Deutsche Bank has announced plans to streamline operations by reducing management roles and cutting headcount in the coming years, as rising expenses weigh on its financial performance in the final quarter of 2024. Despite a strong showing in its investment banking division, unexpected cost increases overshadowed the results, prompting Chief Executive Officer Christian Sewing to prioritise efficiency improvements.
Operating expenses surged by 14% year-on-year, eclipsing the bank’s record-breaking fourth-quarter performance in fixed-income trading. Sewing, who has led Deutsche Bank for nearly seven years, reaffirmed the institution’s goal of operating with a lower workforce while maintaining a leaner, more efficient structure.
The German lender had previously aimed to keep costs below 62.5% of total income in 2025 but has now revised that target to below 65%, citing additional investments. This adjustment triggered a negative market reaction, with Deutsche Bank’s shares falling as much as 6.3% in Frankfurt trading before stabilising at a 4.2% decline. Despite this, the bank’s stock remains up 55% over the past year.
Analysts at KBW described the latest financial results as underwhelming, with increased costs offsetting a slight revenue beat. In response, Deutsche Bank has granted greater control to its business leaders over cost management and is actively cutting management layers while integrating teams. Areas failing to meet efficiency benchmarks will face further scrutiny, and underperforming units may be trimmed as part of a broader restructuring beyond 2025.
The bank remains focused on delivering shareholder returns, confirming plans for €2.1 billion in capital distributions this year, including €1.3 billion in dividends and €750 million in share buybacks. Additionally, Deutsche Bank reaffirmed its 2025 revenue target of €32 billion—3% above consensus estimates—despite the upward revision of cost targets.
Investment banking remains a bright spot, with fixed-income and currency trading revenue jumping 26% in the fourth quarter, outperforming analysts’ expectations. Advisory and equity capital markets revenues also surged by 71%, as Deutsche Bank’s expansion efforts in these areas began to yield results.
Conversely, revenue from corporate and private banking declined due to falling interest rates and economic headwinds, while provisions for bad loans stood at €420 million for the quarter—broadly in line with market expectations. Deutsche Bank anticipates a moderation in credit loss provisions this year, alongside reduced legal costs, which should help drive profitability.
Sewing is set to unveil a new strategic roadmap later this year, aiming to sustain growth while ensuring efficiency gains. He remains committed to improving returns for shareholders, with analysts predicting that the bank’s earnings per share could more than double from 2024 levels.
