Deutsche Bank AG’s streak of market share gains in trading snapped in the final quarter of Chief Executive Officer Christian Sewing’s turnaround plan, underscoring the need for the corporate and private bank to pick up the slack.
(Bloomberg) — Deutsche Bank AG’s streak of market share gains in trading snapped in the final quarter of Chief Executive Officer Christian Sewing’s turnaround plan, underscoring the need for the corporate and private bank to pick up the slack.
Revenue from fixed-income trading increased 27% from a year earlier, just shy of the average 28% at the five biggest US investment banks, according to a statement Thursday. That ended nine straight quarters in which Deutsche Bank’s securities unit was ahead.
The weaker-than-expected trading performance — with revenue of €1.5 billion, compared with estimates for €1.6 billion — and a slump in the business of advising on deals caused the firm to miss estimates for revenue and pretax profit in the quarter. Costs, meanwhile, were ahead of expectations.
The results conclude almost four years during which Sewing cut thousands of jobs and focused the lender on its core strengths, relying heavily on the trading business to reach a key profitability goal. With the markets rally petering out and interest rates rising, the CEO has put the onus for the coming years on the corporate and private bank.
Despite missing estimates, profit for the full year was the highest since 2007, Deutsche Bank said. The firm also exceeded Sewing’s 8% target for return on tangible equity by a wide margin, with 9.4%. Sewing had held onto that goal after abandoning various others.
Deutsche Bank joined other European lenders in getting a lift from higher interest rates in the quarter. Revenue at the corporate bank increased 30% from a year earlier, while the private bank that includes the retail business saw a 23% gain.
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