Deutsche Bank’s annual profits hit 15-year high despite fourth-quarter miss

Deutsche Bank missed analyst expectations for the fourth quarter but reported bumper results for 2022.

Revenue and profits for the full year both rose to the highest level in 15 years as Germany’s largest lender was buoyed by rising interest rates and a volatile market that boosted its important fixed income trading division.

In 2022, Deutsche’s net profit more than doubled to €5.7bn, exceeding analyst expectations by more than €1bn. That was helped by a €1.4bn accounting tailwind from a revaluation of deferred tax assets in the US.

However, the fixed income trading division lost steam after nine quarters of winning market share. Its revenue was 27 per cent higher than a year earlier, a little below the average 28 per cent at the five biggest US investment banks. As a result, the lender missed analyst expectations for revenue and pre-tax profit in the last quarter of the year, and costs were ahead of expectations.

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The bank was also hit by additional costs linked to “ongoing regulatory discussions . . . concerning adherence to prior orders and settlements related to sanctions and embargoes and AML compliance, and remedial agreements and obligations related to risk management issues,” it said in a statement.

At the end of a four-year restructuring plan, the lender’s return on tangible equity rose to 9.4 per cent of risk weighted assets, well above the 8 per cent it has targeted and in touching distance of its 2025 target of 10 per cent. Chief financial officer James von Moltke said he saw “good momentum on the path towards our 2025 objectives”.

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