Thursday 2 February 2017 9:00 am

Deutsche Bank more than €1bn in the red for 2016 - but it's better than last year

Deutsche Bank has racked up losses of more than €1bn after a difficult 2016, but still improved significantly on the year before.

The figures

The struggling German banking giant reported a net loss of €1.4bn (£1.2bn) for 2016, although that is a €5.4bn improvement on 2015's €6.8bn loss.

The bank also recorded net losses of €1.9bn in its fourth quarter, again a €234m increase compared with a loss of €2.1bn for the same period the year before.

Analysts' forecasts for the bank were already bleak, with a consensus predicting a full-year net loss of €910m and €1.6bn for the fourth quarter. Some believed full-year losses could be as wide as €2.8bn.

Meanwhile, the bank's revenues for 2016 slipped to €30bn, a 10 per cent decrease on €33.5bn in 2015. Revenues for the fourth quarter inched up to €7.1bn, a six per cent increase from €6.6bn, driven partly by sales proceeds from Deutsche Bank's stake in Hua Xia Bank.

However, the bank strengthened its Common Equity Tier 1 (CET1) capital ratio, which stood at 11.9 per cent at the end of 2016, compared with 11.1 per cent at both the end of September last year and the end of 2015.

Investors were less than impressed. Shares are trading down 6.2 per cent at 17.99 in early trading.

Why it's important

To say 2016 was a tricky year for Deutsche Bank would be an understatement. Along with its ongoing restructuring efforts and the low interest rate environment, the bank also faced an unenviable number of legal issues.

Perhaps most notably, Deutsche finalised a $7.2bn (£5.7bn) payment with the US Department of Justice last month for mis-selling mortgage-backed securities, having agreed the settlement in principle last December. At one point, it was reported the US Department of Justice was pushing for the mega-fine to be an eyewatering $14bn

The German giant has already announced it will be trimming down bonuses to make the financial impact of the year more manageable, with a letter last month revealing one in four staff would not be receiving an individual bonus for their efforts in 2016, although they would still be rewarded with a group bonus. The management board has also waived its bonus for the year.

What Deutsche Bank said

John Cryan, chief executive, said:

Our results for the year 2016 were heavily impacted by decisive management action taken to improve and modernise the bank, as well as by market turbulence for Deutsche Bank. We proved our resilience in a particularly tough year.

We finished 2016 with pleasingly strong capital and liquidity ratios and we are optimistic after a promising start to this year.

In short

The numbers show it – 2016 was not Deutsche Bank's finest year, but the bank has steadied its capital position and improved on the year before.