By
Chimamanda U. Martha
December 15th, 2023
The performance of Deutsche Bank in the 2020 fiscal year was driven in part by the growth in the Investment Banking Unit.
German multinational investment bank and financial services firm Deutsche Bank AG (NYSE: DB) has posted a better than expected fourth-quarter 2020 earnings report. Per the official report, the firm posted a full-year profit of 1 billion euros profit before tax in the 2020 fiscal year.
Amid a restructuring plan that affected the firm’s earnings in the past quarter, the profitability of the firm in 2020 is a testament to the firm’s strategies in hope of better days ahead. The 1 billion euros profit for 2020 is a great leap when the global effects of the COVID-19 pandemic are factored in.
Deutsche Bank noted that its net profit for the Full-year is 624 million euros with the Q4 2020 net profit coming in at 189 million euros. The top German lender also recorded a growth in its core banking profitability for the year. The firm saw a Full-year 2020 Group net revenues rose 4% to 24.0 billion euros while the Fourth quarter Group net revenues grew 2% to 5.5 billion euros.
“In the most important year of our transformation, we were able to more than offset transformation-related effects and elevated credit provisions – despite the global pandemic,” said Christian Sewing, Deutsche Bank’s Chief Executive Officer. “With profit before tax of a billion euros, we’re ahead of our own expectations. We have built firm foundations for sustainable profitability, and are confident that this overall positive trend will continue in 2021, despite these challenging times.”
The firm has arguably come a long way when compared to its performance in the year-ago period. While the firm recorded a loss before tax of 2.6 billion euros, in 2019, its 1 billion euros profit before tax in 2020 comes off as a major step-up.
Deutsche Bank shares closed 0.86% higher on NYSE on Wednesday at $10.54, but are in a slight dip of 1.99% in today’s pre-market.
Deutsche Bank Saw Growth in Core Business Areas in 2020
The performance of Deutsche Bank in the 2020 fiscal year was driven in part by the growth in the Investment Banking Unit. The unit saw its net revenues shot up by 32% to 9.3 billion euros in 2020. In addition, revenues in Fixed Income & Currencies (FIC) Sales & Trading rose 28%, reflecting four consecutive quarters of double-digit growth.
The firm’s Chief Financial Officer (CFO), James von Moltke told CNBC after the earnings call that the firm has achieved all of its targets for the year. Per the report, Moltke said that while the investment banking sector was the strongest business area, both the corporate and private bank had also managed to offset the “headwinds” from low-interest rates, while the asset management business unit had seen inflows of 14 billion euros.
The impressive performance of the bank in 2020 has given the firm the confidence to anticipate a better outlook in 2021, as efforts are made to wade through the rest of the COVID-19 pandemic.