Deutsche Bank smashes earnings estimates and boosts shareholder returns

The German bank also announced plans to increase share buybacks and dividends by 50%, returning a total of €1.6 billion to shareholders.

Deutsche said it plans to buy back additional shares worth 675 million euros, which it aims to complete in the first half of the year. This follows buybacks worth €450 million in 2023. It also plans to recommend a dividend to shareholders of €900 million for 2023 at its annual general meeting in May.

For the full year, the bank reported net income of €4.2 billion attributable to shareholders, beating analysts' expectations of €3.685 billion.

“Pre-tax profit of $5.7 billion is an all-time high, and we've had year-on-year growth despite some elements that have made some noise this year, but what's really exciting is the momentum we're seeing in the year,” said James Vaughn, Deutsche Bank's chief financial officer. Business”. Moltke told CNBC on Thursday.

“We had 10% year-over-year growth in our investment bank in the fourth quarter, and admittedly in a year it was still tracking the very strong performance of 2021 and '22, so it's down 9% for the full year, but we see the momentum especially now in 24 in terms of construction advisory and a very strong, and I think consistent, performance in our FIC [fixed income and currencies] Franchise.”

As part of a €2.5 billion operational efficiency programme, Deutsche Bank said it expects to cut 3,500 jobs, especially in “non-customer-facing areas”.

As of the end of 2023, the savings achieved or expected from actions completed under the efficiency program had risen to €1.3 billion, according to bank estimates. The program aims to reduce the quarterly run rate of adjusted costs to €5 billion, with total costs falling to around €20 billion in 2025.

In a statement on Thursday, Al-Khayat said the bank's 2023 performance “underscores the strength of our global Hausbank strategy as we help our clients navigate an uncertain environment.”

“We achieved our highest pre-tax profit in 16 years, delivered growth well ahead of target and maintained our focus on cost discipline while investing in key areas,” Sewing said.

“Our strong capital generation enables us to accelerate distributions to shareholders. This gives us firm confidence that we will achieve our 2025 targets.”

Other highlights of the fourth quarter included:

• Net revenues grew by 5% year-on-year to reach 6.7 billion euros, bringing the annual total to 28.9 billion.
• Net flows of €18 billion across the private bank and asset management divisions.
• Provisions for credit losses amounted to 488 million euros, compared to 351 million in the same period in 2022.
• The equity tier 1 (CET1) capital ratio – a measure of banks' solvency – was 13.7% at the end of 2023, compared to 13.4% at the end of the previous year.

Amid concerns about banks' profitability and reports that the German government is considering selling some of its holdings in the company, including its 15% stake in Commerzbank, Deutsche has emerged as a subject of merger speculation in recent months.

However, CEO Christian Sewing told CNBC at the World Economic Forum in Davos, Switzerland, that acquisitions are not a “priority” for Germany's largest bank.

Correction: This article has been updated to reflect the release of Deutsche Bank's results on Thursday.