Deutsche Bank warns of coronavirus impact as profits plummet a year ago

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Christian Sewing, chairman and chief executive officer of Deutsche Bank AG, pauses as the largest German bank announces its annual results in Frankfurt, Germany, Friday. February 1, 2019. Deutsche Banks revenue shrank for an eighth consecutive quarter in the final months of last year, complicating chief executive Christian Sewings’ plan to return the lender by cutting costs. Photographer: Krisztian Bocsi / Bloomberg via Getty Images

Krisztian Bocsi | Bloomberg | Getty Images

Deutsche Bank has stated that it plans to report lower first quarter net profit than a year ago, and will set aside a significant amount for potential loan losses when she will report on her full results on Wednesday.

He also warned that he might miss his capital target in the future, due to Covid-19.

In a preview on Sunday, the German bank announced that it forecasts a net profit of 66 million euros (71.56 million dollars) for the first quarter of 2020, against 201 million euros in the first quarter of 2019.

Turnover is expected to reach 6.4 billion euros.

The bank also set aside € 500 million in provisions for credit losses. This is a figure that is being watched closely by investors this earnings season as banks prepare for the financial impact of the global coronavirus pandemic.

He will give full details of his results on Wednesday as scheduled.

Over the past decade, the troubled lender has faced restructuring, increased competition, litigation costs and a lower market share. Deutsche Bank ended 2019 with a full-year net loss of 5.3 billion euros.

Deutsche Bank’s share price has dropped more than 25% in the past 12 months.

Weaker capital requirements

Deutsche Bank also said on Sunday that its level 1 common share ratio – a measure of bank creditworthiness – fell to 12.8% at the end of the first quarter, from 13.6% at the end of 2019.

“The decline in the CET1 ratio during the quarter included a negative impact of around 30 basis points from the revised securitization framework and around 40 basis points from elements precipitated by the Covid-19 pandemic,” said the lender. in its press release.

In the future, Deutsche Bank has said it may have a lower CET1 ratio, below its target of 12.5%,

“The short-term implications of the COVID-19 pandemic make it difficult for the bank to accurately reflect the timing and scale of the changes to its initial investment plan,” he added. However, he added that he “remains committed to maintaining a significant buffer above its regulatory requirements at all times.”

The German bank also said it was “unlikely” to reach its 2020 target of fully loaded leverage ratio of 4.5%. This measure measures the financial health of a bank.

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