BUSINESS

Net profit falls by half at Germany's biggest bank due to litigation expenses, higher taxes

07/30/2013 01:57 EDT | Updated 09/28/2013 05:12 EDT
FRANKFURT - Deutsche Bank, Germany's largest bank, said its net profits fell by 50 per cent in the second quarter, lowered by expenses for lawsuits against the company and by higher taxes.

Net profit fell to 335 million euros ($445 million) from 666 million euros a year ago.

The bank set aside 630 million euros to cover lawsuit losses. Deutsche Bank faces legal challenges related to U.S. mortgage bonds and a scandal over rigging of a key interest rate benchmark by a number of banks. Its legal set asides have now reached 3 billion euros.

It also saw its effective tax rate jump to 58 per cent from 31 per cent a year ago. It paid 457 million in taxes compared to 301 million in the year earlier period. The reason was that the bank had expenses — such as the litigation costs — that are not tax deductible.

The bank said Tuesday it was making progress in strengthening its finances to meet new regulatory demands and hold down costs. It also saw revenue from trading stocks jump by 55 per cent, to 787 million euros. Trading in bonds and other products brought in 11 per cent less revenue at 1.9 billion euros during the quarter, which saw turmoil on bond markets due to indications from the U.S. Federal Reserve that it could begin scaling back its bond purchases.

Co-CEOs Anshu Jain and Juergen Fitschen said in a statement that "our core business performed well" and that "our franchise remained strong" during the period.