Deutsche Bank sees biggest annual profit in a decade

Deutsche Bank says it reaped its best annual profit in 10 years last year

FRANKFURT, Germany -- Deutsche Bank said Thursday it reaped its best annual profit in a decade in 2021 and had put most of the costs of its wrenching, years-long restructuring behind it. The bank underlined its recovery by announcing a dividend for 2021 and a 300 million-euro ($338 million) share buyback to return money to shareholders.

CEO Christian Sewing said Thursday the bank had created “positive momentum” in a “negative environment” during the pandemic and that “the downward spiral turned into an upward spiral” as the bank made progress toward the goals laid out more than three years ago in an extensive plan to revamp its business.

Last year, Germany's largest bank saw stronger earnings from its investment bank, which made 3.7 billion euros ($4.1 billion) in before-tax profits, a gain of 17%. And it had lower losses for loans that aren't being paid back, which fell 71% during the year against a background of low interest rates and an economic recovery from the worst of the pandemic lockdowns.

The bank said it had already accounted for 97% of its restructuring costs anticipated through the end of 2022.

In July 2019, Sewing announced a 7.4 billion-euro ($8.3 billion) restructuring that involved cutting overhead costs and thousands of jobs in an attempt to end years of uneven profits and large losses from repeated run-ins with regulatory authorities. The bank had just under 83,000 employees at year-end 2021, down from 91,737 at the end of 2018.

Progress in cutting costs slowed during the year but in some cases for positive reason such as higher business volumes and spending on computer systems and financial controls. Sewing said that such spending helped ensure the bank's compliance with anti-money laundering regulations and promoted more profitable business going forward.

“Our determination to reduce costs further has not changed,” he said.

The bank also said it would be paying higher bonuses because of the bank's stronger performance.

Sewing's 2019 plan involved shedding billions in risky investments, leaving less profitable lines of business where the bank wasn't a dominant competitor. In 2021, the unit charged with running down holdings no longer seen as parts of the bank's core activities shrank to 28 billion euros, down from 34 billion in 2020 and remained ahead of its 2022 goal.

Remaining costs for restructuring such as severance for employees being let go continued to weigh on earnings into the last months of the year, hitting fourth-quarter earnings with charges of $456 million.

Full-year net profit rose fourfold from the year before to 2.5 billion euros, the highest since 2011. Revenues rose 6% to 25.4 billion euros. For the fourth quarter, the bank managed to turn in a net quarterly profit of 82 million euros despite higher remaining restructuring expenses including employee severance. The bank proposed a dividend of 20 euro cents per share for 2021, its first since the 11-cent dividend for 2018.