LEAD: Debt crisis hits Deutsche Bank fourth-quarter profit

Feb 2, 2012, 14:23 GMT

Frankfurt - Deutsche Bank, Germany's biggest bank, said on Thursday its fourth-quarter profit plunged 69 per cent after Europe's debt crisis hit its market trading operations.

The Frankfurt-based bank said net income dropped to 186 million euros (245 million dollars) in the final quarter of 2011, from 605 million euros in the same period a year earlier. Total fourth-quarter net revenues were down 7 per cent at 6.89 billion euros.

The results are a rather sobering farewell for Chief Executive officer Josef Ackermann, who steps down from his post at the end of May after a decade in the job.

Speaking at the bank's annual press conference, the 63-year-old Ackermann painted a rather downbeat outlook for the bank, saying it faced 'another challenging year.'

'The scale of the economic slowdown in Europe and around the world will largely depend on further progress in solving the sovereign debt crisis,' he said, referring to the eurozone.

However, in his comments at the press conference, Anshu Jain who is to take over from Ackermann as joint chief executive in May, described the performance of investment banking operations in January as 'very gratifying' after a disappointing second half of 2011.

The 48-year-old Jain, who currently heads the bank's investment banking business, is to share the chief executive job with Juergen Fitschen.

Several of Deutsche Bank's global rivals have reported weaker fourth-quarter earnings.

But unlike other banks, Deutsche Bank is not planning any layoffs in its investment banking business, Jain said.

Deutsche Bank posted a pre-tax loss of 351 million euros in the fourth quarter after reporting a pre-tax profit of 707 million euros in the same quarter of 2010.

Additional write-downs on Greek bonds, losses at its investment bank unit and charges for possible legal action in the United States hit the results.

In his comments to reporters, Ackermann appeared cautiously optimistic that Greece and private lenders would soon reach a debt deal to head off the threat of Athens defaulting.

'There is so much at stake that everyone must make a contribution,' Ackermann said.

He went on to say that resolving the Greek debt problem would ease the pressure on other heavily indebted eurozone states such as Portugal.

Ackermann also signalled that Deutsche Bank was considering further expansion in Asia, saying that the significance of the region continued to grow.

In November, Deutsche Bank abandoned its pre-tax profit forecast of 10 billion euros for 2011 and said it was cutting 500 jobs.

'Current quarter performance was severely impacted by ongoing concerns around the European sovereign crisis and an overall uncertain macroeconomic environment,' the bank said.

'This resulted in significantly reduced client activity across the industry and a decline in volumes across many products,' it added.

Income from trading bonds and other securities fell 35 per cent in the final three months of last year, while revenue from equity trading dropped 38 per cent.

However, the bank said it booked a net profit of 4.3 billion euros for the full year 2011, up from 2.3 billion euros in 2010.

Asked at the press conference whether he planned any major event to mark his departure from the helm of Germany's biggest bank, Ackermann replied: 'There is not going to be an Ackerman show.'