Deutsche Bank’s business also went well in the third quarter. Although the company had to accept a decline in profits, this was expected. The IT problems at Postbank continue to cost money.
By the end of the year, the IT problems associated with the conversion of Postbank customers should be largely resolved. Deutsche Bank, which presented its quarterly balance sheet today, is overall more confident about its own business.
The figures and statements from bank management were received favorably on the stock market today. The share rose to the top of the leading DAX index with a price gain of around six percent.
More profit than expected, but less than last year
In particular, the profit yield at Deutsche Bank was a slightly positive surprise. The group had to accept a decline in profits of eight percent to around one billion euros due to higher taxes; However, analysts had expected a sharper decline.
The board led by boss Christian Sewing is confident that it will be able to exceed the strategic goals set for 2025, it said in a letter to employees on the occasion of the balance sheet for the third quarter.
Postbank problems continue to cause costs
One of the bank’s immediate goals is likely to be to sort out the IT problems at its subsidiary Postbank. According to CFO James von Moltke, the additional costs related to the Postbank problems are estimated at around 30 to 35 million euros in the fourth quarter. In the third quarter it was less than ten million euros.
In recent months there have been strong complaints from Postbank customers, particularly in connection with an IT change. According to consumer advocates, they complained about blocked accounts and delayed follow-up financing. A special representative on behalf of the financial regulator Bafin is now monitoring that Deutsche Bank gets the problems under control. Since last year, twelve million Postbank customers have been gradually brought together on one platform with seven million Deutsche Bank customers in Germany.
DWS has its own IT problems
IT problems are also causing high costs at the fund subsidiary DWS. The conversion of the computer systems at DWS will probably be more expensive than previously assumed, said DWS boss Stefan Hoops in a conference call with analysts today. “It is clear at this point that we will have another year of significant IT build-out costs, corresponding to 2023, leading to further transformation costs in 2024.” This involves around 100 million euros each. In addition, the hoped-for savings are unlikely to occur until later, said Hoops.
Less provisions, more income
At the parent company, the experts were largely impressed by the business figures for the third quarter. Deutsche Bank has reduced reserves for loan defaults by 100 million euros to 245 million euros.
The group’s total income increased by three percent to 7.1 billion euros in the quarter. In addition to the private customer business, the corporate bank in particular performed well among the group divisions. The division doubled its pre-tax profit to 805 million euros, while the other areas achieved less profit before tax than in the third quarter of 2022. This also included the investment bank and the fund subsidiary DWS.
Prospect of higher dividends
According to CEO Sewing, the bank should now achieve revenues of around 29 billion euros for the year as a whole, which is roughly the upper end of the previous target range. This also increases the potential to increase distributions to shareholders, says Sewing. So far, the institute is assuming that over one billion euros will flow back to shareholders through dividends and share buybacks. In 2022 it was around 700 million euros.