
Germany’s biggest lender Deutsche Bank On Thursday, a weaker than expected profit that fell sharply in the last three months of 2024, because legal provisions on the bottom line were weighed.
On Thursday, the Frankfurt-raised shares of the bank fell by 3.43% at 12:57 pm London on Thursday.
The net profit that can be attributed to shareholders, reached 106 million euros in the fourth quarter ($ 110.4 million), compared to the 282.39 million euros prediction in an LSEG survey of analysts. The result meant a significant decrease in the 1,461 billion euros that was reached in the third quarter.
Full year to attribute net profit to shareholders at 2,698 billion euros, a decrease of 36% from 2023.
Turnover reached 7,224 million euros in the fourth quarter, versus an LSEG analyst’s survey of 7,125 billion euros – but was eroded in the period by costs of 594 million euros. The turnover of 2024 years grew by 4% on an annual basis to 30.1 billion euros.
Deutsche Bank CFO James von Moltke admitted that the bank “saw a very high level of non-operational costs in 2024.”
“We are not happy with one -off costs or surprises and most of these things have been real … issues that arise from the past, sometimes the distant past, the Postbank takeover in 2024 is a good example. Netto basis, represents around 900 Million costs in ’24, “Von Moltke told Annette Weisbach of CNBC in an interview on Thursday.
“So in a sense, the only good news you can say about it: it’s behind us. And more importantly, that’s why the company’s risk profile has changed dramatically,” he added
The bank said that it is now aimed at a cost use ratio of less than 65% this year, compared to a first goal of less than 62.5%. Despite the decrease in the quarterly profit, Deutsche Bank also launched a share purchasing of 750 million euros.
Other highlights of the fourth quarter were:
- Profit before tax of 583 million euros, a decrease of 17% on an annual basis;
- Provision for credit losses of 420 million euros, a decrease of 14% on an annual basis;
- CET 1 Capital Ratio, a measure of the bank’s solvency, was 13.8%, unchanged compared to the third quarter.
Deutsche Bank declared a return after taxes on tangible shares (ROTE) of 4.7% for the entire year 2024, compared to 7.4% in the previous year and well below the purpose of the creditor of more than 10% ROTE this year .
The income of the investment bank shine in the fourth quarter
The fall in profit of the fourth quarter marks a setback for the lender, who had returned to the black in the third quarter, after breaking his profit streak with a loss of 143 million euros in the three months to the end of June, because it is a provision for A lawsuit about her postal bank division. Deutsche Bank previously started a cost-saving drive of 2.5 billion-euro after touching a post-financial crisis low in 2019 that awarded a decade of weak income, with shares gradually gaining ground to add more than 30% last year .
Earlier stimulated by return and a high interest environment, European banks must now compete with the partial loss of that support, since the European Central Bank continues the cycle of loosening the monetary policy of last year. The ECB is generally expected to reduce the rates again during the meeting later in the Thursday session.
“The strong rugwind of higher interest rates has come to an end. We believe that banks that focus more on reimbursements -based income rather than just net interest income, and those with potential for mergers and acquisitions, are better positioned for 2025. Including banks in Germany, Italy, Spain and France, “Ingen Analists noted in their Bank Outlook 2025 report released in November.
Deutsche Bank has recently seen robust performance of its investment bank activities – an important engine of his income from the third quarter And a core growth area in the period. In the fourth quarter, the income of the Investment Banking Unit achieved 30% on an annual basis to 2.4 billion euros, and also increased 15% on an annual basis to 10.6 billion euros in 2024.
This year, German banks also have the storm of a dimmed prospect for the largest economy in Europe, together with the political volatility prior to the upcoming general elections in February.
“We also share the frustration that I think it is pretty ugly in Europe, that growth stagnates relatively in recent years, since Europe has continued a transition on a number of items, energy costs, inflation, interest cycle and what do you have,” von Moltke CNBC told Thursday. “We would like to see a policy mix that focuses on growth and competitiveness in Europe.”
In our own country, Deutsche Bank could benefit The uncertainty about the fate of the second largest lender Commerzbank in Germany, in which the Unicredit of Italy has built up an interest since September, is speculation of a possible takeover.
Talked to CNBC on Thursday, Von Moltke said that Deutsche Bank is looking at how he should compete or take advantage, and assessing strategic consequences of every “change in our landscape” that would be caused by a successful takeover of Unicredit.
Transatlantic
European banks have come under pressure to compete with the scale, growth and profitability of peers in the US, where Deutsche Bank has steadily invested to strengthen its foot. Deutsche’s activities in the country are now good for around 20% of the measures, including balance and turnover, Von Moltke said Thursday.
“It is a cumulative investment that we see paying off. So you have seen, for example, when hiring bankers, business financing bankers, we have increased … that footprint, and so we expect to take advantage,” he said CNBC. “Likewise, on the market side, we have made a number of really strategic investments, and we see that all his fruit is shed.”
He added that the American company still has room to ‘deliver and crystallize’ in the future, agree that he shares the optimism of transatlantic counterparts about the regional prospects. After the return of US President Donald Trump to position, market participants now look into the question of whether the leader of the White House will be good for his promise of lighter touch regulations – and the potential impact of such a step on banks that are active in the American commercial space and on their competitiveness about European lenders.