Deutsche Bank expects to benefit from Brexit

Deutsche Bank AG Chief Executive Officer John Cryan said the firm has a “competitive advantage” because its main hubs are in London and Frankfurt, giving it flexibility on where it services clients depending on how Britain’s negotiations to exit the European Union affect U.K.-based bankers.

Deutsche Bank’s latest results showed that the bank earned just €20m in net income in the latest quarter, 98% less than the €796m earned in the same quarter in 2015.

The bank’s pre-tax profit of €408m was down 67%, after goodwill impairment charge of €285m, restructuring and severance charges of €207m, … Cryan said Wednesday more cuts could come if the “current weak economic environment persists”.

But the bank isn’t going down without a fight, and is making a significant effort to restructure.

Deutsche’s cash-cow bond trading business slid by a fifth in the second quarter, contrasting with the performance of some US heavyweights who benefited from a more robust home market.

Deutsche Bank has lost about 43 percent of its market value this year.

Revenue at the corporate and investment banking unit, which comprises underwriting and transaction banking and is led by Jeff Urwin, fell 12 percent to 1.89 billion euros, in line with analyst estimates.

The bank also has been trying to settle regulatory investigations expected to result in big fines, another uncertainty for investors. It said it was also expecting further litigation costs over historical issues. That division’s second-quarter revenue declined 28% from the year-earlier period.

Despite the profit hit, Deutsche Bank outperformed expectations. And unlike rival Commerzbank, Deutsche Bank was able to boost its key capital ratio fractionally in the quarter.

The bank’s credit rating for senior unsecured debt, which is not backed by collateral but is ahead of junior debt in the queue for assets in the event of bankruptcy, was lowered to two notches above junk.