Germany’s Deutsche Bank saw net profit fall 69 percent to 186 million euros (US$245.06 million) in the fourth quarter as the eurozone debt crisis hurt its businesses in investment banking and trading stocks and bonds.
Net profit fell far short of analyst estimates compiled by FactSet of 492.5 million euros and compares unfavorably with 605 million euros in the same quarter last year.
Total net revenues were off 7 percent at 6.89 billion euro.
The results reflected the market turbulence and pessimism in the waning weeks of last year about Europe’s chances of dealing with too much government debt in some countries amid a slowing economy. The crisis has eased somewhat since the quarter ended, with stocks rising and governments finding it easier to borrow.
However, the result was still a downbeat farewell note for CEO Josef Ackermann, who was to preside over his 10th and last annual press conference yesterday before leaving his post on May 26.
The bank said that the debt crisis made investors shy away from risker investments and reduced the market activities it makes its money from. The bank’s corporate and investment bank, where its investment banking and securities trading businesses are housed, saw revenues drop 26 percent in the fourth quarter, to 3.4 billion euros from 4.6 billion euros a year earlier. Income from trading bonds and other debt securities fell 35 percent, while trading in equities such as stocks brought in 38 percent less revenue.
“Current quarter performance was severely impacted by ongoing concerns around the European sovereign crisis and an overall uncertain macroeconomic environment,” the bank said in a statement. “This resulted in significantly reduced client activity across the industry and a decline in volumes across many products.”
European officials are trying to support governments such as Italy and Spain that are struggling to maintain access to affordable borrowing so they can maintain their debt burdens without defaulting. Greece, Ireland and Portugal have had to turn to other eurozone governments and the IMF for bailout loans after fears they might default made it impossible for them to borrow at affordable rates.
Fears a government default might lead to a financial crisis and recession have caused seesaws in stock and bond prices for more than two years.