Deutsche Bank is still recovering from 2015 fines, CEO says after it posts third consecutive annual loss

Key Points
  • For 2017, the German bank posted a 497 million euro loss ($621 million).
  • The results were the third consecutive annual loss for Deutsche Bank.
  • A drop in investment banking revenues as well as tax changes in the U.S. affected the bank's results.
US tax reform has had ‘visible impact’: Deutsche Bank CEO

Deutsche Bank is still recovering after being hit with billions in fines back in 2015, its chief executive officer John Cryan told CNBC, after the bank posted another year of losses on Friday morning.

The German lender reported a net loss of 2.2 billion euros ($2.75 billion) in the fourth quarter of 2017 — worse than the net loss of 1.25 billion euros that Reuters analysts had forecast.

For the year, the German bank posted a 497 million euro loss ($621 million), compared to a 290 million euro loss that Reuters analysts had estimated. This was the third consecutive annual loss for Deutsche Bank. The bank's results were impacted by a drop in investment banking as well as tax changes in the U.S.

"We are coming out (of crisis) and were it not for the U.S. tax reform whatever it was 11, 10, 11 days before the end of the year, then we would have been reporting at least a positive result at the bottom line, which psychologically always feels better than a negative result," Cryan said Friday.

He told CNBC that 2015 was the "bottom line" for the bank, when several impairments and other charges contributed to a 6 billion euro net loss.

Deutsche Bank said Friday morning that it had a non-cash charge of about 1.4 billion euros due to a valuation adjustment on its U.S. Deferred Tax Assets. Without that, the bank said it would have made a full-year net income of about 900 million euros.

On the investment banking side, the German bank said that low volatility, reduced client activity and challenging trading conditions hurt its revenues. Fourth-quarter revenues for the investment banking arm were 2.7 billion euros, down 16 percent year-on-year.

Deutsche Bank can play 'important' role in US, CEO says

The bank's shares were down by 5 percent on the earnings news.

Cryan told CNBC he doesn't understand why investors seemed so disappointed with the German bank compared to its peers.

"I don't know," he said. "In the most volatile of our business, which would probably be our fixed income sales trading and financing area, we're down 20, 21 percent against an average that's 10 percentage points north of that... I think we had a weak comparative quarter the previous year, relatively weak, so maybe there's a bit of disappointment there, but other than that we seem to be in line with most of our competitors."

However, Cryan said that the global economic momentum and the prospective of higher interest rates are making the outlook for 2018 "really strong."

"Later in the year, I think the markets will start anticipating the big move in the euro interest rate that we've all been hoping for," he said.

"The outlook from my perspective, forgetting even Deutsche Bank, the outlook for banking and economic activity is really strong."