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GERMANY-BANKING-EARNINGS-DEUTSCHEBANK-LEAD
Deutsche Bank reports first annual profit in four years
FRANKFURT AM MAIN, Feb 1, 2019 (BSS/AFP) – Germany’s biggest lender
Deutsche Bank reported Friday a 2018 bottom line in the black for the first
time in four years, with a cost-cutting drive delivering results even as
revenues fell.
The firm reported 267 million euros ($305 million) net profit, compared
with a loss of 751 million in 2017.
The result was short of expectations of 505 million euros from analysts
surveyed by Factset.
Pre-tax profits at the financial firm were up eight percent year-on-year,
at 1.3 billion euros.
But revenues fell four percent, to 25.3 billion euros, with Deutsche
blaming a fourth quarter marked by “challenging financial markets” and
“negative” headlines, including a November raid by prosecutors on the bank’s
Frankfurt headquarters.
Between October and December, the firm reported a net loss of 425 million
euros.
– ‘On the right track’ –
Nevertheless, “our return to profitability shows that Deutsche Bank is on
the right track,” chief executive Christian Sewing said in a statement,
adding that he aims to “grow profitability substantially” in 2019.
Sewing was named CEO in early 2018 after the bank struggled for years to
escape financial woes and a thicket of legal entanglements dating back to the
years before the 2008 financial crisis.
He has launched a new round of restructuring to focus on home market
Germany, cut costs and slash headcount.
Almost 6,000 departures in 2018 brought the payroll down to 91,700, while
Deutsche reduced costs five percent, to 23.5 billion euros.
The bank’s turnaround may not be advancing quickly enough for some
shareholders and the German government, which has said it wants strong
lenders to support the country’s firms in their international business.
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Bloomberg News reported Thursday that executives’ talks with Berlin over a
possible merger with partially state-owned rival Commerzbank have
“intensified” in recent months.
In the bank’s different divisions, operating profit at the retail and
commercial banking unit was roughly flat, while the flagship corporate and
investment bank unit tumbled eight percent.
There was a steeper fall for the smaller asset management arm, whose
profits shed 14 percent.
Deutsche added that by the end of the year, it had “wholly or partially
resolved 19 of the 20 most significant” looming legal risks identified in
2016, with 1.2 billion euros of provisions set aside for litigation costs.
Looking ahead to 2019, the group aims to cut costs to 21.8 billion euros,
compared with a previous target of 22 billion, while shrinking its workforce
to “well below” 90,000.
In financial terms, Deutsche will target a return on tangible equity of
four percent, compared with 0.5 percent in 2018.
BSS/AFP/HR/1415