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Deutsche Bank expects $7 billion losses after charges for the third quarter
Deutsche Bank AG (NYSE:DB) (ETR:DBK) (FRA:DB) is expecting to report a net loss of €6.2 billion (approximately $7 billion) after charges for the third quarter of this year.
Deutsche Bank estimated an IBIT loss of approximately €3.3 billion and a net loss of €4.8 billion year-to-date through the third quarter.
Excluding the impact of the impairment of goodwill and intangibles, its IBIT loss would be approximately €200 million and the net loss would be around €400 million.
Deutsche Bank expects to remain profitable year-to-date until the third quarter with IBIT of approximately €2.5 billion and net income of approximately €900 million.
The global investment bank also disclosed that its management board will recommend a reduction or possible elimination of the common share dividend for the fiscal year 2015. Deutsche Bank said the move was part of the planning for the implementation of its Strategy 2020.
The stock price of Deutsche Bank declined more than 4% to $27.50 per share during the extended hours, around 4:55 in the afternoon in New York.
Deutsche Bank huge write-down
Deutsch Bank said its third quarter financial performance will be affected by a huge write down including a €5.8 billion of goodwill and certain intangibles related to its Securities (CB&S) and Private & Business Clients (PBC) divisions.
The global investment bank also incurred a €600 million impairment of the carrying value of its 19.99% stake in Hua Xia Bank Co. Ltd. Deutsche Bank said its holding was no longer strategic.
Additionally, Deutsche Bank said its litigation provisions are worth approximately €1.2 billion. The bank expected that majority of the amount are not tax deductible. It is also anticipating that its final litigation provisions in the quarter will be affected by further events prior to the release of its final results for the third quarter.
Deutsche Bank regulatory capital ratios
According to Deutsche Bank, the impairment of goodwill and intangibles as well as its Hua Xua investment has no material impact on its regulatory capital ratios.
It is currently expecting to report a fully-loaded CRR/CRD4 Common Equity Tier 1 ratio of around 11% for the third quarter. The expected regulatory capital ratio included the impact of European Banking Authority Regulatory Technical Standards (Prudential Valuation) adopted during the period.
This story first appeared in ValueWalk.