Deutsche Bank AG (DB) reported a fourth quarter net income of €1.3 billion ($1.9 billion) or €2.00 a share, compared to a net loss of €4.8 billion or €8.71 per share a year earlier. Results were primarily driven by a tax benefit. Additionally, the company experienced an increase in sales and trading revenue in the quarter.
The company experienced a €554 million gain from tax benefits in the reported quarter as a result of the recognition of deferred tax assets in the U.S. of €790 million.
For the full year, the bank earned €5.0 billion ($6.95 billion) or €7.59 per share. This compares with a loss of €3.9 billion or €7.61 in 2008. The results in the prior-year period were significantly impacted by the global economic crisis.
Deutsche Bank’s net revenue for the fourth quarter was €5.5 billion ($8.12 billion) compared to a negative €853 million in the prior-year quarter.
The company reported a provision for credit losses of €560 million. This represented an increase from €544 million in the prior quarter but was down from €591 million in the year ago quarter.
Deutsche Bank has also experienced a decrease in its non-interest expenses, which were €4.2 billion in the reported quarter, compared to €5.4 billion in the prior quarter and €4.8 billion in the year-ago quarter. The reported quarter figure included €225 million in costs related to the bank payroll tax announced by the U.K. government.
Income before income taxes for the quarter was €756 million, versus a loss before income taxes of €6.2 billion in the year-ago quarter.
Deutsche Bank’s Tier 1 ratio was positively impacted by retained earnings and a reduction in risk-weighted assets. Tier 1 capital ratio was 12.6% at the end of 2009, up from 11.7% at the end of the prior quarter and 10.1% at the end of 2008. Excluding hybrid instruments, the core Tier 1 ratio was 8.7% at the end of 2009, up from 8.1% at the end of the prior quarter and 7.0% at the end of 2008.
Deutsche Bank is also planning to increase the dividend. The bank’s board will recommend a dividend of 75 cents per share, compared to 50 cents for the year 2008.
The company has taken several strategic initiatives in 2009, such as the repositioning of its core business, bolstering capital levels, opportunistic acquisitions and investments in organic growth. Going forward, though, we think any significant improvement will remain restricted as a result of a sluggish recovery of the overall economy.
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