The Postbank case is making progress, and Deutsche Bank (DB.US) expects pre-tax profit to increase by €430m in Q3.

Deutsche Bank (DB.US) will reassess its dividend plan as progress in resolving one of its largest legal issues is expected to boost third-quarter profits. Deutsche Bank said it expects third-quarter pre-tax profit to increase by €430m after it reached an agreement with 80 plaintiffs in a long-running dispute over the acquisition of Postbank, the former postal bank. “In the context of an improved capital plan, we will review our distribution plan,” a spokesman said in a statement.

The bank’s shares briefly rose 3.1 per cent after the announcement, before falling back to trade up 2.3 per cent at $16.03 at the time of writing. The company was forced to break its promise last quarter when it set aside €1.3bn for the Postbank case, leading to its first quarterly loss in four years.

Alison Williams, a Bloomberg Intelligence analyst, said in a Thursday note that “a significant portion” of the terms had been released, meaning there was “upside potential” for more buybacks later this year or in early 2025. The settlement amount was “more favourable than previously expected”, she said.

Deutsche Bank has reached an agreement with the plaintiffs, who account for nearly 60 per cent of the total claims in a lawsuit that has been pending for more than a decade. The bank said the average settlement would consume about 45 per cent of the reserves it has set aside for these cases.

Analysts had forecast pre-tax income of about €1.8bn for the third quarter before the announcement, according to data collected.

The Postbank litigation has been outstanding since Deutsche Bank took full control of the German retail bank in 2010. The plaintiffs are former investors in the bank who are seeking a higher price than the €25 per share they received.

Lawyers for another group of plaintiffs rejected Deutsche Bank’s settlement offer last week, calling it “dead on arrival”. The group’s case is being heard by a court in Cologne, which on Monday postponed a ruling until October.

Deutsche Bank began acquiring Postbank, which has millions of customers, during the global financial crisis in 2008 but has been unable to fully integrate it and has had IT system problems during the merger process that have led to problems such as large numbers of customers being unable to access their accounts and accounts being locked automatically. The investors’ lawsuit has led Deutsche Bank to set aside €1.3bn in provisions.