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Analysts Expect Deutsche Bank To Break Profit Run In Fourth Quarter

Analysts Expect Deutsche Bank To Break Profit Run In Fourth Quarter
Analysts expect Deutsche Bank to announce a net loss when it publishes fourth-quarter profits on Thursday owing to a drop in revenue at its investment bank.
A loss would be a setback for Germany's largest bank, which had previously reported five consecutive quarters of profit, its longest such period of profits since 2012.
However, the loss is thought to be a glitch in the bank's current profit streak rather than a harbinger of something more significant. Based on the bank's consensus prediction published last week, analysts are projecting full-year net profits for 2022 and 2023.
Deutsche's return to profitability in recent quarters has demonstrated how CEO Christian Sewing's 9 billion euro makeover, which began in 2019, is paying off. Sewing has brought the bank back into profit after a decade of regulatory failures and billions of dollars in losses.
Reduced reliance on the investment bank's more unpredictable income was part of Deutsche's makeover. However, in recent quarters, the division has been the bank's top revenue generator, accounting for about 40 per cent of the bank's turnover thanks to a global trading boom and dealmaking fees.
Andreas Thomae, a portfolio manager at Deka, a German bank investor, said the investment bank has become a very reliable firm.
"Most importantly," Deutsche has "won back customers in Germany and Europe who were a little sceptical before," he said.
According to analyst forecasts, the bank would record a net loss attributable to shareholders of roughly 130 million euros ($147.20 million) in the fourth quarter. This is down from a profit of 51 million euros a year ago.
Revenues for the bank as a whole, as well as its investment bank, are expected to be down roughly 4 per cent year over year.
The fourth-quarter results of some of the nation's largest banks disappointed investors, owing in part to rising expenses that stifled profit growth.
According to UBS analysts, Deutsche's fourth-quarter results will be dominated by costs, since the bank has stated that it aims to "clear the decks of transformation charges and other costs" this year.
The year 2022 is critical for Deutsche Bank since it is the deadline for the bank to satisfy 2019 targets, such as return on tangible equity. Deutsche Bank will release a strategy review and new aims for the coming years in March.

Christopher J. Mitchell

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