Source: Bloomberg
Deutsche Bank AG, Germany’s largest bank, reported a 76-per cent drop in fourth-quarter profit as Europe’s sovereign-debt crisis curbed trading and the company booked writedowns on holdings. The shares declined.
Net income fell to EUR147 million (US$194 million) from EUR601 million a year earlier, the Frankfurt-based company said Thursday in a statement. Earnings missed the EUR556-million average estimate of 12 analysts surveyed by Bloomberg. The investment bank had a EUR422-million pre-tax loss.
Chief Executive Officer Josef Ackermann, who is delivering full-year results for the last time before stepping down at the end of May, abandoned a goal of posting record annual profit in November as the debt crisis intensified. Deutsche Bank took charges related to litigation, Greek government bonds, Icelandic generic drug maker Actavis Group hf, a Las Vegas casino and its BHF-Bank AG unit.
“Fixed income had a poor quarter because it’s so linked to the sovereign debt crisis in Europe,” said Christopher Wheeler, a London-based analyst at Mediobanca SpA who has an “underperform” rating on the stock. “That hit them hard.”
The shares fell as much as 2.8 per cent in Frankfurt trading, and were 49 cents lower at EUR33.55 by 9:41 am. Deutsche Bank has advanced 19 per cent since the European Central Bank said December 8 it would offer unlimited three-year loans to lenders ‒ a decision Ackermann described to CNBC as important in easing some of the banking system’s “funding challenges.” Bloomberg’s 43-company European banks index climbed 16 per cent in the period.
Anshu Jain, who will take over as co-CEO with Juergen Fitschen, said last week that 2012 has started “on a mildly better note” than 2011 ended.
The investment bank’s loss compared with a EUR603-million pre-tax profit a year earlier and the EUR233-million profit estimate from nine analysts. Revenue from debt trading dropped to EUR1.04 billion from EUR1.61 billion, missing the EUR1.47-billion estimate of analysts, while equity trading revenue decreased to EUR539 million from EUR872 million.
Deutsche Bank said its core Tier capital ratio, a measure of financial strength, was 9.5 per cent under Basel 2.5 rules at the end of the year. Risk-weighted assets rose by EUR44 billion in the fourth quarter as the bank adopted the stricter rules and implemented a “safety margin taken to cover unforeseen legal risks from the financial crisis,” according to the statement.
The company plans a dividend of 75 cents a share for 2011, unchanged from 2010, the statement said.
