A statue is pictured next to the logo of Germany’s Deutsche Bank on September 30, 2016 in Frankfurt, Germany.
Kai Pfaffenbach | reuters
Deutsche Bank Ltd reported its 10th straight quarter of profit on Thursday, buoyed by higher interest rates and favorable market conditions.
Deutsche Bank reported net profit attributable to shareholders of 1.8 billion euros ($1.98 billion) for the fourth quarter, bringing its annual net income for 2022 to 5 billion euros, up 159% from the previous year.
The German lender nearly doubled a consensus estimate among analysts polled by Reuters of 910.93 million euros in net profit for the fourth quarter, and exceeded projections for 4.29 billion euros on the year.
In 2019, Deutsche Bank launched a comprehensive restructuring plan To reduce costs and improve profitability, including exiting its global equity sales and trading operations, downsizing its investment banking and cutting about 18,000 jobs by the end of 2022.
The annual result marked a significant improvement from the 1.9 billion euros reported in 2021, and CEO Christian Sewing said the bank had “successfully transformed” over the past three and a half years.
“By refocusing our business around core strengths, we have become significantly more profitable, better balanced and more cost-effective. In 2022, we will demonstrate this by delivering our best results for fifteen years,” Sewing said in a statement on Thursday. Did.”
“Thanks to the disciplined execution of our strategy, we have been able to support our clients through extremely challenging conditions, proving our resilience with strong risk discipline and strong capital management.”
Post-tax return on average tangible shareholders’ equity (RoTE), a key metric being recognized in Tailoring’s transformation efforts, was 9.4% for the full year, up from 3.8% in 2021. Deutsche also recommended a shareholder dividend of 30 cents per share, up from 20 cents per share in 2021.
Here are other quarterly highlights:
- Loan loss provisions stood at EUR 351 million compared to EUR 254 million in the fourth quarter of 2021.
- The Common Equity Tier 1 (CET1) ratio – a measure of bank solvency – stood at 13.4% compared to 13.2% at the end of the previous year.
- Total net revenue was €6.3 billion, up 7% from €5.9 billion for the same period in 2021, bringing the annual total to €27.2 billion in 2022.
Deutsche’s corporate banking unit reported a 39% increase in net interest income, “aided by higher interest rates, strong operating performance, business growth and favorable FX movements.”,
Some tailwinds were offset by a slowdown in dealmaking affecting the broader industry in recent months.
“The fourth quarter was a bit down for us in November and December, but still a record quarter in our FIC (fixed income and currency) business for the fourth quarter, 8.9 billion [euros] for the full year,” CFO James von Moltke told CNBC on Thursday.
“We’re thrilled with that performance but … it was slightly below analyst expectations and our guidance for year-end.”
He added that January was a month of strong performance for the bank’s trading portfolios as markets remained volatile.
“What gives us some encouragement is that our general view, which was that volatility and positions in the macro businesses will ease over time, but if you look at that from a revenue perspective with increased activity in micro areas like credit, M&A, equity, It will be changed if we like. And the debt issuance too,” Deutsche Bank CFO told CNBC’s Annette Weisbach.
“We see that still as a thesis of what ’23 will look like,” he said.