Lionel Laurent is a Bloomberg Gadfly columnist covering finance and markets. He previously worked at Reuters and Forbes.

Rarely, if ever, has Deutsche Bank looked this miserable -- and the pain is set to get even worse.

Deutsche's Depths
Germany's biggest bank has trailed the benchmark index this year
Source: Bloomberg

On Wednesday, the bank's quarterly profit was all but wiped out by the costs of an overhaul by CEO John Cryan that has yet to bear fruit.

Deutsche's Discount
The lender trades at the steepest discount to book value in at least 15 years
Source: Bloomberg Intelligence

The stock sank as much as 5.3 percent. The shares now trade for two thirds less than their tangible book value, a steeper discount than even during the depths of the financial crisis. Analysts' bearishness about the stock is close to record levels, according to Bloomberg Intelligence.

Deutsche's Depression
Analysts haven't been this bearish on Deutsche bank since the financial crisis
Source: Bloomberg Intelligence

For all his assertions that 2016 will be a year of peak restructuring, Cryan may be setting up shareholders and staff for more pain next year and beyond. Faced with a worsening economic outlook and a weaker environment for asset disposals, he will either have to ramp up the scale of his overhaul to cut thousands more jobs and shrink the balance sheet further -- or ask for more time to meet his targets.

Either way, the worst is yet to come.

The second quarter gives little cause for celebration. Revenue sank 12 percent and net income came in at almost zero -- even after litigation costs tumbled.

The only division to increase revenues and profit was Postbank --- the consumer unit, which Cryan hopes a "white knight" will take off his hands. And unlike rival Commerzbank, Deutsche Bank was able to boost its key capital ratio fractionally in the quarter.

The focus on cutbacks meant that Deutsche Bank was unable to benefit from its strength in fixed-income trading in a quarter during which the U.K. vote to leave the European Union stoked market volatility.

Trading Pain
Deutsche Bank trading revenues suffered worse than U.S. peers on average
Source: Company reports, HSBC research

While debt trading revenue climbed 22 percent at the top U.S. investment banks in the quarter, Deutsche Bank's fixed-income trading revenue fell 19 percent. In foreign exchange, performance was flat, a sign that restructuring is preventing the bank from getting the most out of the market action.

Stubborn Costs
Deutsche Bank is halfway through its peak restructuring year, yet its cost-to-income ratio remains high
Source: Company reports

Sure, Cryan's cost-cutting is having some positive impact too -- expenses fell 5 percent from the year-earlier period -- but with revenue shrinking, the cost-income ratio remains stubbornly high at 91 percent. Then look at headcount: it stood at 101,307 at the end of June, down by 138 full-time equivalents from the end of March, but still up on the year-earlier period. None of this looks like peak pain.

Cryan's suggestions on Wednesday that he might have to be "yet more ambitious" in the timing and depth of the restructuring looks like a promise to bolt the stable door long after the horse has bolted.

The weak economic environment is unlikely improve soon, especially in Europe, where lower-for-longer interest rates are crushing bank profits. Worse, Deutsche Bank is also seeing rising loan losses from the shipping and metals and mining industries.

None of this bodes well for the execution of Cryan's strategy.

Morgan Stanley analysts reckon Deutsche Bank has a 9 billion-euro ($9.9 billion) capital hole to fill by 2018 -- and that's not including damage caused by future litigation costs.

Adding to the pressure on Cryan are rival banks moving faster with their overhauls: Italy's UniCredit is considering a 5.5 billion-euro capital raising and asset sales.

Cryan would be right to ask his predecessors why they didn't move sooner and cut deeper. As it is, he's been left with what he admits will be a "sustained restructuring." Translated, that means peak pain is yet to hit.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

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Lionel Laurent in London at

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Edward Evans at