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Deutsche Bank's 'flow monster' outpaced in trading income

The Banker's Top 1000 World Banks has revealed some surprising results for sources of income at banks.
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For the first time this year, The Banker has collected data on the sources of income at banks. We asked banks to submit figures and each data point was checked against annual reports, and then standardised so that the data were consistent with The Banker database methodology. And among some of the expected figures, there are a few surprises.

For example, nobody will be shocked to hear that Goldman Sachs leads the trading income table, with more than $17bn in income, representing 41.52% of its total operating income. Similarly, most will fail to be moved by the fact that, judged by fee and commission income, Goldman falls to 11th place. The relative earnings power of trading versus banking at Goldman has long been known.

What is more revealing is that Deutsche Bank ranks 14 in the list of the top 20 banks by trading income – outpaced by the likes of French banks Société Générale and BNP Paribas, as well as troubled UK bank Lloyds Banking Group.

According to Deutsche Bank’s figures, its trading income is about half that of Credit Suisse and JPMorgan, less than half that of Morgan Stanley and Bank of America, and less than one-third that of Goldman Sachs.

This is not what was expected from Deutsche Bank. It is seen as a ‘flow monster’ among European houses. Of course, it could simply represent the difference between what Deutsche puts in its banking book (where banks book securities available for sale and to be held to maturity) and what is held in the trading book, where banks hold their trading assets.

Deutsche Bank now has risk-weighted assets of just 18% of total assets. Whether the trading income figures and Deutsche’s shrunken risk-weighted assets represent a real reduction in trading operations – or whether they mean that Deutsche has transferred illiquid and difficult-to-price assets into its banking book to avoid marking them to market – remains to be seen.

Top 20 banks by fee commission income
Top 20 banks by fee commission income

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