Profit Rises 31% of Deutsche Bank’s India

Deutsche Bank, net profit from India rose 31% to 823 crore in the last fiscal year from 630 crore mainly because of increased income from businesses such as cash management, commercial banking and loans to firms.

The rise in profit was despite a marginal drop in the bank’s loan book to 28,626 crore in 2011-12 from `28,680 crore, in the year earlier.

Net interest margin (NIM) improved to 5.7% from 5.2%, increasing income 10% to `3,151 crore from `2,861 crore, the bank said in a release. NIM is the difference between income earned and interest expended and is considered a key matrix in a bank’s profitability.

In April 2011, the bank sold its credit card business worth `224 crore to IndusInd Bank Ltd, together with its entire operating platform, including talent and technology. Its retail book is now only a small part of its business in India, consisting of individual bank accounts, personal and home loan.

The official said Deutsche Bank’s loan book shrunk last year because the bank focused on high-yielding assets and shed those offering lower yields.

“The strategy has been successful as reflected in the high NIMs as well as higher return of assets compared to the previous year,” the official said.

Return on assets improved to 2.58% from 1.95% in 2010-11 while provisions for bad loans dropped to `12 crore from `85 crore.

Deutsche Bank also announced that its retail banking division had turned profitable seven years after it started giving loans to individuals in India in 2005-06. “This has been achieved in a highly challenging and competitive banking environment. The key to success has been the relentless focus on core businesses, stress on quality and customer satisfaction while maintaining strict cost discipline,” Deutsche said in the release.