Deutsche Bank swings to annual profit and exceeds expectations

Deutsche Bank exceeded 2020 earnings expectations Thursday as it emerges from the coronavirus crisis, led by a strong performance in its investment banking division.

Germany’s largest lender posted a full year net profit of Euro 113 million ($ 135.7 million), while analysts expected a loss of Euro 201 million, according to Refinitiv. Deutsche reported a loss of 5.7 billion euros for 2019 when it underwent a major restructuring.

The bank posted a profit of 51 million euros in the fourth quarter, compared to analyst expectations of a loss of 325 million euros.

The bank’s CFO, James von Moltke, told CNBC shortly after the announcement that it had achieved all of its goals for the year.

Higher revenues and cost savings helped Deutsche’s investment banking division perform well, with net sales increasing 32% in 2020 to EUR 9.8 billion.

This “more than offset an increase in the provision for credit losses due to COVID-19,” the bank said in a statement.

Here are the other highlights:

• Total net revenues in the fourth quarter were 5.5 billion euros, compared to 5.35 billion euros for the same period in 2019, bringing the group’s net income for the year to 24 billion euros, an increase of 4 % compared to 2019.
• Common equity tier 1 (CET1) ratio – a measure of bank solvency – stood at 13.6%, unchanged from the fourth quarter of 2019.
• Loan loss provisions in the fourth quarter were € 251 million, compared to € 723 million in the last quarter of 2019.

“In the key year of our transformation, we were able to more than offset the transformation-related effects and increased loan loss provisions – despite the global pandemic,” said CEO Christian Sewing in the earnings report.

“We have built a solid foundation for sustainable profitability and are confident that this overall positive trend will continue into 2021, despite these challenging times.”

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