Deutsche Bank has reported income before income taxes for the fourth quarter 2004 of â¬ 418 million after reorganisation charges of â¬ 574 million. These charges included restructuring expenses of â¬ 400 million related to the bank´s Business Realignment Program, which was launched in the fourth quarter 2004 and â¬ 174 million related to additional efficiency measures.
In the prior year fourth quarter, income before income taxes was â¬ 676 million. For the full year 2004 income before income taxes was â¬ 4.1 billion, a rise of 50% compared to 2003.
Net income was â¬ 269 million for the fourth quarter 2004, compared to â¬ 436 million in the prior year period. For the full year, net income was â¬ 2.5 billion, up 87% from â¬ 1.4 billion in 2003.
Pre-tax return on average active equity for the year 2004 was 17% compared to 10% in 2003. Full year diluted earnings per share were â¬ 4.67, up 102% from â¬ 2.31 in 2003. The Board of Managing Directors recommends a dividend increase of 13% to â¬ 1.70 per share.
Deutsche Bank also announced details of its Business Realignment Program which covers a series of initiatives aimed at revenue growth and cost efficiency. The program, together with additional efficiency measures in the fourth quarter 2004, is expected to result in a reduction of approximately 6,400 in full-time equivalent headcount. Of these 1,600 are covered by the restructuring and severance charges in the fourth quarter 2004. Restructuring charges for the remaining 4,800 will be taken in 2005. This headcount reduction includes the Efficiency and Investment Plan for Germany announced in December 2004. However, the Business Realignment Program and the additional efficiency measures include smartsourcing (i.e., transferring jobs to lower cost locations) which will add 1,200 headcount, leading to a net reduction of 5,200 headcount.
Total expenses related to the Business Realignment Program and other efficiency measures recorded in the fourth quarter 2004 and expected in 2005 are estimated to be â¬ 1.3 billion. The bank expects to reduce its operating cost base by â¬ 1.2 billion in 2005, of which â¬ 0.8 billion will relate to the Business Realignment Program. The annualized run-rate of cost savings related to the Business Realignment Program is targeted at â¬ 1.1 billion.
Josef Ackermann, Spokesman of the Board of Managing Directors and Chairman of the Group Executive Committee, said: 'Deutsche Bank delivered continued growth in profitability, driven by a record year in Debt Sales and Trading, solid growth in Advisory and Origination, and by reaching our ambitious profit target of â¬ 1 billion underlying pre-tax profit in Private and Business Clients. We also made continued good progress in credit risk management, leading to further reductions in problem loans and provisions for credit losses. Our recommended dividend increase demonstrates our desire to see shareholders benefit from our profit growth. This also reflects our commitment to an attractive dividend policy and our confidence in continued profitable growth going forward. '
He added: 'The investments we have made in our core businesses, together with our planned cost savings, underline our firm commitment to deliver on our financial targets.'
Source: Deutsche Bank