Deutsche Bank Expects EUR1.5 Billion Hit From U.S. Tax Reform

By Nathan AllenFeaturesDow Jones Newswires

Germany's Deutsche Bank AG (DBK.XE) said Friday that it expects to book a charge of about 1.5 billion euros ($1.81 billion) in its fourth-quarter results, stemming from the recent U.S. tax reforms.

The charge, which is due to a valuation adjustment of Deutsche Bank's U.S. deferred tax assets, will lead the group to post a small after-tax loss for 2017, the bank said in a press release.

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Companies can log deferred tax assets during unprofitable periods and use them to offset future tax payments.

Those assets, which are essentially credits toward future tax payments in the U.S., are worth less on paper after the tax overhaul sharply reduced headline corporate tax from 35% to 21%.

The revaluation is likely to reduce Deutsche's fully loaded CET1 ratio--a measure of financial strength--by around 10 basis points, the bank said. However, the move will not affect its ability to make scheduled payments on additional tier-1 securities, it said.

Deutsche also expects combined fourth-quarter revenues from its fixed income, sales & trading, equity sales & trading and financing units to be around 22% below the year-earlier period, excluding the impact of debt valuation adjustments in both periods.

Write to Nathan Allen at nathan.allen@dowjones.com

(END) Dow Jones Newswires

January 05, 2018 11:11 ET (16:11 GMT)