Deutsche Bank pledges to boost dividend and cut jobs

Deutsche Bank has set out plans to triple its dividend, buy back more shares and cut jobs as Germany’s biggest bank tries to boost a share price that has languished over the past year.

The bank said on Thursday that it wanted to “accelerate” its payouts to shareholders and was on track to beat a target of returning €8bn by 2025.

The pledge came despite a 30 per cent drop in profits during the fourth quarter, when it was stung by a higher tax bill and a larger provision for loan losses, mainly driven by a bleaker outlook for US commercial real estate.

While overall loan-loss provisions were in line with the bank’s guidance, provisions for US commercial real estate in the fourth quarter shot up to €123mn, from just €26mn a year before.

Deutsche made €1.26bn in net income in the final quarter of the year, down from €1.8bn a year earlier, while revenues and costs both climbed 5 per cent.

“The year ended on a whimper,” Keefe, Bruyette & Woods analysts wrote in a note to clients, adding that the bank’s operational performance had been “poor”.

One drag on the financial results was a €233mn writedown on the book value of London-based boutique investment bank Numis that Deutsche bought late last year for £410mn.

Deutsche Bank chief financial officer James von Moltke said the goodwill impairment was “not related to the business outlook” for the franchise and should not be seen as a sign that Deutsche had overpaid.

Chief executive Christian Sewing said he was expecting a 10 per cent increase in revenue over the next two years to €32bn, compared with a previous target of €30bn for 2025. “We feel further encouraged by a strong start to this year in January,” he told journalists in Frankfurt on Thursday.

As the windfall from higher interest rates begins to recede, the bank said it would axe 3,500 jobs by 2025, although later clarified that 800 of the cuts had already been announced in April last year.

The move follows a headcount expansion of more than 5,000 in the past 12 months that has taken the bank’s workforce above 90,000 for the first time since Sewing embarked on a restructuring in 2019.

Deutsche said most of the positions to be eliminated would be non-client facing, and that it expects €400mn in restructuring costs in 2024, down from €566mn last year.

Deutsche shares, which before Thursday were down 2 per cent over the past 12 months, were up 3.8 per cent in midday trading on Thursday.

Asked about the bank’s low valuation on the stock market, which sits at just 0.4 times its book value, Sewing told reporters that “we are still a show-me story because we have missed targets too many times in the past”.

As part of its plan to boost shareholder returns, Deutsche said it would lift its dividend by 50 per cent to €0.45 a share this year and vowed to push the payout to €1 a share by 2025.

The bank also promised to buy back another €675mn of shares over the next five months after receiving regulatory approval, following a €450mn share buyback in 2023.