Deutsche Bank posts $6.2 billion fourth-quarter loss

The fourth quarter decline contributes to the bank's first annual loss in more than 50 years.

Deutsche Bank, the biggest German bank, reported on Thursday a net loss of €4.8 billion in the fourth quarter, or $6.2 billion, compared with a profit of €953 million in the same period a year earlier, which was in line with its pre-announcement on January 14.

The bank said it had made a net loss of €3.9 billion for all of 2008, its first annual loss in more than 50 years.

"We are very disappointed at our fourth-quarter result, and at the consequent full-year net loss in 2008," chief executive Josef Ackermann said in a statement yesterday. "Operating conditions in the quarter were completely unprecedented, and exposed some weaknesses in our business model. We therefore are repositioning our platform in some core businesses."

So far, the bank has cut more than 1,200 jobs and shut down credit proprietary trading.

"Looking forward, we see continuing very difficult conditions for the global economy, posing significant challenges for our clients and for our industry," he said.

Indeed, the losses were pretty much across the board. In its corporate banking and securities unit, revenues were down €3.8 billion in the fourth quarter versus a €3.8 billion surplus in the same period last year.

Its private clients and asset management division posted revenues of €2 billion, but that was down 22% from the fourth quarter in 2007. Similarly, its asset and wealth management net revenues were €588 million, a decline of 47% versus the fourth quarter 2007.

On the up side, its global transaction banking unit's net revenues were €751 million in the quarter, up 14% versus the fourth quarter 2007, reflecting record volumes in trade finance and cash management. For the full year, revenues were a record €2.8 billion, an increase of 7%, or €189 million, compared to 2007. 

The bank said that the rising demand for trade finance products resulted in higher guarantee volumes, increased number of transactions as well as higher margins in both the guarantee and documentary business. Recent market conditions led to higher transaction volumes in the US dollar and the euro clearing business for cash management with financial institutions, resulting in additional fee income and increased net interest revenues due to higher deposit balances.

In an effort to put a best light on the report, Ackermann added in the announcement: "We remain convinced of the value and strategic importance of our 'stable' businesses. Our strong capital base, liquidity and funding position are also key assets in difficult conditions. We are convinced that Deutsche Bank will emerge successfully from the current crisis."

The bank does not break down its results regionally, although there will be some numbers available in the 144a form when that comes out for the SEC filing in a little over a month.

Ackermann has repeatedly said Deutsche does not want state assistance in handling the crisis. And to that end, the bank increased its core capital ratio to 10.1% at the end of last year, from 8.6% of total assets at the end of 2007.

It also took provisions for credit losses worth a total €1.1 billion, an increase of 76% from the previous year.