Deutsche Bank rating cut by Fitch on lack of revenue recovery

[NEW YORK] Deutsche Bank had its long-term credit grade cut one level by Fitch Ratings as the lender struggles through another strategic overhaul.

The German bank's grade was reduced to BBB+ from A-, while its outlook was set at stable, Fitch said in a statement Thursday.

The lender will take "some time" to reach its earnings targets, the ratings company said.

"We no longer expect revenue to demonstrate any clear signs of franchise recovery this year, and we expect necessary further restructuring costs to continue to erode net income," Fitch analysts wrote.

Chief executive officer John Cryan announced the Frankfurt-based lender's third revamp in as many years in March, saying that he wants to restore "modest growth" by pivoting Europe's largest investment bank to corporate clients and emphasising the firm's German roots.

Deutsche Bank had its weakest quarterly revenue in 3 1/2 years in the second period and warned that revenue of its operating businesses would decline this year.

"The scale and scope of what it has to do, plus strategic revisions earlier this year, mean that Deutsche Bank has further to go to complete its business restructuring than any of the other" global universal banks, the analysts said.

S&P Global raised Deutsche Bank's rating to A- from BBB+ in March, citing a retroactive change in German law that will protect senior creditors.

The bank's credit has been rated Baa2 by Moody's Investor Services since May 2016.

BLOOMBERG