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Deutsche Bank reported a plunge in profits for the final quarter of 2024 and warned investors that costs this year would be higher than expected, as the German bank’s boss pledged to consider ditching weaker businesses to improve performance.
Chief executive Christian Sewing told journalists on Thursday that the bank would unveil a new medium-term strategy later this year. “We will examine whether we should redistribute parts of the capital invested or even give up one or the other area to use our capital better elsewhere,” he said, adding that “nothing is off limits”. Asked which activities may be affected, Sewing declined to give details.
Net profit attributable to shareholders fell to €106mn in the fourth quarter, a 92 per cent decrease on the same period a year earlier and well below the €380mn figure expected by analysts. The bank blamed a €329mn hit linked to a long-running mis-selling scandal in the Polish residential mortgage market.
Germany’s largest lender said it had narrowly missed its 2024 cost targets as it was hit by a sharp rise in litigation charges. Loan losses in the final three months of the year were higher than expected by analysts.
Deutsche said it was now targeting a cost-income-ratio — a key efficiency benchmark — of less than 65 per cent this year. The new target is higher than its previous aim of keeping costs below 62.5 per cent of income but would still represent a far better performance than the 76 per cent ratio it achieved in 2024. Shares fell 6 per cent in early trading on Thursday.
Sewing called 2025 a “year of reckoning”, adding that the bank wanted to “lay the foundations” to become “the European champion”.
He said Deutsche was still aiming to generate revenues of more than €32bn in 2025, adding that the lender had made a “strong start . . . this year”.
Sewing said he still had “firm confidence” the lender would meet its target of lifting returns on tangible equity to more than 10 per cent in 2025, after they fell to 4.7 per cent last year. Andrew Coombs, analyst at Citibank, wrote that reaching the 10 per cent target “looks increasingly challenging”. Ahead of Thursday’s results, analysts on average expected an 8.9 per cent return on equity in 2025.
Group revenue for the final quarter of 2024 rose by 8 per cent to €7.2bn, driven by a 30 per cent increase in its investment bank as fixed income and currency trading surged. The lender’s two other main business units — its corporate clients division and the retail arm — both suffered slight year-on-year declines in revenues in the three months to December.
Sewing said annual profits — down 36 per cent year on year to €2.7bn — had fallen mainly because of restructuring and legal costs such as a provision of up to €1.3bn for a long-running lawsuit over the price it paid to buy out Postbank’s minority shareholders in 2010.
“We have now put these legacy issues behind us and thus significantly reduced the risks for our bank going forward,” he said.
The bank has announced a new share buyback programme of €750mn and proposed a dividend of €0.68 a share, up from €0.45 a share for 2023 lifting total payouts to shareholders for 2024 to €2.1bn.
