New accounting rule pushes Deutsche Bank into profit

Taking advantage of new accounting rules has shifted Deutsche Bank into a profit instead of a loss.

The bank reclassified 25bn Euros (£19.7bn) of assets as loans it will hold until maturity. The shift allowed it to avoid 845m Euros of writedowns on some of its assets.

Avoiding the writedown helped raise net income by 536m Euros and led to it posting a quarterly net income of 414m euros.

The new accounting provisions allowed the bank to have a 'more proper treatment' of its assets, said its CFO Stefan Krause, reported the FT.

It had previously classified some assets as 'trading', which meant they were valued at market price through the profit and loss account. The assets are now described as 'available for sale', which is still at market value but the price movements are held on the balance sheet.

The provision is an easing of the controversial fair value mark-to-market accounting.

On Wednesday Schroders reclassified some of its assets, avoiding a £50m to its quarterly profits.

Further reading:

Asset reclassification helps Schroders avoid £49.9m loss

IASB confirms new reclassification rules