Deutsche Bank Profit Rises on Tax Gains, Asset Sales

Deutsche Bank AG, Germany’s biggest bank, said third-quarter profit rose 31 percent as tax credits and gains from asset sales outweighed the first loss at its investment bank in five years.

Net income climbed to 1.62 billion euros ($2.34 billion), or 3.31 euros a share, from 1.24 billion euros, or 2.43 euros, a year earlier, the Frankfurt-based company said in a statement on its Web site today. Deutsche Bank estimated on Oct. 3 that net income would exceed 1.4 billion euros.

Gains from German tax changes and the sale of Deutsche Bank’s North American headquarters cushioned the impact of 2.16 billion euros in writedowns and trading losses linked to the U.S. subprime mortgage contagion. UBS AG, Europe’s biggest bank by assets, yesterday said more writedowns are possible in the fourth quarter, while Merrill Lynch & Co. ousted Chief Executive Officer Stan O’Neal after a record loss.

“It looks as if the troubled areas aren’t diminishing and probably will stay with us for the foreseeable future,'’ said Paul Vrouwes, who helps manage about $218 billion at ING Investment Management, including Deutsche Bank shares. “Nobody knows what the future will look like in terms of a recovery.'’

Deutsche Bank’s shares have declined 12 percent this year, compared with a 9.1 percent slump in the 63-member Bloomberg Europe Banks and Financial Services Index. The bank’s stock trades at 7.96 times estimated profit, the fourth-lowest among the 50 financial companies closest to Deutsche Bank by market value globally, data compiled by Bloomberg show.

Profit Goal

“Looking forward, challenges undoubtedly remain,'’ Chief Executive Officer Josef Ackermann said in a statement. “We have made a positive start to the fourth quarter, and assuming markets function at normal levels, we re-affirm our commitment to delivering on our 2008 financial targets.'’

Investment-banking revenue in the fourth quarter may be “significantly lower'’ than the record levels reached over the past year, though it should remain “high'’ when viewed on a longer-term basis, the bank said.

Deutsche Bank’s writedowns are the third-highest as a proportion of the securities unit’s revenue among the eight biggest investment banks that already reported earnings, behind Merrill Lynch and UBS, according to company reports.

Sales and trading revenue, which accounted for almost half the bank’s total last year, slumped 62 percent after 1.56 billion euros in writedowns and trading losses in fixed-income and equities. The bank also wrote down loans to fund buyouts by 603 million euros, net of fees, leaving it with leveraged finance commitments totaling 41.4 billion euros at the end of September.

Compensation Drops

The investment banking unit, run by Anshu Jain and Michael Cohrs, recorded a loss of 179 million euros in the quarter, compared with a profit of 1.03 billion euros in the year-earlier period. Pretax profits at the consumer banking, asset management and transaction banking units rose 35 percent to a combined 832 million euros.

Ackermann, 59, said in a letter to shareholders today that sales and trading will remain “a critical part of our platform,'’ though the bank may make unspecified “adjustments'’ to some business lines. He said last month that Deutsche Bank would probably scale back hiring plans. No job cuts have been announced.

Personnel expenses for the 17,181 employees at the corporate and investment bank fell 87 percent to 177 million euros in the quarter. The drop in costs reflects “lower performance-related compensation in line with business results,'’ the bank said.

`Isn’t Enough’

Ackermann has said he would expand the so-called stable businesses of consumer lending and money management to help increase pretax profit to 8.4 billion euros in 2008, excluding one-time costs and gains. The bank may miss this goal by 300 million euros, according to the median estimate of 15 analysts who updated their forecasts this month.

Deutsche Bank bought German lenders Norisbank and Berliner Bank for a combined 1.1 billion euros last year, gaining more than 640,000 clients, and acquired Britain’s Tilney Investment Management Ltd. to expand in consumer banking and money management.

Debt sales and trading revenue dropped 71 percent to 576 million euros, as “substantial market turbulence caused breakdowns in relationships between credit securities and hedging instruments,'’ the bank said. Equities trading revenue fell 38 percent to 428 million euros, missing the 1 billion-euro median forecast of eight analysts surveyed by Bloomberg, on a loss in proprietary trading and lower revenues in equity derivatives.

Asset Sales

Ackermann said last month that Deutsche Bank made mistakes during the credit boom that led to “exaggerated commitments,'’ including leveraged lending.

Losses at the investment bank were cushioned by 654 million euros of gains from selling stakes in Allianz SE, Linde Group, and its building on 60 Wall Street in Manhattan. An appreciation in the value of the bank’s option to increase its 10 percent stake in China’s Huaxia Bank Co. also contributed to the gain. In addition, the company booked about 600 million euros in tax credits in the quarter.

UBS, based in Zurich, yesterday reported its first quarterly loss in almost five years after writing down fixed-income securities and loans committed to leveraged buyouts by almost $4.7 billion. CEO Marcel Rohner said that the investment bank may not return to profitability in the fourth quarter.

