Deutsche Bank shares slip despite profit beat as traders look to uncertain outlook

Deutsche Bank on Thursday reported its 10th straight quarter of profit, but shares retreated as analysts honed in on an uncertain outlook and weakness in the investment bank.

Deutsche Bank reported a 1.8 billion euro ($1.98 billion) net profit attributable to shareholders for the fourth quarter, bringing its annual net income for 2022 to 5 billion euros, a 159% increase from the previous year.

The German lender almost doubled a consensus estimate among analysts polled by Reuters of 910.93 million euro net profit for the fourth quarter, and exceeded a projection of 4.29 billion euros on the year.

Despite the lofty net profit figures, Deutsche Bank shares were 2.4% lower by mid-morning in Europe as analysts honed in on the uncertainty of the macroeconomic outlook, evidenced by the bank’s reluctance to issue a share buyback at this stage.

Amit Goel, co-head of European banks equity research at Barclays, characterized the results as “a bit mixed,” given that the strong revenue message for 2023 was offset by a weaker-than-expected fourth quarter in many other metrics, particularly the investment bank.

“The revenue miss vs consensus and our estimate was also largely driven by lower IB and corporate center result partly offset by better corporate bank; within the IB both FIC and origination and advisory were lower,” Goel noted.

Total revenues at the investment bank fell 12% year-on-year in the fourth quarter. Its contribution to Deutsche Bank’s core bank pre-tax profit fell 6% to 3.5 billion euros.

The bank’s full-year results follow a sweeping restructuring plan, announced in 2019, to reduce costs and improve profitability. It saw Deutsche Bank exit its global equities sales and trading operations, scaling back its investment bank and slashing around 18,000 jobs by the end of 2022.

The result marks a significant improvement…