Deutsche Bank slumps to £121m loss on back of rising bad debts

Deutsche Bank, Germany's biggest bank, yesterday admitted it was "not satisfied" with its performance as it reported a larger-than-expected loss for the third quarter and increased provisions for possible bad debts.

Deutsche losses swung to a pre-tax loss of €181m (£121m) from a profit of €363m a year ago.

The bank's loan-loss provision saw a nearly five-fold increase to €753m for the quarter as Deutsche prepared for further fallout from the telecoms sector and ailing German companies.

Josef Ackermann, the chief executive of Deutsche, said: "These have been exceptionally difficult times for the global banking industry. Clearly we are not satisfied with the result for the third quarter."

Mr Ackermann tried to sound an upbeat note about Deutsche's restructuring prospects. He wrote to shareholders saying the bank was set to post a positive full-year result on the back of disposals and advanced cost-cutting measures.

But analysts were disappointed by Deutsche's most recent set of results because it holds more diversified investments than many of its competitors and has been boosting profits by selling some of its massive cross holdings in Germany's largest companies.

The company said its hefty credit-loss provisions for the third quarter "was taken to give greater emphasis to the current credit environment as compared to historical experience". The bank said loan losses should have peaked in the third quarter and charges included €200m in general provisions in case of further failure by Germany companies. The number of corporate failures in Germany is expected to reach 40,000 this year.

Results were also hit by a €266m writedown on equity investments, the majority of which were on its stake in the troubled German insurer Gerling, which cost the bank €300m in the second quarter.

Deutsche's gloomy results mirror deep losses posted by Germany's number two bank, HVB Group.

HVB shocked markets when it posted a deep third-quarter loss as interest and commission income fell and loan-loss provisions more than doubled.