FRANKFURT (Reuters) – Deutsche Bank will post its third-consecutive annual loss in its 2017 results, defying its chief executive’s expectations of a swing to profit and highlighting the difficulty of overhauling Germany’s largest lender.

FILE PHOTO: The headquarters of Germany’s Deutsche Bank is seen early evening in Frankfurt, Germany, January 26, 2016. REUTERS/Kai Pfaffenbach/File Photo

The bank warned on Friday that weak trading, low client activity and a 1.5 billion euro ($1.8 billion) negative impact from a tax overhaul in the United States would result in a “small” loss for the full year.

CEO John Cryan has cautioned that the bank’s turnaround would be a long, hard slog but said in July that he expected a return to profit in 2017.

The bank’s announcement took investors by surprise and its shares fell sharply, closing 5.2 percent down.

“The share price reaction speaks for itself,” said a trader in Frankfurt. “Investors are disappointed.”

In March Deutsche announced an overhaul that includes integration of its Postbank retail bank with its in-house consumer bank, as well as the partial sale of its asset management business.

The company has struggled to keep revenue from shrinking and experienced a 10 percent drop in the third quarter. The bank had warned that the fourth quarter could be rough and confirmed that view on Friday.

“Trading conditions in the fourth quarter 2017 were characterised by low volatility in financial markets and low levels of client activity in key businesses,” Deutsche Bank said in its statement.

Revenue at Deutsche’s cash-generating bond-trading division is expected to drop 22 percent in the fourth quarter from a year ago, the bank said.

The bank is due to report fourth-quarter and full-year earnings on Feb. 2.

Deutsche Bank posted a net loss of 1.4 billion euros in 2016 and 6.8 billion euros in 2015. Cryan was appointed in 2015 to steer the bank back to profit.

The company has been recovering from multiple legal battles, ranging 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.

Last year a looming $14 billion fine from the U.S. Department of Justice had unsettled clients and investors and prompted talk of a government bailout.

The bank said that the reduction in the U.S. corporate tax rate to 21 percent from 35 percent would translate into an average tax rate for the whole group at the lower end of a range between 30 percent and 35 percent.

The lower effective tax rate will require a revision to the valuation of deferred tax assets, causing the negative hit to Deutsche’s fourth-quarter earnings, it said, adding that it will not have any cash impact.

($1 = 0.8306 euros)

Reporting by Tom Sims; Additional reporting by Andrea Lentz; Editing by David Goodman