Deutsche Bank says more charges to hit fourth-quarter profits

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December 14, 2012 6:00 AM EST

Deutsche Bank said on Thursday that its radical restructuring plan would hit fourth-quarter profits "significantly" as the bank gets on with cleaning up its balance sheet, but there was no cause for investors to be alarmed.

"This is not seen as a profit warning, this is a guidance ... to make you aware that we have effects coming out of resegmentation," Chief Financial Officer Stefan Krause told analysts during a conference call after the bank issued a regulatory statement on the outlook for fourth-quarter results.

Despite a difficult economic environment, the bank said it achieved solid operational results in October and November across all its core businesses.

Nonetheless it also said that additional charges may hit earnings. The lender had already told investors recently to expect a 280 million-euro hit to fourth-quarter earnings (227.8 million pounds) from the group's overhaul plan announced in September.

At the time Deutsche Bank said the overhaul would cost a total of 4 billion euros in restructuring charges but would bring savings of 4.5 billion euros in annual costs and as part of the plan it would hive off 125 billion euros worth of risky assets into a segregated unit to improve its capital base.

But on Thursday the bank said the revamp combined with new valuation adjustments for certain assets and charges related to restructuring a Dutch transaction banking business are expected to cause an additional burden on earnings this year.

"We currently expect these specific items to have a significant negative impact on the bank's earnings in the fourth quarter 2012," the bank said, without providing further details on the expected amount.

Deutsche Bank shares closed down 2.7 percent at 33.34 euros.

The bank has not given any specific earnings forecast this year but analysts on average had been forecasting a fourth-quarter pretax profit of 845 million euros, a swing back from a loss in the same period last year. Forecasts for the full-year profit averaged 4.8 billion euros, according to Thomson Reuters I/B/E/S Estimates.

The bank said it still expected to have a core Tier 1 capital solvency ratio of 7.2 percent by 2013.

Separately Krause declined to comment on the arrests of five staff during a raid on the bank's Franfurt headquarters by the German tax authorities and police on Wednesday.

(Editing by Erica Billingham and Greg Mahlich)

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