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Surprise! Deutsche Bank shares rise as it announces profits beat early

Shares in Deutsche Bank jumped this morning as the German lender surprised markets by announcing that profits will be significantly above analyst expectations for the second quarter.

Deutsche expects to report income before tax of €700m (£618m) for the April to June period, giving net income of €400m, it announced this morning.

The ad hoc announcement, nine days before the official publication of its second-quarter results, was prompted by German regulations which require notification if consensus forecasts are out of line.

The average of analyst estimates of income before taxes was less than half the actual figure, at €321m.

Read more: Deutsche Bank's boss 'sick and tired' of bad news after S&P cuts rating

Analysts did a better job of predicting second-quarter revenues, which are expected to come in at €6.6bn, compared to €6.4bn estimates.

The unexpectedly strong performance will provide a welcome boost for the bank, which lost €500m over the course of 2017, its third annual loss in a row. The German standard-bearer sacked former boss John Cryan, a Yorkshireman, in April, replacing him with Christian Sewing.

The improvement in the bank's fortunes will take some of the pressure off the Deutsche Bank leadership, after an extended period of struggling to maintain investor confidence. The bump means shares are almost 18 per cent above the all-time low of €8.76 hit on 27 June.

The bank had been hit by recent ratings downgrades, its inclusion on a US list of "problem banks", and its failure of a Federal Reserve stress test in June.

Shares on the Deutsche Boerse gained 7.4 per cent at the time of writing, putting the bank on course for its best closing price since May.

Analysts at Barclays cautioned that the "underlying earnings picture is less clear" in spite of the improvement of headline earnings, although said that the stronger common equity tier one capital ratio, at 13.6 per cent, likely means the group has made "meaningful progress in bringing down risk-weighted assets and leverage exposure".

Read more: Deutsche Bank's US subsidiary put on federal agency list of 'problem' banks

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