* Q4 worse than expected, revenue down sharply
* CEO Cryan says not satisfied with results
* Shares down 4.8 pct in early trade (Adds comment, details, background)
FRANKFURT, Feb 2 (Reuters) - Deutsche Bank on Friday posted its third consecutive annual loss in 2017, taking a hit from challenging markets, a drop in investment bank revenue and a U.S. tax reform, after a difficult fourth quarter.
The worse-than-expected results are likely to increase pressure on Chief Executive John Cryan to turn Germany's biggest bank around.
"We believe we are firmly on the path to producing growth and higher returns with sustained discipline on costs and risks," Chief Executive John Cryan said in a statement. "We have made progress, but we are not yet satisfied with our results."
Investors have called on Cryan to cut costs, but the bank said it anticipated costs in 2018 of 23 billion euros, higher than a previously targeted 22 billion.
Last March Deutsche announced an overhaul that includes the integration of its Postbank retail bank unit with its own in-house Deutsche Bank-branded consumer bank, as well as the partial sale of its asset management unit.
On Friday it said the integration with Postbank was "on schedule" and that it would partially float its asset management unit "in the earliest available window."
Still, the bank's executives have warned that a recovery would be a long, hard slog that would take years, not quarters.
Continued weak performance at the bank has prompted some investors to question whether Cryan should be given more time to turn around the bank, after less than three years as CEO.
It reported a 2017 loss of 497 million euros ($621 million), worse than the loss of 290 million forecast by nine banks and brokerages polled by Reuters.
U.S. tax reforms prompted a non-cash tax charge of 1.4 billion euros, pushing the bank into a full-year loss.
In the fourth quarter, its net loss widened to 2.19 billion euros from 1.89 billion a year earlier and revenue slumped 19 percent to 5.7 billion euros.
Analysts had forecast a loss of 1.95 billion euros on revenue of 6.2 billion.
Its cash-cow bond-trading division saw revenue tumble 29 percent due to lower client activity in less volatile markets. Competitors saw similar declines.
The bank's shares opened down 4.8 percent on Friday.
During his tenure, Cryan has stabilized the bank, raised capital, designed an overhaul, confronted legal challenges and managed the demands of greater regulation.
But shareholders are now airing their impatience. Hendrik Leber, a fund manager with Acatis, said he liked Cryan personally. "But I don't know which direction Deutsche Bank is heading toward," he said.
"With UBS, the direction was clear with its big restructuring," Leber said. "I'm not seeing a clear strategy with Deutsche Bank."
Recently, the bank has been the focus of national debate over its intention to resume bonuses despite its full-year loss. Earlier this week, government spokesman Steffen Seibert told reporters: "Company management must of course ask what impression it leaves in public."
Compensation at the investment bank rose 45 percent in the fourth quarter to 1.29 billion euros.
Deutsche Bank has become a major player on Wall Street over the past two decades but misguided bets and poor conduct have resulted in a litigation bill of 15 billion euros ($17.6 billion) since 2009. Legal battles have ranged from its role in the marketing of U.S. mortgage-backed securities to a so-called "mirror trading" scheme that could be used for money laundering.
Last year, a looming $14 billion fine from the U.S. Department of Justice had unsettled clients and investors and prompted talk of a government bailout.
On Thursday, the U.S. Commodity Futures Trading Commission said it issued an order settling charges against Deutsche Bank Securities Inc, a unit of the bank, for attempted manipulation of the ISDAFIX benchmark and requiring the firm to pay a $70 million civil penalty.
(Reporting by Tom Sims; editing by Maria Sheahan and Jason Neely)