FRANKFURT (Reuters) - Deutsche Bank appealed for investors to be patient after it posted its third consecutive annual loss in 2017, taking a hit from challenging markets, a drop in investment bank revenue and a U.S. tax reform, after a difficult fourth quarter.

“We believe we are firmly on the path to producing growth and higher returns with sustained discipline on costs and risks,” Chief Executive John Cryan said in a statement on Friday. “We have made progress, but we are not yet satisfied with our results.”

The disappointing earnings are likely to increase pressure on Englishman Cryan to turn Germany’s biggest bank around. Cryan told journalists “we aim for a profit” in 2018 without being more precise.

Deutsche Bank is in the throes of a major restructuring, seeking to put out fires as competitors take market share. At the same time, shareholders are griping about the pace of the turnaround, doubting the bank’s strategy and leadership.

The quarterly loss “illustrates the scale of the reengineering task still facing the firm,” said Peter Nerby of the ratings agency Moody’s.

ELUSIVE COST CUTS

Investors have called on Cryan to cut costs, but the bank said it anticipated costs this year of 23 billion euros ($28.6 billion), higher than a previously targeted 22 billion and down only 4 percent from 2017.

Last March Deutsche announced an overhaul that includes the integration of its Postbank retail bank unit with its own in-house Deutsche Bank-branded consumer bank, as well as the partial sale of its asset management unit.

On Friday it said the integration with Postbank was “on schedule” and that it would partially float its asset management unit “in the earliest available window”.

Still, executives have warned that a recovery would be a long, hard slog that would take years.

Continued weak performance at the bank has prompted some investors to question whether Cryan should be given more time to turn around the bank, after less than three years as CEO.

It reported a 2017 loss of 497 million euros, worse than the loss of 290 million forecast by nine banks and brokerages polled by Reuters.

U.S. tax reforms prompted a non-cash tax charge of 1.4 billion euros, pushing the bank into a full-year loss.

In the fourth quarter, its net loss widened to 2.19 billion euros from 1.89 billion a year earlier and revenue slumped 19 percent to 5.7 billion euros. Analysts had forecast a loss of 1.95 billion euros on revenue of 6.2 billion.

LESS VOLATILITY

Its cash-cow bond-trading division saw revenue tumble 29 percent in the quarter due to lower client activity in less volatile markets. Competitors saw similar declines.

The bank’s shares were 5.5 percent lower in late afternoon on Friday. “There is not really anything good that can be said about Deutsche Bank’s earnings,” said Octavio Marenzi, CEO and founder of consultancy Opimas.

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During his tenure, Cryan has stabilised the bank, raised capital, confronted legal challenges and managed the demands of greater regulation.

But shareholders are now voicing their impatience. Hendrik Leber, a fund manager with Acatis, said he liked Cryan personally. “But I don’t know which direction Deutsche Bank is heading toward,” he said.

“With UBS, the direction was clear with its big restructuring,” Leber said. “I’m not seeing a clear strategy with Deutsche Bank.”

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BONUS DEBATE

Adding to its problems, the bank has been the focus of national debate over its intention to resume bonuses despite its loss.

Pay and benefits at the investment bank rose 45 percent in the fourth quarter to 1.29 billion euros.

Further unsettling investors, Cryan warned that he would make “no big promises” for the bank’s 2017 dividend.

“Shareholders shouldn’t walk away with nothing if Deutsche Bank pays its staff bonuses,” said Ingo Speich, a fund manager Union Investment, one of Deutsche Bank’s larger shareholders.

Deutsche Bank became a major player on Wall Street over the past two decades but misguided bets and poor conduct have resulted in a litigation bill of 15 billion euros since 2009.

Legal battles have ranged from its role in the marketing of U.S. mortgage-backed securities to a so-called “mirror trading” scheme that could be used for money laundering.

On Thursday, the U.S. Commodity Futures Trading Commission said it issued an order settling charges against Deutsche Bank Securities Inc, a unit of the bank, for attempted manipulation of the ISDAFIX benchmark and requiring the firm to pay a $70 million civil penalty.

($1 = 0.8049 euros)