Deutsche Bank (NYSE: DB) today announced its highest annual profit, both before and after tax, since 2007 after strong risk discipline and sound capital management.

Profit before tax was € 5.6 billion in 2022, up 65% over 2021. This reflected 7%  growth in net revenues with a 5% year-on-year reduction in noninterest expenses, resulting in a cost/income ratio of 75%, down from 85% in 2021.

Net profit was € 5.7 billion in 2022, more than double the prior year. This includes a positive year-end deferred tax asset valuation adjustment of € 1.4 billion, compared to € 274 million in the prior year, which reflected continued strong performance in the bank’s US operations.

Diluted earnings per share were € 2.37, up from € 0.93 in 2021, and management intends to recommend a dividend of € 0.30 per share for 2022, up from € 0.20 per share for 2021, to the 2023 Annual General Meeting.

“Over the past three and a half years we have successfully transformed Deutsche Bank,” said Christian Sewing, Chief Executive Officer.

“By refocusing our business around core strengths we have become significantly more profitable, better balanced and more cost-efficient. In 2022, we demonstrated this by delivering our best results for fifteen years.

Thanks to disciplined execution of our strategy, we have been able to support our clients through highly challenging conditions, proving our resilience with strong risk discipline and sound capital management. As a result, we are well-equipped to deliver sustainable growth and returns to shareholders in the years ahead.”

Despite strong results, the stock price declined around 5% in today’s trading session.

In the fourth quarter of 2022, profit before tax was € 775 million, up more than ninefold from € 82 million in the fourth quarter of 2021, reflecting 7% year-on-year growth in net revenues with a 7% year-on-year reduction in noninterest expenses. The quarter was positively impacted by a gain of approximately € 310 million on the sale of Deutsche Bank Financial Advisors in Italy.

Net profit was € 2.0 billion, up from € 315 million in the fourth quarter of 2021, and reflects the aforementioned positive tax impact.

Net revenues were € 27.2 billion in 2022, up 7% year on year, and € 6.3 billion, up 7%, in the fourth quarter. In both the full year and fourth quarter of 2022, revenues were the highest since 2016, despite business perimeter reductions as part of the bank’s transformation launched in 2019.

The contribution of core businesses to Core Bank profit before tax was as follows:
• Corporate Bank: € 2.1 billion, more than double the 2021 level of € 1.0 billion, with post-tax RoTE1 of 12.5% and a cost/income ratio of 62%
• Investment Bank: € 3.5 billion, down 6%, with post-tax RoTE1 of 9.2% and a cost/income ratio of 62%
• Private Bank: € 2.0 billion, up by more than fivefold from € 355 million in 2021, with post-tax RoTE1 of 10.6% and a cost/income ratio of 72%
• Asset Management: € 598 million, down 27% year on year.

Provision for credit losses was € 1.2 billion in 2022, up from € 515 million in 2021. The year-on-year development reflected more challenging macro-economic conditions during most of 2022 against the backdrop of the war in Ukraine, while 2021 benefited from economic recovery following the easing of COVID-19 restrictions.