Deutsche Bank smashes profit expectations in fourth quarter as higher interest rates bolster revenue
Deutsche Bank on Thursday reported its 10th straight quarter of profit, receiving a boost from higher interest rates and favorable market conditions.
Deutsche Bank reported a 1.8 billion euro ($1.98 billion) net profit attributable to shareholders for the fourth quarter, bringing its annual net income for 2022 to 5 billion euros, a 159% increase from the previous year.
The German lender almost doubled a consensus estimate among analysts polled by Reuters of 910.93 million euro net profit for the fourth quarter, and exceeded a projection of 4.29 billion euros on the year.
In 2019, Deutsche Bank launched a sweeping restructuring plan to reduce costs and improve profitability, which involved exiting its global equities sales and trading operations, scaling back its investment banking and slashing around 18,000 jobs by the end of 2022.
The annual result marks a significant improvement from the 1.9 billion euros reported in 2021, and CEO Christian Sewing said the the bank had been "successfully transformed" over the last three and a half years.
"By refocusing our business around core strengths we have become significantly more profitable, better balanced and more cost-efficient. In 2022, we demonstrated this by delivering our best results for fifteen years," Sewing said in a statement Thursday.
"Thanks to disciplined execution of our strategy, we have been able to support our clients through highly challenging conditions, proving our resilience with strong risk discipline and sound capital management."
Here are the other quarterly highlights:
- Loan loss provisions stood at 351 million euros, compared to 254 million euros in the fourth quarter of 2021.
- Common equity tier 1 (CET1) ratio — a measure of bank solvency — came in at 13.4%, compared to 13.2% at the end of the previous year.
- Total net revenue was 6.3 billion euros, up 7% from 5.9 billion euros for the same period in 2021, bringing the annual total to 27.2 billion euros in 2022.
Deutsche's corporate banking unit posted a 39% growth in net interest income, aided by "higher interest rates, strong operating performance, business growth and favorable FX movements."
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