German multinational investment and financial services company, Deutsche Bank published its annual report for fiscal 2018, that ended on 31st Dec 2018.
During the period, the bank showed a weak performance achieving revenue of €25.32 billion, which is 4.3 per cent lower compared to that of 2017. Taking a look at the report, the bank has pledged to reverse the declining revenue in 2019 assuming solid economic growth during the period.
Further, the bank is also working to achieve a 4 per cent return on tangible equity, but that is fully linked to market conditions. The bank has predicted the same in the previous year, but the market conditions didn’t support the growth.
Christian Sewing, the CEO of Deutsche Bank said:
“Market conditions have improved as compared to those experienced in the fourth quarter of 2018. However, they are somewhat weaker than we had anticipated. We aim to achieve our other key performance indicators over time, consistent with becoming a simpler and safer bank.”
According to reports from Bloomberg, many analysts are skeptical on the forecast estimate by the bank and have a general consensus that the bank will report a decline in revenue and return on tangible equity of 1.2 per cent in 2019.
Deutsche Bank is not the only case, several other banks such as Societe Generale has previously revised its guidance with lower profits for its markets business, and also executive from both Citigroup and JPMorgan Chase & Co. told that they are expecting a weaker trading revenue compared to a year ago.
The report also mentions about Deutsche Bank and Commerzbank of a possible merger, and the merging of two rival banks will be a very positive move. CEO Sewing believes that the combined entity would improve the cost of funding, but job cuts coming out of the merger will be the pain points ahead. Together, the bank would employ close to 140,000 employees worldwide.
