Deutsche Bank in the red for third year running

Banking giant Deutsche Bank has posted a loss for the third year running, citing short-term pain from president Trump’s tax reforms.

Germany’s biggest bank said it had been hit by a €1.4bn ($1.8bn) charge as a result of changes to the corporate tax system.

The bank reported a fourth-quarter pre-tax loss of €1.3bn, versus a loss of €2.4bn in the same quarter the previous year.

Income for the full 2017 financial year was €1.3bn before tax, versus a loss of €810m in 2016.

However, Deutsche Bank said its results were heavily affected by US tax reform. The bank had to make a non-cash charge of approximately €1.4bn arising from a valuation adjustment on its US Deferred Tax Assets (DTAs).

Deutsche Bank CEO John Cryan – ‘We believe we are firmly on the path to higher returns’ Photo: Deutsche Bank

Short-term hit

Although corporation tax is being reduced from 35% to 20-22% (the final rate has yet to be agreed), changes in the way assets are taxed are causing a big short-term hit for some companies.

The tax charge means Deutsche Bank reported a net loss of €0.5bn for 2017. Without the charge, the bank would have made full-year net income of roughly €900m, compared with a net loss of €1.4bn in 2016.

Deutsche Bank chief executive John Cryan said: “In 2017 we recorded the first pre-tax profit in three years despite a challenging market environment, low interest rates and further investments in technology and controls.

“Only a charge related to US tax reform at the end of the year meant that we had to post a full-year after-tax loss.

“We believe we are firmly on the path to producing growth and higher returns with sustained discipline on costs and risks.”