In the midst of all the crises, Deutsche Bank made its highest profit in 15 years in 2022. Group CEO Christian Sewing confirmed on Thursday the goal of "sustainable" growth over the next few years and further increasing the return for the shareholders of the Dax group.
The pre-tax profit grew last year by 65 percent to around 5.6 billion euros, as announced by Deutsche Bank in Frankfurt. The surplus has more than doubled to around 5.7 billion euros compared to the previous year. After deduction of interest payments to holders of subordinated bonds, shareholders are left with a profit of just over 5.0 billion euros, compared to 1.9 billion euros a year earlier. The bank also benefited from a one-off tax credit of 1.4 billion euros.
In the times before the financial crisis of 2008/2009, profits in the billions were nothing special. In its record year 2007, Deutsche Bank achieved a pre-tax profit of more than EUR 8.7 billion and a surplus of around EUR 6.5 billion. But Germany's largest bank had to clean up its balance sheet after the great crisis and made losses for five years in a row up to and including 2019.
Sewing: Transformation successful
In the summer of 2019, Sewing, who had been promoted to the top position a year earlier, initiated a fundamental realignment of the group: investment banking was trimmed, global stock trading ended, and the integration of Postbank into private customer business was pushed ahead. In 2020, Deutsche Bank closed a year with a profit for the first time.
"The transformation of Deutsche Bank over the past three and a half years has been a success," Sewing said on Thursday. "By focusing on our strengths, we have become significantly more profitable, diversified and efficient."
Last year, things went well for Deutsche Bank, especially in business with private customers and companies. The corporate bank more than doubled its pre-tax profit to EUR 2.1 billion. At EUR 2 billion, the private customer bank even earned more than five times as much as a year earlier. The two segments together thus yielded more than the investment bank, on whose success Deutsche Bank had long depended.
Interest boosts business
In 2022, the investment bank's profit fell by six percent to 3.5 billion euros. Asset management also yielded less: the pre-tax profit of the in-house fund company DWS collapsed by 27 percent to 598 million euros.
As with other institutes, the turnaround in interest rates gave business a boost. In the fourth quarter, Deutsche Bank's pre-tax profit increased more than ninefold within a year: to 775 million euros. The bottom line for the period October up to and including December was 1.8 billion euros in the books after 145 million euros a year earlier.
After Deutsche Bank had increased its earnings - i.e. total income - last year by seven percent to 27.2 billion euros, also thanks to the rise in interest rates, CFO James von Moltke expects a further increase to 28 billion to 29 billion euros this year euros out.
Yield target is raised
Meanwhile, the board of directors fears hardly more loan defaults in 2023 than in the previous year - despite the difficult economic situation as a result of the Russian war of aggression in Ukraine and high inflation. From today's perspective, risk provisions for impaired loans will reach 0.25 percent rather than 0.30 percent of the loan volume in the current year, explained von Moltke. Last year, Deutsche Bank invested a good 1.2 billion euros in risk provisioning, more than twice as much as in 2021.
The bank even exceeded the return target for the full year 2022, which analysts had long doubted: the after-tax return on tangible equity reached 9.4 percent, the target was eight percent. For 2025, the Management Board confirmed the goal of achieving a return of more than ten percent. In 2021 it was 3.8 percent.
The shareholders of the Dax group should participate in the good figures: After a dividend of 20 cents per share for the 2021 financial year, there should be 30 cents for the past year.