Deutsche Bank AG (ETR:DBK), the largest German bank, report fourth quarter profits had risen after record losses the year before, where the banking giant lost EUR 4.8 billion.
Net profits rose to $1.8 billion for the quarter, surpassing estimates, but not impressing many in the markets, as a one-off tax was a large part of the picture. Most of that tax was related to deferred tax assets in America.
After the 554 million euro tax gain for the quarter, the actual pretax profits of the company came to 397 million euros; much weaker than its major global competitors, causing concern rather than positive outlooks going forward.
Chief Executive Officer Josef Ackermann countered concerns by saying January trading numbers had improved, giving him hope that 2010 should be a decent year for the investment banking arm of the company, although he tempered that with the cautionary note that it will take time to work through the ongoing weak global economy.
While the numbers themselves for their investment banking revenue weren’t a disaster, as the EUR 3.5 billion gain was a significant improvement from the EUR 3 billion loss in the fourth quarter of 2008, what concerned analysts was the drop from the last three quarters where they generated net revenue of EUR 5 billion.
Ackermann said the reasons for the lower numbers was the clients simply cut back on trading over the last couple of months of the fourth quarter, and margins were more level because things were much less volatile, i.e. less fees and commissions. Ackermann says they are temporary events and will change in 2010.
Annual pretax profits came to EUR 5.2 billion, equal to EUR 7.59 a share, a major improvement over pretax losses of EUR 5.7 billion for 2008.
Concerning the Tier 1 ratio of the bank, it increased to 12.6 percent at the end of 2009, an increase from the 10.1 percent recorded a year earlier. The Core Tier 1 ration, which is considered more important by analysts, rose to 8.7 percent as of the end of 2009, up from 7 percent the year before.
