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Deutsche Bank reports bigger losses than expected

By Lawrence Gash

Bank’s share price up despite the news

Deutsche Bank, the leading German bank, has reported a bigger 2019 loss than it anticipated, with reorganisation costs affecting earnings.

For the fifth successive year the bank suffered a loss. It had expected to lose around €5bn (£4.2bn, $5.5bn) for 2019, but a worse than predicted fourth quarter saw this figure rise to €5.7bn.

While other major banks such as Goldman Sachs and JPMorgan Chase have enjoyed extremely strong growth and profit, Deutsche Bank has struggled. In the past decade its share price has fallen 82 per cent, while in the past five years alone it has lost a total of €15bn.

Deutsche Bank’s attempt to merge with its German competitor Commerzbank came to nothing while a number of scandals also beset the firm. The bank was forced to pay more than $20bn in fines since 2010. With its woes further compounded by the euro zone’s ultra-low interest rates and lacklustre growth, the bank has been forced to reorganise.

CEO Christian Sewing has attempted to make €7.4bn of savings by shifting the bank’s focus to corporate and private banking, slimming down the investment division and cutting 18,000 jobs across the organisation. Sewing also recently informed those still remaining at Deutsche Bank that their bonuses will be slashed and previously promised raises will be delayed.

Commenting on the latest earnings data Sewing stated: “Our new strategy is gaining traction. We’re very confident we can finance our transformation with our own resources and return to growth. I stand in front of you in a very optimistic frame of mind. We have taken a series of landmark decisions and made good progress with the most radical transformation of Deutsche Bank for two decades.”

Although initially dipping 3 per cent, Deutsche Bank’s share price has gained 3.4 per cent by early-afternoon trading to stand at 8.25. With the firm’s restructuring process around 70 per cent completed and the concomitant costs already incurred, investors are holding out to see if the largest bank in Germany can make a comeback.

FURTHER READING: JPMorgan Chase enjoys the best year for any US bank on record

FURTHER READING: Germany’s population reaches record high but growth is slowing

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