Release Date: January 30, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- DWS Group GmbH & Co KGaA (WBO:DWS, Financial) reported strong long-term net flows of EUR14.4 billion in Q4 and EUR32.9 billion for the full year 2024.
- Assets under management crossed the EUR1 trillion mark, a significant psychological milestone.
- The Passive segment, particularly Xtrackers, delivered record net inflows of EUR41.8 billion for the year.
- Adjusted revenues reached a record level of EUR2.747 billion for 2024, driven by high management fees and additional performance and transaction fees.
- The company proposed an ordinary dividend of EUR2.20 per share, a 5% increase from the previous year, reflecting a strong commitment to shareholder value.
Negative Points
- The Active Equity segment faced challenges with net outflows due to a low-risk appetite among clients and ongoing industry pressures.
- The relative performance of some active strategies declined, prompting changes in leadership and strategy.
- Adjusted costs increased by 4% quarter-on-quarter, impacting the cost-income ratio.
- The fair value of guarantees decreased significantly, negatively affecting other revenues.
- The Alternatives segment, while showing a positive turnaround, had only modest net inflows of EUR1 billion in Q4.
Q & A Highlights
Q: It was announced that discussions around the joint venture with the Postal Bank of China have been terminated. When can we expect any developments regarding earning a majority stake in Harvest?
A: We had constructive discussions with PSBC for a wealth joint venture, but it was not feasible for DWS and DB Group to consolidate. We remain interested in increasing our stake in Harvest, but this requires many discussions and is not entirely in our hands.
Q: In the asset management sector, consolidation is creating larger players. How do you view M&A and the need for further scale? Are you big enough?
A: We do not see size as a target but focus on EPS growth. M&A must add accretive value, and we see more opportunities in the East rather than the Western world. We prefer organic growth over bolt-on acquisitions.
Q: Can you provide more details on your ETF success and future pipeline, particularly in fixed income?
A: Our ETF team is dedicated and has delivered strong growth. We are focusing on active ETFs and have a strong product pipeline. We anticipate continued success in areas like fixed income and are exploring new themes.
Q: Regarding private credit, how do you see the business growing, and what differentiates you in the market?
A: The market is moving towards asset-based finance, making our collaboration with Deutsche Bank more appealing. We have set up management capabilities and are working on an origination partnership to leverage DB's origination channels.
Q: Can you elaborate on your cumulative net flow target of EUR150 billion between 2025 and 2027? Which asset classes will contribute the most?
A: The target is based on strategic planning across investment strategies and markets. We expect two-thirds from Xtrackers and one-third from Alternatives and Active businesses.
Q: What is your outlook for 2025 regarding other revenues and cost-income ratio?
A: We expect other revenues to be higher than in 2024, with stable contributions from net interest income and Harvest. We aim for a cost-income ratio below 59% by managing costs diligently.
Q: How do you view ESG policy from a commercial perspective, and has it benefited you against competitors?
A: We offer a diverse range of products, including climate-related ones, to provide choice. We haven't seen a systematic benefit from our ESG policy compared to competitors, but offering choice is crucial as fiduciaries.
Q: Can you update us on the excess capital position for the firm?
A: We do not disclose excess capital information.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
