Deutsche Bank has today posted a net loss of €1.9 billion in the fourth quarter as legal costs for past misdeeds outstripped gains from a rebound in bond trading.
Germany's flagship lender missed the higher expectations of analysts who had expected the bank to post a fourth-quarter net loss of just €1.16 billion.
The bank hiked its litigation reserves to €7.6 billion from €5.9 billion in the quarter, as it had to put more money aside for settlements such as over the sale of toxic mortgages and sham Russian trades.
Revenues at its cash cow bond trading division were up 11% in the quarter.
It benefited from a surge in trading across interest rate products, commodities and foreign exchange (FICC) as investors responded to Donald Trump's victory in the US presidential election.
But it lost market share to Wall Street banks, some of which more than doubled bond revenues, in part due to paring back its investment bank, where it has thrown out products and cut ties with thousands of clients.
"We are optimistic after a promising start to this year", the bank's chief executive John Cryan said in a statement.
Almost all of the bank's businesses had a strong start in January, Deutsche Bank noted.
The amount of money the bank has set aside to cover the legal bill for past missteps rose 29% to €7.6 billion at the end of the year, compared to the end of September.
It also upped provisions for possible future legal action by 38% to €2.2 billion.
"Whilst 2015 and 2016 were peak years for litigation, 2017 continues to be burdened by resolving legacy matters," the bank said in a presentation.
In equities trading, Deutsche Bank saw revenues decrease in the quarter as hedge fund activity retreated, while revenues from corporate and investment banking edged up despite the bank missing out on advising clients on some large deals.
Deutsche Bank said its total revenues were up 7.5% at €7.1 billion in the quarter.
