FRANKFURT (Business News) - Deutsche Bank posted a fourth-quarter pretax loss after investment banking wilted amid the sovereign debt crisis, and as bad investments and litigation charges spoiled Josef Ackermann's final earnings presentation as chief executive.
Deutsche Bank's pretax loss of 351 million euros ($ 463 million) compared with a 707 million euro profit in the year-earlier quarter and was well below the 1.05 billion euro profit forecast in a Business News poll of banks and brokerages.
"The results are a catastrophe," said analyst Dirk Becker from brokerage Kepler, adding the bank's results would have more or less met consensus without unexpected items.
Deutsche Bank's cash cow -- revenue from trading debt products -- was down 38 percent in the quarter. The bank also set aside 380 million euros for litigation in the corporate banking and securities division.
Peers such as Morgan Stanley, Goldman Sachs, JPMorgan and Bank of America have also posted lackluster trading and investment banking revenue in the fourth quarter as clients shunned capital markets and put off deals because of the European debt crisis.
One bright spot for Deutsche were the so-called "classical banking" businesses such as private banking, cash management and treasury services.
However, a pretax profit of 392 million from asset and wealth management and retail banking failed to offset a 422 million euros pretax loss from the corporate banking and securities division, the investment banking unit.
Writedowns from holdings in pharmaceuticals company Actavis, Cosmopolitan casinos and wealth manager BHF bank led to a pretax loss of 722 million euros in the corporate investments division.
The results come before Ackermann hands the reins of Germany's flagship lender to investment banker Anshu Jain and Germany chief Juergen Fitschen, who are due to take over at the helm as co-chief executives in May.
ACKERMANN'S DECADE
In his decade at the top of Deutsche, Ackermann transformed it from being a German lender specialized in serving industrial companies into an international investment bank with retail banking, asset management and wealth management operations.
In October, Deutsche Bank scrapped an ambitious full-year target of achieving 10 billion euros profit before tax from its core businesses, saying it was no longer within reach as the European debt crisis roiled global markets.
Full-year pretax profit in its core businesses stood at 6.6 billion euros.
Ackermann, a 63-year-old Swiss, joined Deutsche Bank in 1996 and became chief executive in 2002 overseeing four phases of transformation including a shift in strategy with a focus on shareholder value.
When Ackermann took over, the bank's share price was at about 70 euros. On Thursday, Deutsche Bank shares were down 2 percent at 33.36 euros by 3:09 a.m. ET, underperforming a firmer sector index.
In the early stages of his career, Ackermann aggressively expanded investment banking and cut the bank's dependence on German revenues through global expansion and by unwinding a portfolio of German industrial holdings.
As an advocate of shareholder value in Germany he faced opposition from politicians who said this focus on profitability was not compatible with the "social market economy."
Later, Ackermann set an ambitious target of raising profitability to a pretax return on average active equity of 25 percent, which he first achieved in 2005.
By now, such goals have become harder to achieve as regulators ask lenders to hold more capital reserves to cover potential losses. Deutsche Bank's core tier 1 ratio stood at 9.5 percent at the end of 2011.
Ackermann has said in the past that he wants to plug a 3.2 billion-euro capital shortfall identified by the European Banking Authority mainly by retaining earnings.
The bank said it will still propose to pay shareholders a stable dividend of 0.75 euros a share.
Related Video :
Video Rating: 5 / 5
{ 0 comments... Views All / Send Comment! }
Posting Komentar