Germany’s largest bank Deutsche beat earnings forecast with unexpected profits.
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[DeutscheBank] - Due to lower than anticipated charges on litigation, Deutsche Bank was able to release a fourth-quarter profit statement of €441 million against a forecast from FactSet who had expected a loss of €155 million, and versus an actual loss of €1.365 billion in the same quarter the year before.
The volatile markets this past quarter allowed higher revenues from its investment banking division from trading bonds and foreign exchange, but litigation is still a dark cloud over Deutsche Bank’s head as Co-CEO Anshu Jain cautioned Thursday that litigation expenses "will remain a challenge in 2015". Fines and settlements fell to €207 million in the last quarter compared to €1.111 billion in the fourth quarter the year before. However, €330m has been set aside to cover claims arising from consumer loan contracts with the bank noting, “Appropriate provisions for loan processing fees were created in 2014. On this basis, no further impact is expected in 2015 and beyond.”
Overall revenues for the quarter rose 19% to €7.834 billion with shares at €0.31 per share.
For the full year 2014, net income rose to €1.691 billion from €681 million in 2013.
Markets closed at 24.96 on Wednesday to open with an upward gap at 25.69, reaching subsequent highs on Thursday of 29.90.
Speculation on a potential split in Deutsche Bank that would see Postbank retail operations gaining independence may be part of a greater strategy overhaul but the bank will not be releasing details of any plans until the end of the second quarter.
In the meantime, Deutsche’s goal of providing a return on equity of 12% by 2016 may be achievable if tougher regulation since the recession and an increase in litigation do not impede the bank further. In 2014, the bank only provided a post-tax return of 2.7%.
MT4 chart: DeutscheBank
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