Deutsche Bank runs up unexpected heavy loss on restructuring costs

Frankfurt

DEUTSCHE Bank fell to a wider-than-expected 1.6 billion euro (S$2.4 billion) loss in the fourth quarter, pushing its loss for 2019 to 5.7 billion euros, weighed by restructuring costs.

It was the third consecutive quarterly loss and fifth straight annual loss for Germany's biggest bank.

After calling off merger talks with rival Commerzbank last year, Deutsche embarked on a 7.4-billion euro restructuring plan involving 18,000 job cuts, the closure of some businesses and a management overhaul.

Chief executive Christian Sewing, who took the helm in 2018, said: "Our new strategy is gaining traction."

Deutsche's results missed analysts' expectations for a 1 billion euro loss for the quarter and 5 billion euros for the full year.

The results conclude a turbulent decade for Deutsche, including a cumulative loss of 15 billion euros over the last five years and an 82 per cent plunge in its shares over the decade.

The shares were down 4.4 per cent in early Frankfurt trade.

In contrast, US competitor JPMorgan Chase & Co posted its biggest-ever annual profit as its bond-trading business bounced back in the last quarter of the year.

For analysts and investors, Deutsche's ability to generate revenue has been a major concern. The bank has repeatedly trimmed its outlook. Revenue fell 4 per cent in the fourth quarter to 5.3 billion euros and was down 8 per cent for the year to 23.2 billion euros. The bank aims for annual revenue of 24.5 billion euros by 2022.

Barclays said in a report ahead of the results that Deutsche's latest plan does not mark a turning point for the bank. "We think that the group will struggle to achieve the revenue aspirations presented in the recent strategy plan," it said.

Revenue at Deutsche's cash-cow bond-trading division rose 31 per cent, an improvement from recent declines but less than gains posted by some big US banks.

"We're pleased with the momentum we've seen across the board in fixed income," said Ram Nayak, Deutsche Bank's head of fixed income. "We've seen a nice uptick in our client volumes and a stabilisation of the franchise," he said.

The bank has been seeking to cut costs, which investors are watching closely. It announced on Wednesday that it would halve 2019 bonuses for individual board members. It also told employees this week it would delay salary raises by a few months.

Deutsche Bank, now in its 150th year and considered one of the global financial system's most important banks, has also been hurt by a series of scandals.

Seeking to repair relations with Berlin and the general public, it has appointed to its supervisory board former German government minister Sigmar Gabriel, who once criticised the lender for a business model built on speculation. REUTERS