FRANKFURT, Germany (AP) – Deutsche Bank made a profit in 2018 after three years of losses as it hit targets for cutting costs – but lost money in the last months of the year and faces a raft of issues including a steeply lower share price and continuing legal troubles.
The bank said yesterday it made net profit of 341 million euros (USD390 million), up from a loss of 735 million euros in 2017. It met a key goal of less than 23 billion euros in costs, coming in at 22.8 billion.
But the bank lost 409 million euros in the fourth quarter as revenue slumped from trading bonds and currencies.
CEO Christian Sewing said that “our return to profitability shows that Deutsche Bank is on the right track”. He said the bank’s next goals were to continue cutting costs and to grow profitability “substantially” this year and beyond.
Sewing took over in April from John Cryan, who left amid dissatisfaction with the slow pace of restructuring. The bank has shed employees, dumped risky assets and refocused on Europe and Germany rather than trying to compete with Wall Street investment banks.
So far, investors are not convinced. The bank’s shares have fallen 45 per cent over the past 12 months.
Shares fell 4.4 per cent on Thursday on speculation that Deutsche Bank might merge with smaller German rival Commerzbank.
Sewing, asked about a potential merger, said last week that his first goal was restoring profitability and that a merger was “beyond what I’m currently thinking of”.
Deutsche Bank’s legal troubles include inquiries from regulators about transactions related to Danske Bank, whose Estonian branch is suspected of laundering money from the former Soviet Union.
The bank said there are “no probes” involving it but that it has received several request for information from regulators and law enforcement agencies around the world and is cooperating with them.
It said it processed payments for Danske bank but terminated the relationship in 2015 after identifying suspicious activity by its clients. Authorities searched bank headquarters in November last year as part of an investigation into suspicions bank employees helped set up offshore accounts to launder money. Prosecutors said the probe emerged from documents leaked from tax havens including the 2016 ‘Panama Papers’.
Deutsche Bank said it believed it had already given the authorities all relevant information related to the Panama Papers and that it is cooperating fully.