The bank said it had made a net loss of €3.9 billion ($5.0 billion) in 2008, a figure that reached €4.8 billion in the fourth quarter alone. In 2007, Deutsche Bank had reported a record profit of €6.5 billion.
"Operating conditions in the (fourth) quarter were completely unprecedented, and exposed some weaknesses in our business model," a statement quoted Deutsche Bank chairman Josef Ackermann as saying.
He acknowledged being "very disappointed" at the quarterly figures but said that "since the trust and support of our shareholders is critical for us, we recommend a dividend for the year 2008 of 50 cents per share."
That is well below the €4.50 per share dividend paid in 2007 however, and the lack of a detailed outlook for 2009 worried investors, who drove the bank's share price down by 4.19 percent to €20.35 in morning Frankfurt trading. The DAX index of leading shares was 1.14 percent lower overall. In opening trades the share price had fallen by 9.6 percent.
"The only positive aspect so far is that the bank didn't announce a capital hike, as some might have feared," Dow Jones Newswires quoted a trader as saying.
The bank's shares would fall further if it did not provide an outlook at a press conference scheduled later in the day, he predicted. Deutsche Bank's annual results were first announced on January 14, and Ackermann stressed Thursday that "we are convinced that Deutsche Bank will emerge successfully from the current crisis."
The bank managed to increase its core capital ratio from 8.6 percent of total assets at the end of 2007 to 10.1 percent at the end of last year, the statement said.
The so-called Tier 1 ratio is a measure of financial strength and is being closely watched by analysts for indications of how well equipped banks are to cope with the current market crisis.
Deutsche Bank also took provisions for credit losses worth a total €1.1 billion, an increase of 76 percent from the previous year.
Ackermann said he remained committed to the bank's business model, which is focused on investment banking, a lucrative field in which Deutsche Bank is one of the global leaders. But the sector has suffered sustained turmoil since mid 2007.
"In investment banking, we are market leaders in areas which have continued to perform well throughout the crisis," he stressed. But the bank was "repositioning our platform in some core businesses," the chairman acknowledged.
For the full year 2008, Deutsche Bank revised the total value of its assets lower by €7.0 billion, more than three times the 2007 write-downs of €2.3 billion. In the fourth quarter alone, asset write-downs amounted to €5.3 billion.