Deutsche Bank lays out plan to become ‘European champion in banking’ – Financial Times
Deutsche Bank has pledged to deliver higher growth, returns and payouts to investors as well as lower costs by 2028, as chief executive Christian Sewing seeks to turn the lender into “the European champion in banking”.
Germany’s largest bank unveiled new targets in London on Monday afternoon as part of a capital markets day. Sewing, who has led the lender through a protracted and costly restructuring since 2018, said he wanted to make Deutsche Bank “the European alternative in global banking and the gateway to Europe for clients around the world”.
Shares in Deutsche Bank have almost doubled over the past 12 months as the Frankfurt-based lender reported record quarterly profits on the back of surging revenues from bond and currency trading.
For the first time in more than a decade, Deutsche Bank has promised to earn more than its cost of equity, with a target of a return on tangible equity of more than 13 per cent by 2028. That compares with its previous target of at least 10 per cent, which is roughly equivalent to its cost of equity.
The new target is more ambitious than analysts’ current expectations. Analysts had foreseen an increase to 11 per cent by 2027.
The bank said on Monday that it had met its 2025 target for returns, adding that full-year revenue is expected to be about €32bn while pre-tax profit is forecast to be about €10bn.
Deutsche’s shares fell more than 3 per cent on Monday afternoon after the lender unveiled its new targets, underperforming the wider European stock market.
Over the next three years, the lender has pledged to deliver cumulated revenue growth of close to 16 per cent, lifting revenues to €37bn. At the same time, it has become more ambitious on costs, promising to drive its cost-income ratio below 60 per cent, 5 percentage points below its previous target. Achieving that will require axing €2bn in gross costs over the coming years.
Deutsche also unveiled a more generous policy of payouts to shareholders, even after increasing its dividend by more than 50 per cent last year and starting a programme of share buybacks. On Monday, it said it would earmark 60 per cent of its net profit attributable to shareholders for dividends and buybacks, compared with 50 per cent to date.
