Deutsche Bank AG is predicting volatile markets are here to stay, helping the lender arrest two years of declines at its debt-trading business. Its forecast that full-year trading revenue will rise is bolder than that of its peers. While other US And European trading behemoths are also predicting a boost to trading, they’ve restricted themselves to the shorter term.
Traders crave volatility, or movements in asset prices, because it spurs clients to make bets and hedge their investments, and 2017 promised to be a year of lucrative uncertainty with Donald Trump taking office, Brexit and elections in Germany, France and The Netherlands. Instead, more chaotic markets didn’t appear until early this year as central banks continued to pump billions of dollars into economies.
Deutsche Bank was overly optimistic the year before, predicting higher trading revenue for 2017 in its annual report published early last year. Instead, the unit’s income fell to the lowest since the financial crisis in 2008.
While some other big investment banks like Credit Suisse Group AG, Citigroup Inc. and JPMorgan have also issued optimistic outlooks based on recent market volatility, they have limited their forecasts to the first months of the year. Deutsche Bank didn’t give any guidance on its first-quarter results in its annual report and didn’t provide specific targets for full-year trading.
Deutsche Bank had a full-year net loss of 735 million euros ($906 million) last year, it said. That’s higher than the initial estimate of 500 million euros published in February as the bank was hit by a decrease in deferred tax assets in the UK and higher-than-expected expenses for bonuses in the fourth quarter, a spokesman said.
Deutsche Bank rose as much as 1.1 percent in Frankfurt trading and was up 0.5 percent at 12.84 euros as of 1:46 p.m. The stock has declined 21 percent in the last 12 months, compared with a 1.1 percent gain on the Bloomberg Europe 500 Banks and Financial Services Index.
Fees for mergers and acquisitions advice were slightly up last year but the bank missed out on Germany’s biggest deal so far this year, the 22-billion-euro acquisition of Innogy SE by EON SE. That could earn the participating investment banks as much as 70 million euros ($86 million) in fees on each side of the deal, according to an estimate from research firm Freeman & Co.