Adjusting Downward

Credit Suisse Group, which reports earnings tomorrow, told shareholders on Oct. 1 that its earnings from continuing operations probably ranged from a 29 percent decline to a 6 percent increase for the quarter.

New York-based Merrill Lynch posted the biggest loss in its 93-year history last week on $8.4 billion of writedowns. Citigroup Inc., the largest U.S. bank, had $6.5 billion in costs for fixed-income trading and underwriting losses and consumer loans gone bad.

“My concern going forward is not so much about how much banks have to write down as one-offs,'’ said Jane Coffey, who helps oversee about $14 billion as head of equities at Royal London Asset Management. “It’s much more about what is the normalized business revenue going forward. That’s where we’ll have to adjust downwards from the record levels we’ve been seeing in the last two years.'’

What’s the best advice you’ve gotten?

Gary Belsky, co-author of “Why Smart People Make Big Money Mistakes and How to Correct Them: Lessons from the New Science of Behavioral Economics”:

“Be afraid when people are greedy, and greedy when people are afraid. It’s basically, ‘Buy low and sell high.’ In general, I’ve been doing better than market averages when I’ve been handling my investments. I’ve basically done that by being conservative when the market is frothing and aggressive when the market is down.”

Wayne W. Dyer, Ph.D., author of “Your Erroneous Zones” and “It’s Not What You’ve Got: Lessons for Kids on Money and Abundance”:

The lesson “for me was, first, pay yourself,” Dyer says.

While in the Navy stationed in Guam, Dyer saved 90 percent of his pay over the last 18 months he was there. “So I came home with enough money to pay tuition for four years of school and a car. Even today I pay myself first. If you want to be financially independent by the time you’re 30 years old, pay yourself first.

“When you get your paycheck, take a percentage — between 10 percent and 30 percent — and put that away,” Dyer says. “You’ll be rich enough to be financially independent within a short period of time.”
Neale S. Godfrey, author of “Money Doesn’t Grow on Trees: A Parent’s Guide to Raising Financially Responsible Children,” and chair of the Children’s Financial Network:

“Step away from the television and the magazines. All they serve to do is show you how stupid you are because you’ve missed whatever they’re talking about. It’s old news. It’s already happened.”

The advice came from her financial adviser, she recalls. “I used to call him and say, ‘Why didn’t we …?’ He’d say, ‘Stop it. Step away from the television. It’s done.’”

She realized that he was right. “By the time you see it or read it, it’s done; it’s happened,” Godfrey says. And if you listen and follow the hot news, she says, “You will buy at the top and sell at the bottom — exactly what you’re not supposed to do.”

George Kinder, Certified Financial Planner, author of “The Seven Stages of Money Maturity: Understanding the Spirit and Value of Money in Your Life,” and founder of The Kinder Institute:

“It’s about the meaning, not the money. If my investing is not really deeply tied to what I think is most important in my life,” he says, then, “the asset allocation, the estate plan, the retirement plan might as well be thrown out the window.”

His best advice: “Hire a Registered Life Planner (a financial planner with additional training in helping clients identify and reach life goals) to help you through this,” Kinder says. “Nobody can do this themselves.”

A life trainer, he says, “is trained in how to elicit from a client what is meaningful and how to keep their eyes on the prize.”

Robert Kiyosaki, co-author of “Rich Dad, Poor Dad: What the Rich Teach Their Kids About Money — That the Poor and Middle Class Do Not!”:

“My rich dad gave me lots of advice. One of the better ones: There’s good debt and bad debt. Bad debt is debt you have to pay for and makes you poor. If I use credit cards to buy new shoes it makes me poor. Good debt makes me rich and someone else pays for it.”

One example: “I’m closing on a $17 million property and financing $14 million. That $14 million is good debt. It makes me richer every month by putting $20,000 in my pocket.”

Rieva Lesonsky, co-author of “Start Your Own Business,” and senior vice president and editorial director at Entrepreneur magazine:

Lesonsky’s best advice “was from the owner of our magazine, Peter Shea,” she recalls. “He said, ‘Housing prices have gone up — get a second mortgage and pay off your debt.’ I did, and I’m debt-free.”

Peter Navarro, Ph.D., author of “The Coming China Wars: Where They Will Be Fought and How They Can Be Won,” and associate professor of economics and public policy at the University of California, Irvine:

“Take every piece of advice you get from any investment adviser with a barrel of salt. Most are trying to sell you things that you probably don’t need or want. Think for yourself.”

Navarro says he learned that lesson after a bad experience with a financial adviser. “I lost some money, then took control and never looked back,” he says.

Best financial advice

What’s the best financial advice you’ve gotten? And who gave you that advice?
Tell us

Dave Ramsey, author of “The Total Money Makeover: A Proven Plan for Financial Fitness” and host of a nationally syndicated radio show focusing on personal finance:

“A friend of mine who is a billionaire told me that he reads a book to his grandkids and I should read that book. The book is ‘The Tortoise and the Hare.’ Every time he reads the book, the tortoise wins. Slow and steady wins the race, and consistency matters. Get-rich-quick never wins.

