Shares in Deutsche Bank were sent sliding on Wednesday after co-chief executive John Cryan warned the bank “may make a small loss” this year.
Shares in Germany’s biggest bank fell as much as 6.7 per cent on Mr Cryan’s remarks, even though they were not that much gloomier than his previous guidance.
“Perhaps investors had hoped guidance was conservative; now they might realise it is simply realistic,” said Jon Peace, banks analyst at Nomura in London.
Mr Cryan’s comments were made to investors at Morgan Stanley’s annual financial services conference in London and live-streamed on Deutsche Bank’s website.
The bank’s shares had stabilised in recent weeks, having fallen 24 per cent in the first two months of the year as investors fretted over its €6.7bn loss for 2015 and warnings of a challenging outlook.
But the sell-off resumed in earnest on Wednesday after Mr Cryan told investors: “We may make a small profit, we may make a small loss, we don’t know.”
He added: “There’s a lot of stuff we have to get done this year, so this year we’re not going to be profitable.”
Investors had already been warned that 2016 would be a tough year for Deutsche, which is in the early stages of a five-year restructuring plan that will see it pull back resources from investment banking, float its German retail subsidiary Postbank and cut 9,000 jobs.
Announcing the bank’s full-year results on January 28, Mr Cryan had warned of a painful year as “the bulk of” Deutsche’s restructuring charges were taken while the bank battled challenging market conditions and continuing litigation charges.
Mr Cryan also left investors in no doubt as to where they would end up financially however things panned out. “Even if we have a great year, I don’t think this year we’re going to end up recommending a dividend,” he said. “[It will be] at the earliest 2017.”
Since then, market conditions have got even worse, such that John Gerspach, Citigroup’s chief financial officer, warned last week that the US bank was facing a 15 per cent fall in fixed income and equities revenues in the first quarter.
Against that backdrop, analysts had cut their 2016 earnings per share forecasts for Deutsche by 10 per cent in the last four weeks, according to consensus estimates compiled by Bloomberg. Still, they were expecting earnings per share of €0.344 in 2016, against last year’s loss of €05.06 a share.
Other speakers at the closed-door Morgan Stanley event included UBS chief executive Sergio Ermotti and Commerzbank’s chief financial officer Stephan Engels.
David Mathers, Credit Suisse’s chief financial officer, was a late withdrawal, for reasons the bank would not disclose. Shares in the Swiss bank fell as much as 6.8 per cent before recovering.
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