Deutsche Bank reported a bigger than forecast quarterly loss of 3.15 billion euros ($3.5 billion), underlining the challenges it faces as it attempts to turn around its struggling business.
“Now we can look ahead with more optimism,” he wrote.
Deutsche’s troubles peaked with a $7.2 billion U.S. fine in 2017 for its role in the mortgage market crisis, in a major blow that caused clients to flee.
A new leadership, with Sewing at the helm since last year, has tried to revive Deutsche’s fortunes, but problems have persisted.
In April, the bank called off nearly six weeks of talks to merge with cross-town rival Commerzbank.
It then embarked on a plan for “tough cutbacks” to its investment bank, representing a major retreat from investment banking for Deutsche Bank, which for years had tried to compete as a major force on Wall Street.
As it reshapes, the bank now expects 2019 revenue to be lower than in 2018. The forecast marks a further scaling down in expectations from previous quarters.
Net revenue in the quarter fell 6% to 6.2 billion euros. Analysts on average had expected 6.3 billion euros in revenue, according to a consensus forecast posted on the bank’s website.
Revenue at Deutsche’s cash-cow bond-trading division dropped 4% in the quarter, while equities sales and trading revenue dived 32%.
The declines underscore the continued weakness at the lender’s investment bank, which saw an 18% drop in net revenues during the period.
RBC Capital Markets wrote that Deutsche’s earnings illustrated the “long road until we have visibility on the many stepping stones” to a turnaround.
Among details of the overhaul announced earlier this month, Deutsche said it planned to scrap its global equities business and scale back its investment bank. It also reshuffled management.
The bank will set up a new so-called “bad bank” to wind down unwanted assets, with a value of 74 billion euros of risk-weighted assets.
Reuters reported on Tuesday that it will take years to shed those unwanted assets, tying up capital that could have generated income of 500 million euros a year.
Some investors have told Reuters they doubted these moves would be enough to turn around its flagging fortunes in the face of intense competition and low interest rates.
Others investors have said they were worried Deutsche Bank would backtrack on a pledge not to tap shareholders for additional cash, particularly in view of its capital constraints.
“I really can’t say that I see the positives in this plan. I remain a bitter curmudgeon,” said Barrington Pitt-Miller, portfolio manager at Janus Henderson Investors.