Deutsche Bank goes in red as economy signals alarm

FRANKFURT /BERLIN

Demonstrators protest outside German’s biggest bank, Deutsche Bank’s annual earnings press conference in Frankfurt am Main. AFP photo

Deutsche Bank, Germany’s biggest bank, said yesterday that one-off effects pushed it into the red in the fourth quarter of last year and led to a sharp drop in full-year profits.

Deutsche Bank said in a statement it ran up a loss of 2.167 billion euros ($2.9 billion) in the period from October to December, compared with a profit of 147 million euros a year earlier, as Agence France Presse (AFP) reported.
 
At a pre-tax level, too, earnings were deeply in the red to the tune of 2.569 billion euros in the October-December period compared with a year-earlier loss of 351 million euros.
 
The bottom-line loss was attributable to write-down’s of 1.9 billion euros and litigation-related charges of 1.0 billion euros, the statement explained.
 
At the same time, fourth-quarter revenues grew by 14 percent to 7.9 billion euros, Deutsche Bank told to AFP agency.
 
Deutsche Bank is currently being investigated over allegations that some of its employees were involved in rigging the Libor and Euribor interest rates.
 
And one of its co-chief executives, Juergen Fitschen, is among a number of top-ranking managers under suspicion of being privy to a scheme to avoid paying sales tax in the trading of carbon emissions certificates.
 
The fourth-quarter loss also dragged down Deutsche Bank’s bottom line for the whole of 2012, when net profit declined to 611 million euros from 4.132 billion euros the year before, the bank said.Nevertheless, Deutsche Bank said it would pay shareholders an unchanged dividend of 0.75 euros per share.
 
While several of the measures “had an expected material impact on our fourth quarter financial results, we are encouraged by the initial results,” insisted Fitschen and his co-CEO Anshu Jain.

“This development predominantly reflects strong delivery on portfolio optimization and de-risking of non-core activities, as well as model and process enhancements,” the two CEOs said.

Doubts on economy

Meanwhile, despite the German labor market remains strong, it is not translating into a significant increase in private consumption, data showed yesterday, raising doubts about the strength of a rebound in Europe’s largest economy, according to Reuters reports.
 
Federal Labour Office figures showed seasonally adjusted unemployment falling unexpectedly by 16,000 in January, breaking a long run of increases to take the jobless rate down to 6.8 percent, not far from a post-reunification low.
 
That news will be welcomed by the centre-right government of Chancellor Angela Merkel, who faces an election in September which could be strongly influenced by the state of the economy and its ability to avoid being sucked down by weakness in key European trade partners.

Gross domestic product (GDP) contracted by 0.5 percent in the fourth quarter of 2012, according to an early estimate from the Statistics Office, and the government is forecasting meagre growth of 0.4 percent this year.