Business, Finance & Economics

Euro crisis impacts on Deutsche Bank profits


Josef Ackermann, CEO of Deutsche Bank, delivers a speech during the 'Euro Finance Week' in Frankfurt am Main, Germany, on November 14, 2011.


Frank Rumpenhorst

BERLIN, Germany — Deutsche Bank CEO Josef Ackermann had some bad news to report on Thursday in Frankfurt. Not even Germany’s biggest bank is immune from the euro crisis, with the bank suffering a slump in profits in the fourth quarter of last year.

The bank booked a net income of 186 million euros ($245.06 million) for the last quarter of 2011, down 69 percent from 2010. After payments to minority shareholders, the bottom-line figure was 147 million euros, down 76 percent year-on-year.

The results for the year as a whole were an improvement on 2010, with profits increasing by 86 percent from 2.3 billion euros to 4.3 billion euros and revenue up 16 percent to 33.2 billion euros, on a pre-tax basis the bank actually made a loss of 351 million euros. It only showed a profit because of 537 million euros in tax benefits.

It was a disappointing farewell for Ackermann, who steps down in May. He told reporters in Frankfurt at his last annual press conference that "we had to face extremely adverse external circumstances in the second half of 2011."

The results were partly a reflection of the pessimism that reigned in the final weeks of last year about the euro zone debt crisis, as well as a contraction of the economy.

“The scale of the economic slowdown in Europe and around the world will largely depend on further progress in solving the sovereign debt crisis,” Ackermann said.

In fact, it was ordinary retail banking that had been the stronger performer at Deutsche Bank, compared to the poor showing in the investment banking sector of the business. Ackermann said "classic" banking contributed 56 percent of the company's profits for the full year.

Revenues were "severely affected by lower issuance volumes and less deal activity," Ackermann said. "Markets influenced by political developments, high volatility and an impending economic slowdown weighed heavily on mergers and acquisitions as well as equity and debt origination businesses."

The head of investment banking, Anshu Jain, will take over as co-CEO with Juergen Fitschen when Ackermann steps down in May, after 10 years at the helm.