Deutsche Bank profit falls

January 31, 2002 Posted: 1146 GMT

LONDON (CNN) -- Deutsche Bank, Europe's largest lender, on Thursday said profit plunged in 2001 as it set aside more money for bad loans.

Frankfurt-based bank said net income last year fell 67 percent to 1.4 billion ($1.21 billion), or 2.21 per share, from 4.2 billion, or 6.88, in 2000. The 2001 results are the first to be reported by Deutsch Bank according to the U.S. GAAP accounting standard.

The bank said provisions for bad loans jumped by 500 million to 1 billion in 2001, due to an increasing number of bankruptcies, as well losses related to the collapse of U.S. energy group Enron's and the economic crisis in Argentina. 

"The year 2001 was a big challenge," said Chief Executive Rolf Breuer.

Deutsche Bank's shares rose 2.4 percent to 72.42 in early trading on Thursday in Frankfurt. Its stock reached a high of 105.64 on January 30, 2001 and a low of 43.29 on September 21, 2001.

Restructuring costs increased by 200 million to 300 million as the bank closed branch offices and announced plans to cut 1,400 jobs. Those reductions will continue into 2002.

Trading revenues dropped to 6 billion from 7.6 billion in 2000, while revenues from non-interest income fell by 2.2 billion.

Deutsche said fourth-quarter pretax profit in corporate and investment banking halved to 300 million in the third quarter, down 40 percent year-on-year.

Deutsche's results come one day after the bank scraped the traditional German consensus-driven management style, in which board members are collectively responsible for decisions, and giving its chief executive more authority.

The bank also said it was cutting its management board to five members from eight and creating a new executive committee to handle day-to-day               decisions.

The new structure is expected to streamline operations at Deutsche Bank and allow it to compete more aggressively with U.S.-based banks.

Swiss-born Josef Ackerman will succeed Breuer as chief executive in May.

Ackerman, an outspoken advocate for structural reform at the bank, currently heads Deutsche's investment banking business, is the first non-German to head the bank.