Deutsche Bank AG (DB) shares fell the most in more than six months Friday after Germany's biggest and most important lender posted its third consecutive annual loss thanks in part to a $1.8 billion charge linked to last year's U.S. corporate tax overhaul and a slump in trading revenues.
Deutsche Bank posted a full year loss of €497 million for 2017, the bank said in a statement, a figure that was notably steeper than the €290 million tally anticipated by analysts. Overall revenue fell 19% in the final three months of the year to €5.7 billion, well shy of the €6.2 billion forecast, thanks to a 29% plunge in trading revenues at its bond trading unit.
As it indicated last month, the bank also said the reduction of the U.S. corporate tax rate to 21% from 35% would force the revaluation of some of the tax credits that sit on its balance sheet and reduce its core capital base about around 10 basis points.
"Only a charge related to US tax reform at the end of the year meant that we had to post a full-year after-tax loss," said CEO John Cryan. "We believe we are firmly on the path to producing growth and higher returns with sustained discipline on costs and risks. We have made progress, but we are not yet satisfied with our results."
Deutsche Bank shares fell 4.98% in Frankfurt trading, extending declines that had kept the stock at the bottom of the DAX performance index for much of the session, to change hands at €13.83 each, the lowest since mid-September, before paring the decline to around €14.08.
The stock has sharply under-performed the Stoxx Europe Banks benchmark, which has risen 7% so far this year compared to a 13% slide for Germany's biggest bank.
The sluggishness reflects increasing speculation that Cryan has lost the support of some of his major investors, including China's HNA Group Co., following an as-yet-unsuccessful strategy revamp in March and a $9 billion capital injection. There have also been reports of a rift between Cryan and chairman Paul Achleitner over the CEO's handling of communications between the bank and HNA Group.
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