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Deutsche Bank boosts bad loan provisions

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Deutsche Bank boosts bad loan provisions

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Greatly improved business at its investment banking division meant Deutsche Bank enjoyed second-quarter net profit that was up by more than two thirds at just over one billion euros.

But Germany’s biggest bank said it had had to put aside one billion euros in that quarter to cover borrowers not repaying their loans. And despite the bank’s good performance chief executive Josef Ackermann remained cautious. He said: “The outlook for the remainder of 2009 will be strongly influenced by progress in the global economy.” As the economic slowdown took its toll, Deutsche Bank saw higher rates of loan defaults. Klaus Nieding of the DWS small shareholders association said: “We have a very ‘hot’ autumn and winter ahead of us. Key here are the unemployment figures, which will probably rise, consumption will plunge and both will have an impact on bank business, such as loan defaults. That could lead to a second phase of the financial crisis.” Deutsche Bank has coped with the financial crisis better than most of its German rivals, but the fact that so much money has had to be set aside to cover bad loans worried investors and Deutsche Bank’s shares fell.