Deutsche Bank posts forecast-beating profit of $1.98 billion, but revenue disappoints

On an after-tax measure, it reported EUR1.98 billion, well ahead of expectations of EUR1.10 billion, according to a company-provided consensus estimate.

The bank said profits were helped by a EUR1.4 billion tax benefit from a deferred-tax-asset valuation adjustment, driven by strong U.S. performance.

The quarter was also helped by a gain of around EUR310 million on the sale of Deutsche Bank Financial Advisors in Italy, the Frankfurt-based company said.

The results come after a cost-cutting strategy implemented in 2019, which included job cuts and divestments and curtailing its investment-banking operations.

Revenue ticked up 7% on year to EUR6.32 billion, with a 39% growth in net interest income at its corporate banking unit, helped by rate hikes, strong operating performance, and favorable foreign-exchange movements, it said.

But revenue overall lagged expectations of EUR6.50 billion.

At its investment bank, revenue fell 12% on year, as merger and equities advisory services slumped, but fixed-income revenue reached its highest quarter for more than ten years, it said.

Costs were contained, the bank added, with a 7% year-on-year reduction in noninterest expenses in 4Q.

But provisions for credit losses, amid what it called a more challenging market environment, ticked up to EUR351 million from EUR254 million.

Post-tax return on tangible equity in the quarter was 13.1%, and 9.4% in 2022 overall, meaning the lender surpassed its full-year target of 8%.

Its common equity tier 1 ratio, a measure of financial strength, rose to 13.4% from 13.3% at the end of the third quarter.

It declared a full-year dividend of 30 European cents, up from 20 cents in 2021.

“We are well-equipped to deliver sustainable growth and returns to shareholders in the years ahead,” Chief Executive Christian Sewing said.

Write to Ed Frankl at edward.frankl@dowjones.com