Business

Deutsche Bank Swings to Profit: Live Business Updates

Credit…Ralph Orlowski/Reuters

Deutsche Bank, Germany’s largest bank, reported a profit in the third quarter of 2020 after a loss a year ago as volatile financial markets caused trading revenue to surge.

The bank, which is trying to recover from years of scandals and losses, has also cut costs.

It said that it earned 309 million euros, or $364 million, from July through September, compared with a loss of 832 million euros in the third quarter of 2019.

Deutsche Bank has long been regarded as one of Europe’s most troubled big banks. The earnings, the third quarterly profit in a row, provided some reassurance that the bank and others like it are surviving the pandemic and are less likely to set off a financial crisis.

Much of the improvement in profit came from helping clients to trade debt and currencies. Fees from trading those assets increased by nearly half, the bank said. That helped offset an increase, compared with a year earlier, in the amount of money the bank set aside for problem loans.

The bank also reduced the number of employees who work at retail branches and other activities by 3,000 from a year ago, to 87,000.

Credit…Hiroko Masuike/The New York Times

The Commerce Department on Thursday will release its initial estimate of economic growth for the third quarter, and it’s going to show that the economy grew at its fastest rates since reliable records began after World War II.

But that doesn’t mean the economy has recovered from its collapse earlier this year, and it’s important to know why.

The New York Times’s Ben Casselman broke down the key elements of the report ahead of Thursday’s release. Here are some of the key factors to consider:

  • The numbers will certainly show the economy rebounding. Economists surveyed by FactSet expect that gross domestic product — the broadest measure of goods and services produced in the United States — grew about 7 percent from the second quarter, or 30 percent on an annualized basis.

  • It doesn’t make sense to consider Thursday’s report in isolation. The third quarter’s record-setting growth is effectively an echo of the second quarter’s equally unprecedented contraction, when business shutdowns and stay-at-home orders led gross domestic product to fall by 9 percent. Strong growth was inevitable as the economy began to reopen.

  • The economy is still in a hole. If G.D.P. fell by 9 percent in the second quarter and rose by about 7 percent in the third quarter, the economy is not almost back to where it started. The big drop in output in the second quarter means that third-quarter growth is being measured against a smaller base, and the economy is still 3 to 4 percent smaller than it was before the pandemic. (For comparison, the economy shrank 4 percent during the entire Great Recession a decade ago.)

  • Annualized figures are even more misleading. Gross domestic product in the United States is usually reported at an annual rate, meaning how much output would grow or shrink if that rate of change were sustained for a full year. But during periods of rapid change, annual rates can be confusing.

    In the second quarter, for example, G.D.P. fell at an annual rate of 31.4 percent. That makes it sound as if the economy shrank by nearly one-third, when in fact it shrank by a bit less than a tenth.To avoid confusion, The Times plans to emphasize simple, nonannual percentage changes from both the second quarter and the fourth quarter of last year, before the pandemic began. (We gave a more detailed explanation of this decision before the second-quarter report in July.)

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