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Deutsche Bank Revenue Decline Fiduciary Assets Trust Performance Report trust companies bank trust divisions A.M. Publishing peer comparison financial institutions trust companies banks Bernard Garbo Revenue Growth Remains Solid, Asset Growth Picks Up in 2017

(October 12, 2017 --Chicago, IL) -- Gross revenue growth averaged a solid 8 percent for the first half of 2017, according to Trust Performance Report 2017's quarterly update. Asset growth averaged 5 percent in 2017 compared to the start of the year, better than the first quarter's 3 percent.

Compared to the same period in the prior year, assets grew on average 8 percent in the first half of 2017, down from 9 percent in the first quarter. While year over year comparisons are important, current performance is generally of greater value to trust bankers. The stronger uptick in asset growth in 2017 (as compared to the start of the year) is therefore good news for trust institutions.

Gross revenue growth, which rebound in the first quarter of 2017 after nearly a year of lackluster growth, continued through the second quarter. The turnabout was expected following the asset spike in late 2016--revenue growth generally lags asset growth.

Revenue growth continues to be held back by poorer performance among Peer Group 1 institutions, especially Deutsche Bank, which reported a better than 31 percent decline in gross revenues compared to the same period in 2016. However, the industry giants, the trillion-dollar institutions, on average outperformed other institutions in their peer group.

Deutsche Bank's Sharp Revenue Decline

Peer Group 1 institutions skew industry statistics, which is why TPR weights industry averages. Trillion- dollar institutions, with one exception, are heavily composed of assets in custody accounts. These assets have a very low return on assets. The other 22 institutions that comprise Peer Group 1 tend to be more diversified. This has lead to the assumption that if Peer Group 1 is not performing as well as other peer groups, the trillion- dollar institutions are to blame. This logic, however, is not supported by the data.

Revenue growth in the first quarter for the eight institutions that make up the trillion-dollar institutions was 7 percent. The remaining 22 institutions in Peer Group 1 report average revenue growth of only 1 percent; adjusting for Deutsche Bank, which reported a large decline, the average bounces up to 5 percent. Thus, it is not the largest of the large that are holding back the industry's revenue growth. Though non-trillion-dollar institutions in Peer Group 1 are generally more diversified, their percentage of managed assets is often the same or less than that of trillion-dollar institutions.

Deutsche Bank declined to comment on its large drop in revenues. The bank reported the largest dollar decline in revenues in corporate trusts and agencies.

Profit Margin and Efficiency

Profit margins continue to remain fairly stable, according to preliminary findings by FIDUCIARY EARNINGS & EXPENSES, TPR's sister publication. FEE's preliminary findings also show that while investment in training remains low, it has significantly increased over prior years. Individual and peer results varied considerably. Investment in training has been correlated with improved operating efficiency. Efficiency has been improving across most peer groups, according to FEE.

For a complete copy of the Trust Performance Report's second quarter report submit a trial order request by clicking here: Trust Performance Report

Trust Performance Report -- annual data book, published in May, provides both industry and peer group performance data by assets, gross revenue, net income, and account category. Subscribers receive quarterly updates. TPR findings are based on its annual survey of the top 1400 fiduciary institutions. For more best practices and benchmark data see TPR. For information on ordering click here or the link below.

Fiduciary Earnings & Expenses -- annual data book comparing performance among independent trust companies to that of OCC national trust companies and to bank trust divisions. For information on ordering click here or the link below.

For Sample copies of both publications click here and then, on the web page, check "Trust Performance Report."

No statement in this issue is offered as or should be construed as legal opinion or advice or as an indicator of future performance.
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