Germany's biggest lender has accrued a massive loss for the second year running as legal costs for past misdeeds outstripped profits from bond trading, disappointing investors who had hoped for a better result.
The troubled German banking giant on Thursday reported a net loss of 1.4 billion euros ($1.5 billion) for 2016 - down significantly from the record shortfall of 6.8 billion euros it had accumulated in the previous year, but still falling short of analysts' expectations.
Once the world's third largest lender and now ranked in sixth place, Deutsche Bank is still struggling with the impact of huge fines, lower revenues and restructuring costs.
The fourth quarter alone saw a loss of 1.9 billion euros for the bank because its balance sheet was hit by fines and compensation payments to the tune of $7.2 billion in the United States over its role in the country's mortgage crisis of 2008. The settlement was the largest payout any financial institution has so far paid for misconduct relating to the 2008 crash.
And just on Tuesday, New York and British financial regulators slapped Deutsche Bank with a $630-million penalty for alleged money laundering in Russia. As a result, the bank hiked its litigation reserves to 7.6 billion euros from 5.9 billion euros.
A rare piece of good news came from Deutsche's bond trading division where profits spiked 11 percent in the quarter, benefitting from a surge in trading across interest rate products, commodities and foreign exchange.
Hoping for a better year
Chief executive John Cryan has launched a tough restructuring plan to shed 200 branches in Germany and some 9,000 of its roughly 100,000 full-time employees. Although the costs of the program "heavily impacted" the bank's balance sheet last year, Cryan expressed the hope of improved results in 2017.
"We are optimistic after a promising start to this year," he said in a statement because "almost all businesses had a strong start in January.
Last month, the Frankfurt-based lender was forced to slash bonus payments for a quarter of employees, as it continues to face headwinds from low interest rates as well as increased regulation and higher capital requirements introduced in the wake of the financial crisis.
uhe/jd (Reuters, dpa AFP)