“If you try to impress other people, you’ll lose the wealth race, as well,” Ramsey says. “It sure did give me a nice metaphor. It’s a good reminder to somebody like me to keep me in check. It has implications for debt, for mutual funds, for budgets — an overlay for everything.”

Small Business IT Support

Many small as well as medium sized companies are in need of IT support that includes everything from firewall to VPN installation as well as upgrades and also migration to other computer systems. Some small businesses also require complete network audits and for this a small business IT support provider should have the experience as well as expertise to provide necessary solutions.A small business needs a range of computer support services and will thus look for unlimited onsite support services from a safe and reliable IT support company. With qualified engineers on hand, small business IT support providers would be able to provide the necessary level of experience in installing firewalls such as Checkpoint, Watchguard as well as Cisco that are ideally suited to small businesses. There may also be entry level firewalls that will ensure that the small business keeps its data safe and along with complete security audits, antivirus & anti spam services, should take care of all of the security requirements of the small business enterprise.

You should also look for disaster recovery of your data when a server fails as well as want upgrades and possibilities to migrate to other improved systems. In addition, small business IT support also means providing resilient backup services (even remotely) and with the help of existing broadband lines and automated services, there should be no need for any tapes being sent back and forth between the client and IT support companies.

There are many IT support service companies that are capable of providing a support service to small businesses and which has a high quality of service and engineers, to ensure that they can provide support to small business networks, complete with a fast response time. You should look for companies that provide a personal touch for your network support needs, and who are proactive and also have a complete range of support packages and systems and you also need a company who can work with existing suppliers to streamline your business.

You need to look at the number of years of experience that the small business IT support company has, particularly in areas such as IT networks, the Internet as well as Network Security and who will provide professional as well as efficient service. Often, small businesses are confronted with a certain amount of difficulty in sourcing a good IT support service provider that will justify not hiring a full-time internal IT support team. This means that in case of a requirement for occasional expert support services during upgrades of networks and installing major IT systems, or even in the case of needing desktop support, you will need to have on hand an IT support service provider that can tailor a service to match your requirements and also help you stay within your budget.

Thus, you should look for a service provider that provides email support, Microsoft Networks, Network Security, network infrastructure and a team of dedicated IT professionals with experience of multiple systems and technologies.

Lee Smith writes about Small Business IT Support

Finding Business Resources

There is all kind of business related information readily available in various websites. Everyday millions of web pages are updated in internet related to small scale businesses. Entrepreneurs seems to search all kind of information through yahoo or Google and solve their problem in minutes.A few years ago, businessmen have to depend on books and from the teachings that they have learned from their business degrees to learn of business resources that they can use to manage and boost the growth of their businesses. Liquidating the profits of the business, for example, needs some knowledge in accounting. With the introduction of the computers and related technologies, however, business resources for entrepreneurs become more readily available. A number of online business resources and tools, for example, are now available for any businessman who wishes to take advantage of business resources to improve the sales and profits of his business.

Important functions in a business organization such as preparing the payroll and accounting items for sale also becomes much easier given the number of business resources and tools that can be downloaded or used through the world wide web. You will therefore find the internet a very useful source of different business resources and tools if you are looking for business resources for your company. Never underestimate the importance of learning from your business colleagues though and the value of reading materials such as books and magazines that can provide you with business resources information that you can use. Many businessmen also learn of better business resources by enrolling in business degrees.

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Getting Media Exposure for Yourself and Your Invention

One thing that helps any Inventor with a product is media exposure. The trick is getting the media interested in you and your product. The right exposure can have a two-fold success. The first is everyone now knows about your product and wants to buy it. The second is you are now known as an Inventor with a product. This exposure can draw other companies to you looking for ideas for products that fit their line.

Contact your local cable network and find out if you have any local shows you can be on as a guest. Local shows are always looking for guests. Contact your Public Radio Station near you. They want on-air guests. The great thing with them is they rerun interviews a lot to fill air time. I did an interview with NPR that they ran for 5 months at various times of the day. Contact your state paper for an interview for the Features section. Try submitting a Press Release to magazines that fit your target market.

Your local T.V. station can be a great asset. Talk with them about using you as a local expert they can contact for a quote when they run stories on inventions.

If you have local small press newspapers that are free giveaways to the public see if they want an interview. Contact your small business group in your area for other exposure opportunities. Get t-shirts with your website and product on them. Send some to the national radio shows. John Boy and Billly is a nationally syndicated radio show that is popular in my area. I sent them two t-shirts. They talked about my website for 3 minutes on air. They have a 10 million listening audience. I got 67,000 hits within 5 minutes of them mentioning me on the air. It cost me two t-shirts. Well worth the investment.

There are numerous ways to get exposure for free. You just have to be creative in your thinking. Use the same energy that helped you create your invention to get it noticed.

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