Deutsche Bank warns of further cuts after fall in profits

Deutsche Bank warns of further cuts after fall in profits

A 98% fall in second quarter earnings has led Deutsche Bank to warn investors that it may need to cut more costs

In 2015 the German bank announced plans to cut more than 30,000 jobs over two years as part of a drastic restructuring plan designed to save €3.8bn. Many of these job losses were sustained in back-office and IT roles as the bank looked to reorganise its IT infrastructure and cut its use of legacy or duplicate technology.

However, the latest results coupled with a number of ongoing regulatory investigations has led the bank's chief executive to suggest that further cost-cutting measures may be needed.

"While our results show that we are undergoing a sustained restructuring, we are satisfied with the progress we are making," said John Cryan. "We have continued to de-risk our balance sheet, to invest in our processes and to modernise our infrastructure.

"However, if the current weak economic environment persists, we will need to be yet more ambitious in the timing and intensity of our restructuring."

Deutsche Bank's latest results showed that the bank earned just €20m in net income in the latest quarter, 98% less than the €796m earned in the same quarter in 2015.

At the same time the bank is also dealing with a number of regulatory investigations including a jont US/UK probe into mirror trades enacted by the bank's Russian division and a US Department of Justice (DoJ) case concerning the bank's securitisation and origination of mortgage-backed securities.

Deutsche Bank is currently negotiating a settlement with the DoJ which recently settled with Goldman Sachs over the same issue for $5.1bn in April. 

Deutsche Bank is also one of 51 banks that were subject to EU stress tests, the results of which should be published later this week.

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