Shares in Deutsche Bank surged nearly 7% Wednesday after it said strong earnings meant it could pay out more cash to shareholders over the next two years than previously anticipated.
Germany's biggest lender said in its third-quarter report that it was on track to notch up annual revenue of €29 billion ($31 billion) in 2023 — its highest in seven years — and that it "had the potential to free up additional capital of around €3 billion ($3.2 billion)" between now and 2025.
The bank said it expected to buy back more of its shares — a move which typically juices a company's stock price — next year.
Deutsche Bank (DB) reported pretax profit of €1.7 billion ($1.8 billion) in the three months to the end of September, up 7% from the same period last year.
The lender said net revenue for the third quarter had risen 3% year-over-year to hit €7.1 billion ($7.5 billion), driven by strong growth in its private and corporate banking divisions.
"These results demonstrate strong and sustained business growth momentum combined with continued cost discipline," Christian Sewing, the bank's chief executive, said in a statement.
"This gives us scope to... further improve returns, and increase and accelerate distributions to our shareholders," he added.
Deutsche's investment banking arm fared less well, its revenues falling 4%. That was in keeping with falls seen at other banks as dealmaking dried up in response to the higher cost of borrowing caused by interest rate hikes.
It marks a striking turnaround for the bank following years of scandal, mass layoffs and regulatory fines that have weighed on its reputation, and its stock price. Shares have nearly doubled since hitting a record low in March 2020 but have still cratered 67% over the past decade.
In July, the US Federal Reserve slapped a $186 million penalty on the bank for failing to fix unsafe and unsound practices" that it had identified several years prior. The Fed found that Deutsche Bank had made insufficient progress since 2018 to tighten its anti-money laundering controls, among other failures.
