(MENAFN- AFP) Troubled German lender Deutsche Bank reported Thursday a surprise profit in the third quarter, confounding expectations of further expensive legal pain for the Frankfurt institution.
"We continued to make good progress on restructuring the bank," chief executive John Cryan said in a statement. "The results for the quarter demonstrate well the strengths of our operating businesses".
Deutsche booked 256 million euros ($279 million) in profit attributable to shareholders between July and September.
That far outdid the forecasts of analysts surveyed by Factset, who had predicted a 949-million-euro loss.
Deutsche's financial health has been in the spotlight ever since the US Department of Justice last month asked for an unaffordable $14 billion fine over its role in the subprime mortgage crisis -- sparking fears it might have to raise fresh capital.
Deutsche saw a loss of more than six billion over the July-September period last year, the first full quarter of Cryan's tenure at the helm, as it launched a mammoth restructuring, wrote down assets and set out to tackle some 8,000 legal cases against the bank.
CEO Cryan acknowledged the "unsettling" effect of the US fine demand, news of which sent Deutsche's share price to historic lows of 9.90 euros in late September.
"The bank is working hard on achieving a resolution of this issue as soon as possible," Cryan said.
- 'Surprisingly positive' -
Thursday's "surprisingly positive" release "catches all those who saw the winding-down of Deutsche Bank as a sure thing flat-footed," said analyst Ingo Frommen of LBBW bank.
Deutsche said revenues increased to 7.5 billion euros, slightly up from 2015's third quarter, driven by 10-percent growth in its trading division.
Revenues declined in all other business areas, which the group said was largely down to the "impact of the ongoing low interest rate environment".
Cryan said the bank would have to deal with "challenging" interest rates and tighter capital requirements for some time to come.
"We need to restructure and modernise the bank faster and with higher intensity," he told reporters in a conference call.
- 'DoJ talks ongoing' -
Burdened with a painful overhaul and a web of costly legal problems, Deutsche was labelled "the most important net contributor to systemic risks in the global banking system" by the IMF in June.
Figures released on Thursday show Deutsche has a war chest of around 5.9 billion euros in provisions to cover regulatory fines and legal costs, an increase of 400 million since June.
A source told AFP in late September the bank was in talks with the DoJ to reduce its fine from $14 billion to around $5.4 billion, although the final figure could change.
Chief financial officer Markus Schenck said discussions on reaching a settlement with the US authorities were "ongoing".
"However, the time lines are not completely in the bank's hands alone. It also depends on the Department of Justice," he said in the conference call.
Deutsche shares were little changed on the upbeat results, up 0.08 percent to 13.31 euros around mid-day trading in Frankfurt.
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