In the first quarter of 2025, Deutsche Bank (DB, Financial) advanced its Global Hausbank strategy with notable achievements. The bank reported a compound annual revenue growth rate of 6.1% since 2021, fitting within the bank's elevated target range of 5.5% to 6.5%. Additionally, assets under management saw significant growth, increasing by EUR 95 billion over the past year, with EUR 26 billion in net inflows during the first quarter alone.
Deutsche Bank also made strides in its EUR 2.5 billion operational efficiency program. Efforts such as optimizing the banking platform in Germany and reducing the workforce in non-client facing roles have led to savings of EUR 2.1 billion, roughly 85% of the total anticipated savings. The bank has already achieved approximately EUR 1.9 billion in realized savings, benefiting from previous restructuring and disciplined hiring practices.
On the capital efficiency front, Deutsche Bank achieved an additional EUR 4 billion reduction in risk-weighted assets (RWA) through process enhancements and a securitization deal. This brings the cumulative RWA benefits to EUR 28 billion, which is at the higher end of the bank's year-end 2025 target range of EUR 25-30 billion.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 1 analysts, the average target price for Deutsche Bank AG (DB, Financial) is $15.62 with a high estimate of $15.62 and a low estimate of $15.62. The average target implies an downside of 39.33% from the current price of $25.74. More detailed estimate data can be found on the Deutsche Bank AG (DB) Forecast page.
Based on the consensus recommendation from 1 brokerage firms, Deutsche Bank AG's (DB, Financial) average brokerage recommendation is currently 4.0, indicating "Underperform" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for Deutsche Bank AG (DB, Financial) in one year is $15.69, suggesting a downside of 39.04% from the current price of $25.74. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the Deutsche Bank AG (DB) Summary page.
DB Key Business Developments
Release Date: January 31, 2025
- Pre-Provision Profit: Increased by 19% in 2024 compared to 2023, adjusted for specific litigation items and goodwill impairment.
- Revenue Growth: 4% year-on-year increase, with 75% from predictable revenue streams.
- Adjusted Costs: Decreased by 1% year-on-year to EUR20.4 billion, or EUR20.2 billion excluding specific real estate measures.
- Corporate Bank Return on Tangible Equity (RoTE): 13% in 2024, three times its 2021 level.
- Investment Bank RoTE: 9% in 2024.
- Fixed Income & Currencies Growth: Financing up 12% year-on-year in 2024.
- Private Bank Net Inflows: EUR29 billion, supporting noninterest revenue growth of 5% in 2024.
- Assets Under Management: Grew by EUR115 billion in 2024, surpassing EUR1 trillion.
- Net Interest Income (NII): EUR13.3 billion in 2024, outperforming prior guidance of EUR13.1 billion.
- Common Equity Tier 1 (CET1) Ratio: 13.8% in Q4 2024.
- Leverage Ratio: 4.6% at the end of Q4 2024.
- Issuance Volume: EUR18 billion in 2024, with a 2025 target of EUR15 billion to EUR20 billion.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Deutsche Bank AG (DB, Financial) increased its 2024 pre-provision profit by 19% compared to 2023, driven by revenue momentum and cost discipline.
- Revenues grew by 4% year-on-year, with 75% coming from more predictable revenue streams.
- The corporate bank delivered a return on tangible equity of 13% in 2024, three times its 2021 level.
- The investment bank outperformed its revenue growth target and achieved a RoTE of 9% in 2024.
- Asset management surpassed EUR1 trillion in assets under management for the first time, driven by net inflows of EUR42 billion into passive investments.
Negative Points
- Deutsche Bank AG (DB) faced significant non-operational costs in 2024, predominantly from litigation matters, which masked the underlying strength of the business.
- The investment bank's RoTE of 9% is still below the internal cost of capital, indicating room for improvement.
- Stage 2 loans increased significantly to EUR64 billion, the highest since 2022, raising concerns about potential credit risks.
- The bank's cost-income ratio target for 2025 is below 65%, higher than previously aimed, indicating challenges in cost management.
- FX losses on AT1 calls are a concern, with investors expecting calls despite potential FX impacts.
