Deutsche Bank, Germany’s biggest lender, yesterday reported a bottom line in the black for the first time in four years for last year, with a cost-cutting drive delivering results even as revenues fell.
The firm reported 267 million euros (US$305.68 million) net profit, compared with a loss of 751 million in 2017.
The result was short of expectations of 505 million euros from analysts surveyed by Factset.
Pretax profits at the firm were up 8 percent year-on-year at 1.3 billion euros.
However, revenues fell four percent, to 25.3 billion euros, with Deutsche blaming a fourth quarter marked by “challenging financial markets” and “negative” headlines, including a raid by prosecutors on the bank’s Frankfurt headquarters in November last year.
Between October and December, the firm reported a net loss of 425 million euros.
Nevertheless, “our return to profitability shows that Deutsche Bank is on the right track,” chief executive Christian Sewing said in a statement, adding that he aims to “grow profitability substantially” this year.
Sewing was named CEO early last year, after the bank struggled for years to escape financial woes and a thicket of legal entanglements dating back to the years before the 2008 financial crisis.
He has launched a new round of restructuring to focus on the German home market, cut costs and slash the headcount.
Almost 6,000 departures last year brought the payroll down to 91,700, while the bank reduced costs 5 percent to 23.5 billion euros.
The bank’s turnaround might not be advancing quickly enough for some shareholders and the German government, which has said that it wants strong lenders to support the country’s firms in their international business.
Bloomberg News on Thursday reported that executives’ talks with Berlin over a possible merger with partially state-owned rival Commerzbank have “intensified” over the past few months.
In the bank’s different divisions, operating profit at the retail and commercial banking unit was roughly flat, while the flagship corporate and investment banking unit tumbled 8 percent.
There was a steeper fall for the smaller asset management arm, whose profits shed 14 percent.
Deutsche added that by the end of the year, it had “wholly or partially resolved 19 of the 20 most significant” looming legal risks identified in 2016, with 1.2 billion euros of provisions set aside for litigation costs.
The group this year aims to cut costs to 21.8 billion euros, compared with a previous target of 22 billion, while shrinking its workforce to “well below” 90,000.
In financial terms, Deutsche Bank is to target a return on tangible equity of 4 percent, compared with 0.5 percent last year, it said.
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