Deutsche Bank swings for annual profit, beating expectations

A Deutsche Bank AG hoists the flag outside the company’s office on Wall Street in New York.

Mark Kuzlerich | Bloomberg Getty Images

Deutsche Bank on Thursday beat earnings expectations for 2020, as it emerges from the coronovirus crisis, led by a strong performance in its investment banking division.

According to Refinitiv, Germany’s largest lender posted a full-year net profit of 113 million euros ($ 135.7 million), while analysts expected a loss of 201 million euros. Deutsche reported a loss of EUR 5.7 billion for 2019 as it was under major restructuring.

The bank posted a profit of 51 million euros for the fourth quarter, Compared to analyst expectations of a loss of EUR 325 million.

The bank said that higher revenue and cost cuts helped Deutsche’s investment banking division to perform well, with net revenue up 32% to 9.8 billion euros. Statement.

The bank’s CFO, James von Moltke, told CNBC soon after the announcement that it hit all of its targets for the year. He said that while the investment bank was the strongest business sector, both corporate and private banks had managed to compensate for “headwaves” from low interest rates, while the asset management business saw an influx of EUR 14 billion.

Although most lenders have seen strong investment banking revenue due to higher business volumes and volatility for the year, von Moltke said he expects to see a generalization in 2021.

“However, in the year so far, we have seen the momentum of the previous year as actually taking over in January, in terms of our performance and what we can see of the market environment,” he said. said.

Here are other highlights:

  • Total fourth quarter net revenue was 5.5 billion euros as compared to 5.35 billion euros for the same period in 2019, up 4% from 2019, bringing the group’s net revenues to 24 billion euros for the year.
  • The Common Equity Tier 1 (CET1) ratio – a measure of bank solvency – remained unchanged at 13.6% from the fourth quarter of 2019.
  • Provisions for fourth quarter debt losses were 251 million, versus 723 million in the last quarter of 2019.

CEO Christian Stitch said in the earnings report, “In the most important year of our change, we were more capable of change-related impacts and enhanced credit provisions, despite the global epidemic.”

“We have built a firm foundation for sustainable profitability, and believe this overall positive trend will continue in 2021 despite these challenging times.”