Deutsche Bank

Deutsche Bank shares were up by 7% on Wednesday as third-quarter profit surpassed expectations.

Net profit was 35% higher than for the previous quarter, coming in at €1,031 billion, despite an 8% fall on the previous year.

This beats the €937 million approximate set by analysts.

It also marks Deutsche Bank’s thirteenth consecutive profitable quarter since its restructuring in 2019.

According to experts, investors were cheered by promises of potential share buybacks, which could bring them higher returns.

Deutsche Bank had previously expected to give back €8 billion to investors by 2025, a payout that could now increase.

Yet despite these positive figures, the lender saw a slump in its investment banking revenue.

This is because a drop in corporate trading has reduced income from fees.

Net revenue from investment dropped 4% year-on-year to €2.27 billion, although Deutsche Bank is not being hit as drastically as some of its competitors.

The bank’s other divisions have seen a stronger set of results.

Thanks to higher interest rates, corporate banking business revenues rose 21% year-on-year, coming in at €1.89 billion.

The highest revenue this quarter was generated by the bank’s retail division, which delivered a 3% year-on-year rise.

Analysts expect this unit to become the main revenue driver for the full year, a position that the investment division has held for the previous three years.

Lloyds

British bank Lloyds also confirmed that its profits were up on Wednesday.

The lender reported a pre-tax profit of £1.9 billion (around €2.18 billion) for its third quarter, a figure in line with forecasts.

This profit is up by £576 million compared to the same period last year, predominantly thanks to high interest rates boosting earnings on loans.

Yet alongside some promising data, a number of analysts were disappointed by the lack of an unscheduled dividend or buyback payout.

This was reflected in a 2% drop in Lloyds’ shares on Wednesday morning.

The bank’s net interest margin, a figure that measures the difference between loan income and the money paid out on deposits, was also recorded slightly below expectations, at 3.08%.

The bank made £3.4 billion in net interest income over the quarter, compared to £3.47 billion during the previous quarter.

Richard Hunter, head of markets at Interactive Investor, told Euronews that “The Net Interest Margin (NIM) shock which plagued Barclays […] and inevitably read across to the other UK banks has unsurprisingly been echoed in the Lloyds numbers.”

He nonetheless added that “Lloyds is making a good fist of performing within a difficult environment”.

Concerns about potential loan defaults and increased running costs also dampened Lloyds’ otherwise steady lender’s report.

So far this year, Lloyds reported that its operating costs have risen by 5%, to £6.7 billion.

Barclays

Barclays’ third quarter results were less reassuring for investors.

When data was released on Tuesday, the bank’s shares fell by as much as 8%, and early on Wednesday, stocks again dipped by around 2.4%.

Net profit came in slightly higher than expected at £1.27 billion, but Barclays’ plan to restructure its operations has likely spooked investors.

The plan to cut costs is partially a response to disappointing results from the lender’s investment bank.

This unit reported a 6% drop in income, recorded at £3.1 billion.

Added to this, the bank’s domestic interest margins are suffering because of intense competition in the savings market.

As UK households struggle with the cost of living, banks are coming under pressure to improve savings rates for customers, which is in turn squeezing their profits.

Barclays says its net interest margin would likely be between 3.05% and 3.1%, below previous forecasts of around 3.15%.

The bank has already planned hundreds of job cuts and expects the restructuring process to incur heavy costs.

Revenue in Barclays’ fixed income, currency and commodities division also fell by 13%, as falling market volatility reduced clients’ enthusiasm for trading.