DEUTSCHE Bank AG, Germany's biggest bank, has reported a surprise third-quarter profit after new accounting rules allowed it to book fewer asset writedowns.
Shares in the bank rose as much as 9.1 percent in early Frankfurt trading yesterday after it posted net income of 435 million euros (US$573 million). Analysts surveyed by Bloomberg News had predicted a loss.
Rules easing requirements for marking down investments reduced writedowns for the quarter by 845 million euros to 1.2 billion euros.
CEO Josef Ackermann, who has so far resisted pressure to raise capital or take government help, said financial markets remained "challenging" and indicated the bank may trim its dividend.
Banks from UBS AG in Zurich to New York-based Citigroup Inc had to accept state aid after the bankruptcy of Lehman Brothers Holdings Inc froze credit markets.
"Earnings were better than feared and the use of new accounting rules helped," said Thomas Koerfgen at SEB Asset Management in Frankfurt. "The collapse of Lehman has changed the world for investment banks and Deutsche Bank can't escape this."
Deutsche Bank advanced 2.06 euros, or 8.3 percent, to 26.86 euros by 9:52am in Frankfurt. The stock has fallen 70 percent this year, slashing the firm's market value to 15.4 billion euros. The decline compares with the 57-percent slump in the 69-company Bloomberg Europe Banks and Financial Services Index.
The investment-banking unit, led by Anshu Jain and Michael Cohrs, reported a third straight quarterly pre-tax loss of 789 million euros.
The German bank booked writedowns of 1.2 billion euros on loans for leveraged buyouts, residential mortgage-backed securities, assets secured by bond insurers and commercial real estate. That brings total markdowns to about 8.5 billion euros since last year.
Banks worldwide have reported about US$687 billion of credit losses and asset markdowns since the start of 2007.
"After a period of exceptional market turbulence, the outlook for our business remains challenging," Ackermann said in a statement. "We will balance our dividend policy with our commitment to conserving capital strength in a highly uncertain environment."
Chief Financial Officer Stefan Krause said setting aside money for a dividend at last year's level of 4.50 euros a share "doesn't make sense" under current circumstances.