Deutsche Bank made a €1.4 billion loss in 2016 with ‘negative news flow’ partly to blame

Deutsche Bank has tried to simplify its business, cut costs, and reduce litigation and fines from poor conduct, as part of a plan started in October 2015 by Cryan. But the bank has seen its profit margins cut by low central bank interest rates and tougher capital rules.

Shares plummeted close to 30-year lows in September after reports from the Wall Street Journal that the US Department of Justice was looking to impose a $14 billion fine for mortgage-backed security misselling in the run-up to the financial crisis.

The fine would have been more than the Deutsche Bank’s market capitalisation, sparking concerns from clients and investors alike about the bank’s financial stability. The DOJ settlement was eventually finalised at $7.2 billion.

Here are the other main points from the Deutsche Bank results:

• The bank’s core capital ratio, a measure of financial resilience, was 11.9% at year-end, up from 11.1% at the end of the third quarter 2016, the strongest for 12 quarters.
• Full-year adjusted costs were €24.7 billion, down 6%.
• Revenues in global markets, which is Deutsche Bank’s debt, equities and derivatives trading division, were down 13% in the fourth quarter.

Deutsche Bank recently told staff that it was cancelled performance-related bonuses for senior staff, citing “the financial impact of the settlement with the DoJ and our performance for the year.” Earlier this week Deutsche Bank agreed to pay US and UK regulators $628 million to settle claims it failed to stop the bank being used to launder as much as $10 billion out of Russia.