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Deutsche Bank, Germany's biggest bank, reported a sharp drop in bottom-line earnings at the end of last year as the eurozone sovereign debt crisis hurt business.

Deutsche Bank said in a statement on Thursday it booked net profit of 186 million euros ($245 million) in the fourth quarter, 76 percent less than in the preceding three months and a drop of 69 percent from the period from October to December in 2010.

The figure is worse than expected: analysts polled by Dow Jones Newswires had been pencilling in fourth-quarter net profit of 572 million euros.

While Deutsche Bank's classic high-street banking business performed well, its investment banking activities were hit by the debt crisis, the group said.

"The fourth quarter featured continued market uncertainty and lack of investor appetite leading to subdued market activity," the statement said.

"The European sovereign debt crisis had a particularly marked effect on activity levels in Europe, where Deutsche Bank has a substantial portion of its business."

Revenues in the investment banking fell by 26 percent year-on-year in the October-December period, while revenues in the classic banking division were up 22 percent, thanks largely to the inclusion of Postbank, acquired in 2010.

Taking 2011 as a whole, Deutsche Bank's net profit jumped by 87 percent to a total 4.3 billion euros and overall revenues rose by 16 percent to 33.2 billion euros.

The increase in revenues was "mainly as a result of revenues from businesses acquired in 2010, namely Postbank and, to a lesser extent, Sal. Oppenheim and the commercial banking activities acquired from ABN Amro in the Netherlands," Deutsche Bank explained.

"Once again, Deutsche Bank has proved its ability to deliver substantial earnings in challenging conditions," said chief executive Josef Ackermann, who is scheduled to step down at the end of May after 10 years at the helm.

"In 2011, our classic banking business produced record earnings, thus counterbalancing the impact of weak markets in investmment banking. We also significantly strengthened our capital base, boosted our liquidity reserves and reinforced our funding position," said the Swiss-born executive.

Deutsche Bank said it would pay a dividend of 0.75 euros per share for 2011, unchanged from the 2010 payout.

AFP