Deutsche Bank has increased the amount of job cuts it will make from 2,600 to 4,500 in a bid to reduce costs.
The bank revealed the further cuts at the same time as it reported a 38% fall in pre-tax profits over the first three quarters of this year compared with the same period last year, as investment losses and bad loan write-offs undermined gains from trading.
The results were due Thursday but were leaked on the previous day, forcing Deutsche Bank to issue a statement summarising its results ahead of the official announcement. An investigation into the leak is underway, according to banking sources.
Deutsche said that cost containment measures that had been initiated at the start of the year were already showing results, with operating expenses reduced by 8% from the second quarter compared to the third.
However, the bank said that further staff reductions were necessary. "In further developing the structure of Private Clients and Asset Management, increases in efficiency are planned, in particular by eliminating duplication," Deutsche's management said in a statement released Thursday.
Deutsche reported pre-tax profits of €3.7bn ($3.3bn) to the end of September 2001 compared with €5.1bn for the same period last year. The bank's net income was €2.8bn compared with €4.4m, a fall of 36%.
The damage was done in two areas, bad loan provisions and investments. The bank set aside €561m for possible loan write-offs, more than double the first nine months of 2000.
In mergers and acquisitions Deutsche said it had "strongly increased its global market share". However, the revenue from the advisory group, which was mainly derived from M&A work, declined from €589m in the first three quarters of 2000 to €400m in the same period this year.
In equities origination revenue dropped from €849m for the first three quarters last year to €259m this year, and in equities sales and trading it dropped from €3.59bn to €2.89bn.
Debt origination enjoyed much better fortunes, with revenue rising from €849m in the first nine months of 2000 to €981m this year. Debt and other products (excluding equities) sales and trading revenue rose from €3.51bn to €4.31bn.
Loan products revenue was slightly lower this year, at €2.6bn, compared to €2.62bn last year.
Meanwhile, net income from investments fell 60.5% to €926m, from €2.3bn a year earlier.
Deutsche said of the investment returns: "Falling prices over the course of the year (especially in the telecommunications and technology sectors) and the collapse after September 11 led to market value adjustments and write-downs."
The investment banking business made its presence felt in the stronger portions of Deutsche's third quarter results. Trading profits rose a whopping 26.7% to €6.9bn.
Net interest income for the bank as a whole rose 4.8% to €5bn, while net commission income fell 9.1% to €8bn.
Revenue in the private clients and asset management business was down from €6.25bn in the first three quarters in 2000 to €6.017 in 2001.