Deutsche bank faces profit risk amid Postbank lawsuit

Deutsche Bank is expected to report a loss for the second quarter, breaking a 15-quarter streak of profitability, according to a consensus forecast published on Monday.

This anticipated loss is due to a long-standing investor lawsuit over the Postbank division, which is expected to reduce earnings by 1.3 billion euros ($1.42 billion).

The forecast predicts a post-tax loss attributable to shareholders of around 280 million euros, wider than the previously forecasted 170 million euros and contrasting with a profit of 763 million euros in the same quarter last year.

Despite this, the bank’s four key operating divisions are projected to post profits before tax. The bank has been undergoing an overhaul since 2019 under CEO Christian Sewing to restore profitability after years of losses.

While the management has been praised for improved earnings, the bank continues to face regulatory and reputational issues.

Postbank, acquired by Deutsche Bank during the financial crisis, remains a source of consumer complaints and scrutiny.

However, Deutsche Bank has made progress in resolving some outstanding problems, including settling a 500 million euro lawsuit with the Spanish company Palladium Hotel Group for an undisclosed sum. Deutsche Bank will publish its earnings on July 24.