Deutsche Bank today posted its third annual loss in a row as a previously announced €1.4bn hit from the US tax reforms and a poor investment banking performance pushed the German lender into the red.
Deutsche Bank reported a net loss of €500m (£438m) for 2017 after taking the charge related to the US changes to cross-border taxation, although corporate tax cuts will benefit future earnings. Without the charge the bank would have seen full-year net income of around €900m.
The bank reported income before taxes of €1.3bn for the full year 2017, an increase from a pre-tax loss of €810m in 2016 after reductions in impairments and litigation charges.
While the 2017 results are an improvement after losses of €6.8bn and €1.4bn over the previous two years, Deutsche's chief executive, John Cryan, said even without the tax charge the results were not satisfactory.
Full-year revenues for the bank fell by 12 per cent to €26.4bn, with part of the decline driven by sales of Hua Xia Bank, Abbey Life and Private Client Services in 2016. However, revenues after these effects are accounted for still fell by five per cent.
Costs over the year were down 16 per cent to €24.6bn, slower cost-cutting than investors had hoped for. Cryan said the fourth quarter cost cuts "did not paint an accurate picture of where we are".
Corporate and investment banking revenues fell by 16 per cent year-on-year in the fourth quarter, as revenues from bonds and currencies plummeted by 29 per cent in the face of the low volatility which has plagued investment bank trading desks.
Deutsche will carry out the partial flotation of DWS, its asset management arm, "in the earliest available window", the bank said. The asset management arm gained €16bn in inflows during 2017.
Cryan said: “In 2017 we recorded the first pre-tax profit in three years despite a challenging market environment, low interest rates and further investments in technology and controls.
He added that he believes "we are firmly on the path to producing growth and higher returns with sustained discipline on costs and risks."
Octavio Marenzi, chief executive of banking consultancy Opimas, said: "There is not really anything good that can be said about Deutsche Bank’s earnings."
Cryan will be forced "to make some more radical changes in the business if he is to survive," Marenzi added.