Deutsche Bank has discarded its cost target for 2022 and thus an important part of the corporate strategy. That said, CFO James von Moltke on Wednesday in Frankfurt when the quarterly figures were announced. Instead of an absolute number, the focus will only be on the cost / income ratio, i.e. the expense ratio. It is expected to decrease from the current 80 percent to 70 percent by 2022. The bank only tightened its cost target at the end of 2020, although the brand originally issued seemed ambitious.
The need to save at Germany’s largest financial institution is apparently no longer so urgent in view of the robust profits. For the second quarter, the bank reported a net profit of 692 million euros, clearly exceeding analysts’ expectations. All four divisions developed as expected or even better, said von Moltke. It was the fourth quarterly profit in a row and the best fourth quarter since 2015. The bank raised the earnings target for the coming year. After an initial gain of up to 4.5 percent, the Deutsche Bank share was recently a good one percent in the red.
In investment banking, which benefited from exceptionally high demand for capital market products in 2020, revenues fell by eleven percent from April to June to EUR 2.4 billion. In its core business with bonds and currencies, Deutsche Bank was also better off than its competitors from Wall Street with a minus of eleven percent.
Group boss Christian Sewing has been trying to get the institute back on track for two years with a new strategy. Part of the plan, in addition to the restructuring of the corporate divisions, included massive savings and the cutback of 18,000 jobs. The earnings in the corporate bank, which Sewing had initially referred to as the heart of the new strategy, fell another eight percent in the second quarter. Nevertheless, the bank sees itself on track overall. The restructuring efforts are “well advanced”, said von Moltke. He defended the decision not to state an absolute cost target in the future. This had been planned for a long time.
While profits have stabilized, the institute is confronted with a growing number of legal disputes and regulatory problems: for example impending sanctions by the US Federal Reserve, allegations of the wrong sale of foreign exchange derivatives in Spain, the expanded mandate of Bafin’s money laundering officer at the bank and a new lawsuit in the US alleging that the bank was involved in a pyramid scheme. About the latter, von Moltke said that the allegations were considered unfounded.