FILE - In this Oct. 30, 2014 file picture the Deutsche Bank headquarters are photographed in Frankfurt, Germany. The bank will announce the latest figures Friday, Feb. 2, 2018. (AP Photo/Michael Probst, File)

Tax issue pushes Deutsche Bank to third straight annual loss

February 02, 2018 - 2:51 am

FRANKFURT, Germany (AP) — Deutsche Bank, Germany's largest, is reporting its third straight year of net losses due to a 1.4 billion-euro charge resulting from new U.S. corporate tax legislation.

The net loss was 497 million euros. The bank said Friday it would have shown a net profit of 900 million euros if it hadn't been forced to revalue deferred tax assets by the U.S. tax law, which cut the corporate tax rate. The bank said the new tax regime would be positive for its earnings in the future.

The results showed the bank, a pillar of Germany's economy, still struggling to turn solid profits after years of wrenching restructuring and legal trouble.

Deutsche Bank has seen its earnings eroded by a low interest rate environment that squeezes interest margins; by charges for past misconduct, including a $7.2 billion settlement with U.S. authorities over complex securities based on house mortgages, and by new regulatory and compliance burdens aimed at stabilizing the banking system after the global financial crisis. It has also taken write-downs and losses on businesses and investments that it decided to shed as it refocused its business and reduced risky holdings. The bank has slashed its workforce and withdrawn from doing business in some countries.

CEO John Cryan said that earnings were helped by dwindling expenses for litigation resulting from past misconduct and by lower asset impairments. He said that "we are firmly on the path to producing growth and higher results."

The bank's fourth-quarter loss of 2.2 billion euros reflected the tax charge — but also weakness in key businesses such as bond and currency trading, where income fell 29 percent.

Unusually low market volatility during the fourth quarter led to lower client activity and thus less revenue for the bank. Equity sales and trading also fell, by 25 percent year on year.

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