Deutsche Bank sees Q4 profits fall 76% as crisis curbs trading

Deutsche Bank AG, Germany’s largest bank, said fourth-quarter profit fell 76%, more than analysts estimated, as Europe’s debt crisis curbed trading and the company wrote down holdings.

The bank fell as much as 3.1% in Frankfurt trading after reporting net income of €147 million, below the €556m average estimate of 12 analysts surveyed by Bloomberg. The investment bank posted a €422m pretax loss.

Chief executive Josef Ackermann, who steps down in May, said 2012 will be another “challenging year.” With his departure approaching, Deutsche Bank set aside funds for litigation and wrote down holdings in Greek government bonds, Icelandic generic drug maker Actavis Group hf, a Las Vegas casino and its BHF-Bank AG unit. The charges led to a loss of €722m at the corporate investments unit.

“Ackermann might be trying to clear the slate for the new management, but it still doesn’t look pretty,” said Dirk Becker, an analyst with Kepler Capital Markets in Frankfurt.

Anshu Jain, who takes over as co-chief executive with Juergen Fitschen in May, told reporters yesterday at a press conference in Frankfurt that January was “more gratifying” for the investment bank than the second half of 2011.

Deutsche Bank wasn’t alone in reporting lower profit in the final three months of last year. New York-based JPMorgan Chase & Co, the biggest US bank by assets, posted a 23% decline in profit on lower investment-banking fees and revenue from trading stocks and bonds. Earnings at Goldman Sachs Group Inc, also based in New York, dropped 58%, leading the firm to cut compensation in response to falling revenue. Among the five largest Wall Street banks, only Morgan Stanley posted an increase in trading income, excluding accounting gains, in 2011.

Deutsche Bank scrapped its forecast for operating pretax profit of €10 billion for 2011 in November and announced 500 job cuts amid a “significant and unabated slowdown in client activity.” Ackermann’s purchase of Deutsche Postbank AG and Sal Oppenheim Group to build up consumer-banking and wealth-management have failed to make up for lower investment banking.