few months at the helm of the company have "not been easy. Intel has gone through with most of its layoff plans, which will result in eliminating 15% of its workforce and finishing the year with 75,000 employees. "Over the past several years, the company invested too much, too soon – without adequate demand," Tan wrote. "In the process, our factory footprint became needlessly fragmented and underutilized," he added Intel's net loss widened to $2.9 billion, or 67 cents per share, from $1.61 billion, or 38 cents in the year-ago period. The company recorded an $800 million impairment charge, "related to excess tools with no identified re-use." Analysts at JPMorgan Chase called Intel's foundry decision a "positive step," although ongoing market share losses remain a concern.
CNBC
a few seconds ago
- CNBC
Inflation ahead? Companies will only absorb higher tariff costs for so long
U.S. companies are taking tariffs on the chin for now — but it may not last, Wall Street warned. Economists have expected that President Donald Trump's steep levies on imports would lead American business to pass along those higher costs to consumers. For now, the short-term evidence points to domestic companies eating the increased taxes on products they import with smaller profits or narrowed profit margins, but many market watchers warn that may soon turn to increased consumer prices later in the year. What appears to be happening is that overseas exporters are not absorbing the cost of higher tariffs. "The top-down macro evidence seems clear: Americans are mostly paying for the tariffs," said London-based Deutsche Bank strategist George Saravelos. Saravelos pointed to China as an example of a nation not feeling the full bite of Trump's trade policy to limit free trade. While Saravelos said the world's second-largest economy faces an average tariff rate above 30%, dollar import prices into the U.S. have fallen 1%. Within the U.S., Saravelos said the consumer price index hasn't shown major spikes as a result of these levies. Because of that, he concluded that the American importers have taken a hit to profit margins rather than hiked prices to consumers. But that may not be the case for much longer, warned Saravelos and Nancy Lazar, Piper Sandler's chief global economist. By Lazar's math, "core" CPI — which excludes volatile food and energy prices — should rise at an annual rate of 3.2% in the third quarter as companies pass down prices following the Aug. 1 tariff deadline. That's up from 2.1% in the second quarter, she said, and spur "stagflationary" higher prices and limited growth. Companies warned of price hikes as Trump first announced his tariff plans earlier this year. But the lack of notable upward pressure on inflation data thus far can indicate the increases weren't as severe as feared. It can also help explain the continued strength in spending despite consumers' sour economic outlook. Lazar said the U.S. is paying for about 90% of tariffs on consumer goods. The companies importing such goods are covering 60%, leaving the final 30% to shoppers. Foreign exporters, she said, are covering "very little" of Trump's levies and "are getting off easy." To be sure, some areas have seen notable changes to price tags as global trade policy has shifted. Paul Donovan, chief economist at UBS, cited data showing U.S. consumers are shelling out 3.6% more on average for appliances compared with March. Their counterparts in Europe, the U.K., Mexico and Canada, on the other hand, are paying between 0.3% and 1.9% less. Businesses feel impacts Given the impact to business, tariffs have been a hot topic on second-quarter earnings calls by corporate management teams. Ahmed Moghal, finance chief at oilfield service provider Baker Hughes , said on the company's earnings call this week that higher tariffs resulted in a $15 million hit to earnings before interest, taxes, depreciation and amortization in the second quarter. Higher steel and other tariffs are raising the cost of oilfield equipment. For Conagra Brands , current tariff rates should add about 3% to the cost of goods sold, CEO Sean Connolly said earlier this month. That equates to extra costs of more than $200 million annually for the maker of Marie Callender's frozen meals and Reddi-wip whipped cream. At coffee machine and soft drink maker Keurig Dr Pepper , CEO Timothy Cofer said the levies can weigh on the coffee segment in the second half of the year. While he acknowledged that the situation is "a bit fluid," he said to expect "some additional pressure." "The tariff impacts will become prominent," Cofer said on a Thursday call with analysts.
