Reuters/Kai Pfaffenbach
Deutsche Bank CEO Christian Sewing
- Deutsche Bank stock is sliding 2% after the bank missed its fourth quarter revenue target.
- Bloomberg said the the German government would orchestrate a merger with with rival Commerzbank by mid-2019 if restructuring efforts fell short of targets. The shares also fell after that report.
- Deutsche Bank's stock has been on a rollercoaster ride, hit by, among other things, two separate bank raids last year. The shares have fallen 48% in the past 12 months.
Investors offered no respite to Deutsche Bank's stock after the German bank reported earnings that fell short of analyst expectations. The stock dropped more than 2%.
The struggling lender has been implementing cost-cutting programs to improve efficiency but the bank earned a post-tax return on tangible equity of just 0.4%, half what analysts expected.
Deutsche Bank's stock has been on a rollercoaster ride, hit by, among other things, two separate bank raids last year. The shares have fallen 48% in the past 12 months, reaching record lows. The market capitalization is about €16 billion, a little bigger than what would be deemed a US midcap.
The stock got hit on Thursday as well, falling about 4% after a Bloomberg report said the German lender is gearing up for a potential merger with rival Commerzbank by mid-2019. Citing anonymous sources, Bloomberg said the deal is being orchestrated by the German government, and would come to pass if restructuring efforts fell short of targets.
In the results on Thursday, poor performance from Deutsche's investment bank were to blame with fourth quarter revenues falling 5% year-on-year, dropping to €2.6 billion, worse than the €2.7 billion analyst target.
Germany's largest lender cited challenging financial markets as the source of its problems. Full-year net revenues were down 4% to €25.3 billion in 2018, compared to 2017. The bank was also raided last November as part of investigations into the lender's alleged role in the Panama Papers-related money-laundering scandal.
"In 2019 we aim not only to save costs but also to make focused investments in growth," said CEO Christian Sewing in the statement. "We aim to grow profitability substantially through the current year and beyond."