Deutsche Bank Q4 Loss Narrows On Cost Containment

by Ike Obudulu Last updated on April 29th, 2019,

German banking giant Deutsche Bank AG (DB) on Friday reported significantly narrower net loss in its fourth quarter with lower costs, despite weakness in revenues. For fiscal 2018, the company reported a net profit, its first full-year net profit since 2014. The shares were losing around 2 percent in the morning trading in Germany.

Christian Sewing, Chief Executive Officer, said: “Our return to profitability shows that Deutsche Bank is on the right track. Now, our priority is to take the next step. In 2019 we aim not only to save costs but also to make focused investments in growth. We aim to grow profitability substantially through the current year and beyond.”

Further, citing the progress in 2018, the bank has lowered its 2019 adjusted cost target to 21.8 billion euros, compared to 22 billion euros previously. The bank reaffirmed its target to reduce the internal workforce to well below 90,000 by the end of 2019.

Additionally, Deutsche Bank reaffirmed its commitment to its plans to achieve a post-tax Return on Tangible Equity or RoTE target of above 4 percent in 2019.

The Management Board intends to recommend to the Supervisory Board a dividend of 11 cents per share in respect of 2018.

For the fourth quarter, net loss attributable to shareholders narrowed to 425 million euros, from 2.4 billion euros in the prior year quarter. The loss before tax was 319 million euros, compared to a pre-tax loss of 1.4 billion euros in the prior year quarter.

Noninterest expenses were 5.6 billion euros, down 19 percent, while adjusted costs fell 15 percent to 5.4 billion euros. This reduction was achieved across both compensation expenses and all major categories of non-compensation expenses, driven by cost initiatives.

Revenues in the fourth quarter were 5.58 billion euros, down 2 percent from 5.71 billion euros last year. The results reflected the implementation of strategic measures, a challenging market environment and negative Deutsche Bank-specific news.

In the Corporate & Investment Bank, revenues were 2.6 billion euros, down 5 percent. Global Transaction Banking revenues were 996 million euros, up 5 percent, driven by higher net interest income and transaction growth, notably in cash management.

In the Private & Commercial Bank, revenues were 2.5 billion euros, up 6 percent. In Asset Management, principally DWS, revenues were 514 million euros, down 17 percent.

Fourth-quarter provision for credit losses was higher than in earlier quarters at 252 million euros, mainly due to increased provisions on performing loans required under IFRS 9.

In Germany, Deutsche Bank shares were trading at 7.61 euros, down 1.72 percent. In the pre-market activity on the NYSE, shares were trading at $8.75, down 1.5 percent.

Leave a Reply