Photographer: Krisztian Bocsi/Bloomberg

Why Deutsche Bank's Trading Revenue Is Slumping in Three Charts

Deutsche Bank AG co-Chief Executive Officer John Cryan on Thursday will need to explain how the investment bank helped push Germany’s largest lender into its first full-year loss since 2008 as he seeks to boost profitability and restore investor confidence.

The German lender said last week that “challenging market conditions,” principally at its investment banking and trading unit, cut the group’s fourth-quarter revenue 16 percent to about 6.6 billion euros ($7.1 billion) from a year earlier. Deutsche Bank is scheduled to release fourth-quarter earnings on Jan. 28, with Cryan speaking to analysts and reporters.

The following charts illustrate what is driving down earnings at the business, which generates the largest part of bank’s revenue.

  • The bank is taking less risk as client activity falters. In the third quarter, Deutsche Bank’s average value at risk, a measure of how much the firm could lose from trades in a single day, fell to the lowest since it first published data in 2004.
  • Cryan is seeking to grow a key part of Deutsche Bank’s stock trading arm, as well as divisions which advise on mergers and share sales, while cutting back capital-intensive debt-trading businesses. That means the bank is set to face revenue losses.
  • Deutsche Bank may follow the five biggest U.S. investment banks, which saw their combined revenue fall 4.9 percent in the fourth quarter from a year earlier. The German lender is the first European investment bank to report quarterly results.
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