Das isn’t Sehr Gut

In a surprise move, Deutsche Bank pre-announced its Q3 earnings, gloriously declaring that its net profit more than tripled to $2.1 billion. In an unsurprising move, Deutsche dressed its results with one-time gains to offset underlying weaknesses. This quarter the German bank was helped by tax benefits. Tax benefits? Oh, right, the things that DB used in Q3 of 2007 to report a $2.3 billion profit. To its credit, this time around, the bank didn’t engage in any asset sales, as it did in Q2 of 2009 (dumping some of its holdings of Daimler and Linde for a tidy profit exceeding $500 million) and Q1 of 2008 (hawking Daimler, Allianz, and Linde for a gain of more than $1 billion) – to name just a few offending quarters.

To be fair, a lot of banks paint their results around the edges, and Deutsche clearly hasn’t done anything wrong. But it does seem that the bank is quite concerned about proving to the market that it doesn’t need any more capital to meet regulatory requirements. The bank’s chief executive, Joe Ackermann, famously told the German government in November 2008 to fuck off, declaring that Deutsche didn’t want any part of the Bundes-bailout.

Now, I doubt Deutsche will need to raise more capital since it has fared much better than most competitors (ahem, UBS), but the market isn’t so sure. The stock opened down several percent this morning on a day when another announcer, MS, has risen more than 5%. At least DB has one thing going for it – the Euro is crushing the dollar. Das ist gut if you’re holding the ADR.