FRANKFURT, Germany (AP) — Deutsche Bank has reported that its net income fell to 66 million euros ($72 million) in the first quarter as the pandemic hurt its business. The bank said it was letting its financial buffers fall so it can maintain lending to clients but said the easing was temporary and modest.
The net profit fell from 201 million euros in the first quarter of last year, while revenue dropped to 6.4 billion euros from 6.35 billion euros. Money set aside to cover loans that are not being repaid grew to around 500 million euros from 140 million a year ago, one sign of business distress amid the shutdowns aimed at halting the spread of the virus.
It said its common equity tier 1 ratio, one measure of financial strength, fell to 12.8% from 13.6% at year end. But the bank said it would not restrict lending just to maintain its target for its capital cushion.
“Management has made the clear decision to allow capital to fall modestly and temporarily below its target in order to support clients and the broader economy at this time of economic crisis,” the company said in a statement. The bank said it was maintaining buffers well above regulatory requirements in any case.
The European Central Bank has eased capital requirements for banks during the pandemic to make it easier for them to keep lending. Bank lending is key to the European economy because companies tend to get their financing from banks as opposed to from bond or stock markets.
The bank released partial first quarter earnings in an email just before midnight Sunday. A more detailed report is due April 29.