Transition pushes Deutsche Bank 2010 profit lower
Germany's biggest bank, Deutsche Bank, posted Thursday a sharply lower 2010 net profit, calling the year one of transition as it added a major retail banking network to core investment bank divisions.
Deutsche Bank made a net profit of 2.3 billion euros ($3.2 billion), a statement said, a plunge of 54 percent from the 2009 net profit of five billion euros as it diversified away from its previous focus on trading activities.
In the fourth quarter of 2010, Deutsche Bank's net profit fell by more than 53 percent to 605 million euros as the bank booked charges related to acquisitions and restructuring.
In the fourth quarter of 2009, Deutsche Bank had also benefitted from an exceptional tax gain of 790 million euros.
This time around, analysts polled by Dow Jones Newswires had forecast a fourth-quarter net profit of about 800 million euros.
Deutsche Bank said it would propose an unchanged dividend of 75 euro cents per share, and its stock gained in morning trades in Frankfurt.
"2010 has been a year of investment and change for Deutsche Bank," chairman Josef Ackermann acknowledged in a statement, a reference in part to the bank's fresh focus on retail activities via an acquisition of the German Postbank.
"In the process, while again demonstrating the earnings strength of our core businesses, we greatly improved our global market position and are eminently well placed for further growth," Ackermann added.
In its investment bank unit, Deutsche Bank's net profit gained 31 percent in the fourth quarter to 4.6 billion euros.
Its private clients and asset management division also reported a 31 percent increase in fourth quarter net revenues to 2.8 billion euros.
The bank's core Tier 1 capital ratio, a measure of its ability to withstand major shocks, climbed to 12.3 percent at the end of the year from 11.5 percent at the end of September.
That was the result of a capital increase worth 10.2 billion euros and the full integration of Postbank in the parent group's results.
But Deutsche Bank's acquisition of Postbank, which has the country's biggest retail banking network, also contributed to fourth quarter expenses of 6.3 billion euros, the statement said.
Deutsche Bank took a specific charge of 2.3 billion euros in connection with the deal, along with one of 400 million linked to its acquisition of private asset managers Sal. Oppenheim and BHF.
But the bank reaffirmed its 2011 profit target of 10 billion euros and Ackermann said: "Although fully aware of the remaining risks and uncertainties in the overall economic environment we are confident that we can meet" that target.
It also sharply decreased the provisions booked against loan losses, cutting them by 52 percent for the full year to 1.3 billion euros.
Shares in the bank showed a rise of 0.96 percent to 44.85 euros to lead gainers in morning trading on the Frankfurt stock exchange, while the DAX index of leading stocks was 0.11 percent lower overall.
© 2011 AFP