Turnaround costs push Deutsche Bank to bigger than expected loss
Deutsche Bank plunged to a bigger than expected loss of 5.7 billion euros ($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 mean Germany’s biggest bank is still in recovery mode more than a decade on from the global financial crisis.
The latest attempt, under CEO Christian Sewing, is a 7.4-billion euro drive to cut 18,000 jobs, shrink its investment bank and focus on corporate as well as private banking. But its efforts are being hindered by a faltering global economy and ultra-low euro zone interest rates.
“Our new strategy is gaining traction,” Sewing said on Thursday, noting revenues had stabilized in the second half of 2019, cost cutting was on track, the bank’s capital position had improved and the net loss was entirely down to revamp costs.
But the 1.6 billion euros loss in the fourth quarter was larger than analysts’ mean forecast of 1 billion, leading the full-year result to miss expectations of a 5 billion euros loss. The bank’s shares fell almost 3% in early trade, but had recovered to trade a fraction higher at 0920 GMT. The results conclude a turbulent decade for Deutsche, including a cumulative loss of 15 billion euros over the last five years and an 82% plunge in the shares over the decade.
In contrast, U.S. rival JPMorgan Chase & Co. posted its biggest-ever profit last year as its bond trading business bounced back in the last quarter of the year. Revenue fell 4% in the fourth quarter to 5.3 billion euros and was down 8% for the year to 23.2 billion euros.
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 U.S. banks.
https://www.reuters.com/article/us-deutsche-bank-results/turnaround-costs-push-deutsche-bank-to-bigger-than-expected-loss-idUSKBN1ZT0GH