In turnaround, Deutsche Bank posts 735m euro profitBusiness | 1 Feb 2019 3:45 pm
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 today it made net profit of 341 million euros, 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.
Chief executive 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 percent over the past 12 months. Shares fell 4.4 percent 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 says 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 says 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 as part of an investigation into suspicions bank employees helped set up offshore accounts use 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.
The bank was also fined more than US$600 million by U.S. and U.K. authorities in January 2017 for allowing customers to transfer US$10 billion out of Russia in what regulators said was "highly suggestive of financial crime.''
It has also received an inquiry from the financial services and intelligence committees of the U.S. House of Representatives. Maxine Waters, a Democrat who took over the finance committee chair after Democrats won the House in November's election, said in November she wanted to ask Deutsche Bank about its loans to the business ventures of President Donald Trump and seek more information about the Russian money laundering case.
The bank says that it is "engaged in a productive dialogue with those committees'' and that it is ``committed to providing appropriate information to all authorized investigations.'' -AP