Deutsche Bank posts big loss as restructuring bites
FRANKFURT: Deutsche Bank AG plunged to a bigger than expected loss of €5.7 billion ($6.3 billion) last year, its fifth in a row, as the cost of its latest turnaround attempt hit earnings.
Misconduct scandals, a failed attempt to take on Wall Street heavyweights and, more recently, an aborted merger with Commerzbank AG mean Germany’s biggest bank is still in recovery mode more than a decade on from the global financial crisis.
The latest attempt, under chief executive officer Christian Sewing, is a €7.4-billion drive to cut 18,000 jobs, shrink its investment bank and focus on corporate as well as private banking.
“Our new strategy is gaining traction,” he said yesterday, saying revenues had stabilised in the second half of 2019 and the huge net loss was entirely down to revamp costs.
But the €1.6 billion loss in the fourth quarter was larger than analysts’ mean forecast of €1 billion, leading the fullyear result to miss expectations of a €5 billion loss.
Revenue fell 4% in the fourth quarter to €5.3 billion and was down 8% for the year to €23.2 billion.
The quarterly figure included a 5% drop in corporate banking and a 4% decline at the private bank.
The investment bank’s cash-cow bond trading arm saw a 31% jump, a big improvement on recent quarterly falls, but less than gains at some US banks.
Deutsche Bank is aiming for annual revenue of €24.5 billion by 2022.
The bank said its cost cutting plans, another key focus for investors, were on track, with global employee numbers down by more than 4,100 last year to 87,597 full-time equivalents.
It said on Wednesday that it would halve 2019 bonuses for individual board members, and told staff this week it would delay salary raises by a few months.
Now in its 150th year, Deutsche Bank is considered one of the global financial system’s most important banks, but has been hit by a string of misconduct scandals.
Seeking to repair relations with Berlin and the general public, it last week appointed to its supervisory board former German government minister Sigmar Gabriel, who once criticised the bank for a business model built on speculation.