Why Deutsche Bank Closed 2016 with Losses



Deutsche Bank’s 4Q earnings

Deutsche Bank (DB) reported its fourth quarter earnings on February 2, 2017. The distressed bank reported 4Q16 losses of 1.9 billion euros, or $2.1 billion, missing analysts’ forecasts. For the full year 2016, Deutsche Bank reported losses of 1.4 billion euros, or $1.5 billion, a significant improvement from the 6.4 billion euros, or $6.9 billion, losses reported in 2015.

Deutsche Bank has been the focus of anxiety in regards to the health of the European banking system (XLF). CEO John Cryan’s efforts to turn around the bank aren’t going well. The company has announced its first full year of loss in 2015 since the 2008 recession, and the bank has a slew of litigation costs to settle. Cryan has been shrinking risky businesses and cutting down on staff-related costs and dividend payments to boost capital levels.

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Cryan said in the earnings release, “Our results for the year 2016 were heavily impacted by decisive management action taken to improve and modernize 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.”

Cryan said earlier last year that the bank may not be profitable in 2016. Further, a worsening economic outlook and a difficult operating environment are adding to its woes. European banks like Credit Suisse (CS), UBS, and RBS have also been suffering, but Deutsche Bank seems to be in deep trouble. Read on to the next part to find out what affected its third quarter earnings.


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