Deutsche Bank (DB) reported 649 million euros in net profit, a 63% year-over-year decline, but well ahead of the 426 million euro consensus estimate. Shares traded down in European markets, however, owing to the announcement that the German bank would take a larger than expected writedown of 2.3 billion euros. Bloomberg:
The company reduced the value of residential mortgage-backed securities, mostly so-called Alt-A mortgages, by 1 billion euros. It reported markdowns of 530 million euros on assets secured by bond insurers and 309 million euros on commercial real estate loans. Loans for leveraged buyouts were written down by 200 million euros, and other investments by 203 million euros. Analysts had estimated writedowns would amount to 1.76 billion euros in the quarter. Deutsche Bank’s second-quarter markdowns bring its total to about 7.3 billion euros.
CEO Josef Ackerman said that he was “cautious” regarding his outlook for the remainder of 2008, and promised to “reduce exposure” in key areas. Despite the larger writedown, DB’s Tier 1 ratio rose from 9.2% to 9.3%.