Deutsche Bank rebounds to profit in fourth quarter on stronger results from investment bank

FRANKFURT – Deutsche Bank rebounded to make a surprise fourth-quarter profit of 441 million euros ($498 million) as it saw lower charges for settling accusations of wrongdoing.

The bank also saw higher revenues at its investment banking division from trading bonds and foreign exchange in volatile markets at the start of the October-December quarter.

The bank’s fourth-quarter earnings beat estimates among analysts surveyed by financial information provider FactSet who had expected a loss of 155 million euros.

The profit for the October-December quarter compared to a loss of 1.365 billion euros in the same quarter the year before.

Co-CEO Anshu Jain cautioned Thursday that litigation expenses “will remain a challenge in 2015” as well. The bank faces several investigations connected with allegations of manipulating foreign exchange and interest benchmarks as well as other matters. Litigation expenses for settling such cases with regulators and law enforcement has been a significant cost recently for several major global banks.

Litigation expenses for fines and settlements fell to 207 million euros from 1.111 billion euros in the fourth quarter the year before. Chief financial officer Stefan Krause said some litigation expenses may only have been delayed as investigations take longer than expected, but declined to offer a more specific forecast. “We are not in control of the timing of litigation and settlements,” Krause said on a conference call with analysts.

Overall revenues rose 19 per cent to 7.834 billion euros.

Deutsche Bank has been working to get past the investigations into past behaviour and to comply with a regulatory push to get banks to carry less risk compared to their loss-absorbing buffers. The bank has suffered a steady drag on earnings from litigation costs and from losses on non-core investments it has set aside and is selling off to remove risk from its finances.

For the full year 2014, earnings rose to 1.691 billion euros from 681 million euros in 2013. Jain praised the bank’s performance, saying its finances were more robust and that is was now “a better balanced bank,” with over 1 billion euros in earnings from each of its four main pillars: investment banking, global transaction banking, asset management, and retail banking.