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Deutsche Bank Struggles to Boost Revenue After Surge in Trading

Deutsche Bank Struggles to Boost Revenue After Surge in Trading

(Bloomberg) -- Deutsche Bank AG struggled to boost revenue and reported a larger-than-expected loss in the fourth quarter, overshadowing trading gains at the investment bank as Chief Executive Officer Christian Sewing seeks to turn around the lender.

The German bank reported a higher-than-expected fourth-quarter loss of 1.5 billion euros ($1.65 billion), compared with estimates for 1.04 billion euros after taking bigger writedowns in the final three months of the year than analysts had anticipated. While trading revenue surged, the transaction bank -- at the heart of the bank’s new strategy -- and German retail revenue declined from a year ago.

Sewing last year refocused Deutsche Bank on the business of lending to companies and retail clients, only to be forced to lean more on traders again when hopes for higher interest rates didn’t materialize. While the better-than-expected trading result suggest the investment bank may be halting a slide in market share, a slump at two key pillars of Sewing’s turnaround may revive questions about the strategy.

The transaction bank, which is central to Sewing’s new focus on serving corporate clients, saw revenue decline about 6% to 942 million euros, while German retail revenue was 7% lower at 1.21 billion euros. The bank booked about 1.1 billion euros of restructuring costs into the fourth quarter including writedowns on software and real estate.

Income from buying and selling debt rose 31% from a year earlier, almost twice what analysts polled by the bank had predicted, though it couldn’t quite keep up with combined gains of more than 60% at the five biggest U.S. investment banks. The fixed-income unit, the target of cutbacks in the past years, has moved to the forefront of Sewing’s restructuring plan as low and negative interest rates hamper efforts to make more money from lending

For the full year, Deutsche Bank reported a shortfall attributable to shareholders of 5.72 billion euros, reflecting the cost of the restructuring. That’s the fifth straight year the bank ended up in the red, with combined losses now amounting to 15 billion euros. By comparison, JPMorgan Chase & Co. posted a profit of more than $36 billion last year alone, the most of any U.S. bank in history.

To contact the reporter on this story: Steven Arons in Frankfurt at sarons@bloomberg.net

To contact the editor responsible for this story: Dale Crofts at dcrofts@bloomberg.net

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