What's going on?

Deutsche Bank reported its highest quarterly profit in nearly a decade on Wednesday, but Germany�s biggest bank can�t relax just yet�

What does this mean?

There�s been a flurry of dealmaking in the last couple of years, but the threat of higher interest rates � which drives up the cost of borrowing � has helped bring that to a halt. That�s less than ideal for Deutsche Bank, whose revenue in its deal advisory segment fell 28% last quarter compared to the same time last year. Still, it made up for the shortfall elsewhere: its fixed income and currency trading business grew revenue by 15%, as traders took advantage of the recent market volatility. Its interest income from both corporate and private clients rose too, which � along with some savvy cost-cutting � helped bring up its overall profit by a better-than-expected 18%.

Why should I care?

For markets: Profit beats caution.
Deutsche did warn that the Ukrainian war � which is pushing global prices even higher � posed a real risk to its growth going forward, as did a weakening global economy. That might be why
the bank put aside $320 billion last quarter in case customers can�t pay back their debts. That�s three times more than it tucked away in the first quarter of 2021, and it warned it�ll add �significantly� to that stockpile throughout the year (tweet this). Investors, though, seemed to favor short-term profit over long-term caution, and they sent its stock down 6% on the news.

Zooming out: Two can play at that game.
No wonder Deutsche Bank is such a Debbie Downer: the bank warned this month that Germany � its biggest market � would fall into recession if there was a meaningful disruption to Russian gas supplies. And there could well be, given that it�s been pushing back against Russia�s demands to pay for its gas in rubles. After all, that principled move just backfired on Poland and Bulgaria: Russia�s cut them off, sending European gas prices up 20%.