Deutsche Bank AG beat expectations and posted a rise in fourth-quarter profit. In a further sign the bank has stabilized, it is paying a dividend to shareholders for the first time since 2019.
Like major investment banks in the U.S., Deutsche Bank posted bumper profits during the pandemic. Client activity boomed as companies raised huge amounts of capital and markets entered a furious period of trading. Those trends started to fade in recent months. But Deutsche Bank saw other units pick up steam in the fourth quarter, including its business catering to corporate clients.
The German lender said net profit rose 67% to €315 million (equivalent to $354 million) in the last three months of 2021 compared with the same quarter the year before. Analysts had forecast a profit of €26 million. Helping the results was a tax benefit of €234 million. Revenue rose 8%, even though costs rose more.
Chief Executive Christian Sewing said that the bank remains on track to meet financial targets this year, including an 8% return on tangible equity—a key metric for profitability.
Deutsche Bank launched a major overhaul in 2019 that promised to scale back its Wall Street presence and cut costs. Higher expenses related to regulatory obligations has made it harder to meet those cost goals. Like other global banks, it is also seeing compensation costs for bankers increase.
Deutsche Bank posted its second straight year of profits and the highest since 2011 at €2.5 billion, opening the door for a dividend payout of €0.20 a share. The bank also said it is buying back €300 million in shares in the first half of this year, the first step in its commitment to return €5 billion to shareholders over time.
In March Mr. Sewing will unveil the bank’s strategy and new goals for the years ahead. The bank’s bread-and-butter lending business is expected to improve as central banks around the world raise interest rates.
Negative interest rates in the eurozone have made it difficult for institutions such as Deutsche Bank to earn money on the difference between what it pays for deposits and what it charges to lend.
Deutsche Bank’s future also hinges on whether it can stay away from the types of trouble with regulators and authorities that have long dogged the bank. In December, The Wall Street Journal reported the U.S. Justice Department informed the bank that it may have violated a criminal settlement when it failed to tell prosecutors about an internal complaint over the sustainable investing business of its asset-management arm, DWS Group.
Write to Patricia Kowsmann at [email protected]
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