The fourth quarter alone saw a loss of €1.9 billion, affected largely by $7.2 billion the bank agreed to pay in fines and compensation in the US over its involvement in the mortgage-backed securities crisis of 2008.
The Frankfurt-based lender was last month forced to slash bonus payments for a quarter of employees, as it continues to face headwinds from low interest rates as well as increased regulation and higher capital requirements introduced in the wake of the financial crisis.
The result is worse than the €200 million loss forecast by analysts FactSet, but an improvement on the €7 billion loss recorded in 2015.
The US settlement was the largest payout any financial institution has so far paid for misconduct relating to the 2008 crash, but well below the initial $14-billion demand from the US Department of Justice.
Adding to Deutsche Bank's woes, on Tuesday it was hit with yet another penalty as New York and British authorities slapped it with nearly $630 million over alleged money laundering in Russia.
Chief executive John Cryan has launched a tough restructuring plan to shed 200 branches in Germany and some 9,000 of its roughly 100,000 full-time employees.
"Our results for the year 2016 were heavily impacted by decisive management action taken to improve and modernise the bank, as well as by market turbulence for Deutsche Bank," Cryan said Tuesday in the bank's results statement.