Deutsche Bank Reports Q2 Metrics, FX Business & Litigation Fees in Focus

Deutsche Bank (NYSE:DB) has reported its financial metrics for Q2 2015, which were underpinned by mounting litigation costs. Additionally, the metrics were partly pared by surging Volatility Volatility In finance, volatility refers to the amount of change in the rate of a financial instrument, such as commodities, currencies, stocks, over a given time period. Essentially, volatility describes the nature of an instrument’s fluctuation; a highly volatile security equates to large fluctuations in price, and a low volatile security equates to timid fluctuations in price. Volatility is an important statistical indicator used by financial traders to assist them in developing trading systems. Traders In finance, volatility refers to the amount of change in the rate of a financial instrument, such as commodities, currencies, stocks, over a given time period. Essentially, volatility describes the nature of an instrument’s fluctuation; a highly volatile security equates to large fluctuations in price, and a low volatile security equates to timid fluctuations in price. Volatility is an important statistical indicator used by financial traders to assist them in developing trading systems. Traders Read this Term in foreign Exchange Exchange An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv Read this Term (FX) markets that yielded a positive impact on revenues, according to a Deutsche Bank statement.

In particular, net income during Q2 2015 came in at $894.6 million (€818), which represents a jump of 244.6% YoY from just $260.3 million (€238) in Q2 2014. Moreover, the annualized post-tax return on average tangible shareholders’ equity saw a figure of 5.7% in Q2 2015, compared with 2.1% in Q2 2014.

Deutsche Bank’s income before income taxes (IBIT) was reported at $1.31 billion (€1.2 billion) in Q2 2015, up a staunch 34% YoY from Q2 2014. Finally, net revenues came in at $10.1 billion (€9.2 billion) in Q2 2015, up 17% YoY from Q2 2014, which was reflective in growth across all businesses and favorable foreign exchange (FX) movements.

FX Legal Woes

One of the biggest challenges facing Deutsche Bank in Q2 2015 was its laundry list of legal fees and litigation costs. Despite settling on a number of major cases earlier this year, a number of probes and cases still remain open, including three class action lawsuits in the US on FX matters.

According to Marcus Schenck, Chief Financial Officer (CFO) of Deutsche Bank, in a recent statement on the ongoing FX lawsuits, “We are fully cooperating with certain regulatory authorities investigating the FX trading markets, but we were not named in the two major industry enforcement actions take to date. On LIBOR there are certain civil actions pending, as well as investigations by Swiss authorities. The Bank is furthermore investigating suspicious trades in Russia and in the U.K., which were partially cleared in U.S. dollar. We have self-reported those trades and we've taken disciplinary measures and are fully cooperating with regulators.”

Indeed, Deutsche Bank’s litigation charges climbed to $1.31 billion in Q2 2015 from just $514 million in Q2 2014, constituting a surge of 155% YoY.

FX revenues themselves were markedly higher during Q2 2015, helped by external market conditions across currency markets. According to Mr. Schenck, “Our FX and rates businesses benefited from increasing volatility in a constructive trading environment.”

Investors reacted positively to the earnings release however, as shares of Deutsche Bank (NYSE:DB) edged higher yesterday towards the $35 handle. During pre-market trading Friday, shares settled at $34.77, nearly -4.2% off a 52-week high of $36.29 marked earlier this year.