Deutsche Bank’s profits halved year-on-year in the second quarter after it was forced to set aside 630 million euros ($834.9 million) to meet the costs of a series of lawsuits, Germany’s biggest bank said on Tuesday.
Net profit slumped to 335 million euros, compared with 666 million euros in the second quarter of 2012, the Frankfurt-based bank said.
The bank’s shares fell 2.5 per cent after the release of the results.
“In the second quarter our core businesses performed well, our franchise remained strong and we continued to reconfigure our platform to serve our clients more effectively,” the bank’s co-chief executives Juergen Fitschen and Anshu Jain said.
But they warned a lot of work lay ahead in delivering on planned cost savings.
The bank said it had been forced to set aside money to cover legal actions, including its alleged involvement in manipulation of the interbank lending rate, the Libor, as well as an inquiry into tax evasion in carbon-trading markets.
Germany’s flagship lender is also facing US court action over residential mortgage-backed securities and fraud charges in Milan involving the sale of derivatives. The bank has denied the charges.
The increased legal costs brought the bank’s total provisions for litigation risks to 3 billion euros.
Its quarterly results are in marked contrast to other leading international financial institutions, such as Morgan Stanley, Goldman Sachs, JPMorgan Chase & Co and Bank of America, which have posted a solid round of profits.
The fall in Deutsche Bank’s earnings also came despite the buoyant mood prevailing on global financial markets in recent months.
Second-quarter pretax profit at its investment bank jumped 58 per cent year-on-year to 785 million euros while revenue rose 9 per cent to 3.71 billion euros. This increase contributed to a two per cent gain in group revenue to 8.2 billon euros.
However, debt trading income slumped 11 per cent to 1.9 billion euros, the bank said.