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Deutsche Bank has posted an annual loss of 1.4bn euros (£1.2bn) after being hit by legal costs, although that was down from a loss of 6.4bn euros in 2015.

In the final three months of 2016 alone the bank lost 1.9bn euros, mainly thanks to a record penalty in the US.

Earlier this week, it was fined £500m in connection with a Russian money laundering plan.

The German banking giant reported a 9% fall in costs and an improvement in the percentage of good quality assets.

These assets, known as "tier one", rose to a percentage of 11.9%, the bank's strongest ratio for three years.

Deutsche said it had "proved its resilience in a particularly tough year".

However, investors were disappointed as they had expected a bigger reduction to the bank's losses. In early trade, Deutsche's shares were down 3%.

The year was marked by a series of high-profile settlements and fines for a series of misdemeanours.

In the last quarter of 2016 alone, Deutsche increased the amount of money it sets aside for such penalties from 5.9bn euros to 7.6bn.

Its $7.2bn (£5.7bn) US penalty, the largest against any bank, was for fines and compensation for its involvement in the toxic debt crisis of 2008. It was, though, about half than the original sum the US authorities were considering charging Deutsche Bank.

Many major international banks have been penalised for similar practices, and all major banks are also finding conditions tough as regulations tighten.

Persistent low interest rates are another element of the tougher climate for banks, as it is far more difficult to make a profit when the difference in borrowing and deposit rates is so small.

Many banks, including Deutsche, have been cutting jobs and bonuses in response.

Deutsche Bank is in the process of closing 200 branches in Germany and laying off about 9,000 of its roughly 100,000 full-time staff.

Chief executive John Cryan said: "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.

"We proved our resilience in a particularly tough year. We finished 2016 with pleasingly strong capital and liquidity ratios and we are optimistic after a promising start to this year."