FRANKFURT (Reuters) - Legal costs will weigh down Deutsche Bank's (>> Deutsche Bank AG) results well into 2015, Germany's biggest bank said on Thursday, as global investigations into cases such as the alleged manipulation of interest rate and currency benchmarks drag on.

Deutsche Bank, which had originally hoped to clear its decks of legal problems in 2014, postponed a big litigation charge expected for its fourth-quarter results, helping it to post a surprise pretax profit.

But the delay complicates management efforts to move on from the financial crisis and improve shareholder returns.

“We don’t expect any of this litigation (cost) to be lower, so it’s just a deferral into 2015 which will obviously make the number much higher in 2015," Chief Financial Officer Stefan Krause told analysts.

Deutsche Bank is reviewing its universal banking model which sees it selling everything from home loans in Wuppertal to equity derivatives in New York to see if hiving off parts of the business would boost profits.

European rivals such as UBS and Barclays (>> Barclays PLC) have taken an axe to trading desks in a boost for Deutsche, which has stuck with its dealing divisions. Trading revenues rose 20 percent in the fourth quarter, bucking declines at U.S. rivals such as Goldman Sachs (>> Goldman Sachs Group Inc) and Morgan Stanley (>> Morgan Stanley).

Overall, Deutsche reported a pretax profit of 253 million euros (189.21 million pounds) in the fourth quarter compared with expectations for pretax loss of 83 million euros, which was the median result of a Reuters poll. Analysts had expected the bank to swallow 1 billion euros in litigation costs in the quarter compared with the actual 207 million that was booked.

Deutsche Bank shares were up over 2.6 percent in midday trading, while the Stoxx Europe 600 index <.SX7P> of European banks hovered just above par.

Chris Wheeler, analyst at Atlantic Equities, said the strong revenue performance at Deutsche's investment bank belied a group still struggling to boost returns.

Full-year pretax profit more than doubled to 3.1 billion euros but the group remains far from its own profitability goals, with a return on equity of only 2.6 percent in the fourth quarter compared with its target of around 12 percent by 2016.

“Revenues are one thing but profitability is another, that is a very different story," said Wheeler. "They are not going to get anywhere close to their targets in 2015 and seem to have recognised that by promising a strategic recalibration in the Spring.”

Deutsche's management declined to give any update on its strategic review, which is expected to call for a leaner, smaller group when it is unveiled in the second quarter

Helmut Hipper, fund manager at Union Investment and Deutsche shareholder, said the positive results helped to buy time for Deutsche as it considered what activities to drop.

"Only then will we see more clearly where we're headed and whether we hopefully get presented with a sustainable business model for the coming years," Hipper said.

CLEARING THE DECKS

Deutsche is being probed over issues including possible attempts at interest rate and foreign exchange benchmark manipulation and possible violations of U.S. sanctions on Iran.

It paid a 330 million euro charge to cover claims arising from consumer loan processing fees in the fourth quarter after a German court ruled in October that customers could reclaim administrative costs on the contracts.

The charge helped push profits before income tax in its German retail bank down by three quarters in the fourth quarter.

Pay costs rose 12 percent in the last quarter from a year before due to new hirings, including in its wealth management division. Its cost-to-income ratio improved to 77 percent in the quarter from 85 percent a year ago, but remained way above the European average of around 63 percent.

The lag in profitability has prompted the bank to considering selling half of its Postbank-branded (>> Deutsche Postbank AG) retail unit, which it bought from 2008 to 2012 for over 6 billion euros.

By splitting off its retail operations, Deutsche would simplify its model, raise capital and retreat from the low-profit battlefield that is German retail banking.

($1 = 0.8873 euros)

(Writing by Carmel Crimmins; Editing by David Holmes and Mark Potter)

By Thomas Atkins and Jonathan Gould