Deutsche Bank Reports Another Year Loss, CEO Cites Progress
FRANKFURT, Germany — Deutsche Bank’s CEO sought to convince skeptical investors that Germany’s largest lender was making progress after a turbulent year even as it posted another hefty loss in 2016.
Following a year, in which the bank’s shares have been buffeted by market speculation and its earnings lowered by large fines, John Cryan said Thursday that 2016 had been “anything but easy.”
At the bank’s annual news conference, Cryan emphasized progress in shedding risky assets, cutting costs, streamlining computer systems and resolving legal investigations over past misconduct.
He cautioned that “we are only beginning to see these achievements reflected in the financial results,” adding that “we are certainly not satisfied with these numbers.”
Investors weren’t convinced if the bank’s share price is any guide. In early afternoon trading in Frankfurt, Deutsche Bank shares were down 5.3 percent at 18.14 euros.
The share price retreat came after Deutsche Bank reported a loss of 1.4 billion euros ($1.5 billion) for all of 2016. Much of that loss was due to a fourth-quarter deficit of 1.89 billion euros largely related to the sale of its Abbey Life unit and costs associated with legal fines and penalties.
Still, that annual result was better than 2015’s loss of 6.8 billion euros when the bank had large charges for the fallen value of some of its businesses and for litigation.
Deutsche Bank’s shares have been buffeted over the past year by market fears it would be hit with a large settlement for legal issues in the United States. The bank’s shares fluctuated wildly in September and October after a news report that the U.S. mortgage settlement could be as high as $14 billion. The report led to speculation the bank might need to raise additional capital.
The bank saw its core capital ratio — a key regulatory measure of its capital buffers against unexpected losses on investments — rise to 11.9 percent from 11.1 percent at the end of the third quarter.
The bank has successfully wound down its non-core operations unit, where it had put risky assets that it sought to get rid of. And it made progress in digitalization, reporting 2.7 million client downloads of its banking apps by year end.
Deutsche Bank’s earnings have suffered as it sheds riskier activities and assets to meet tougher regulation in the wake of the financial crisis, and as it struggles to put legal and regulatory issues related to past misconduct.
The bank this month agreed to pay $7.2 billion to U.S. authorities over its sale of opaque securities based on mortgages that were blamed for helping start the global financial crisis. It has also announced job cuts and withdrawal from some less important markets.
On Tuesday the bank announced it would pay $425 million dollars to settle a money-laundering investigation by the New York State Department of Financial Services related to share trades in Moscow, London and New York.
The bank agreed to pay 163 million pounds to conclude a similar probe by Britain’s Financial Conduct Authority. Those amounts were already reflected in the bank’s set-asides for litigation costs.