Deutsche Bank Q1 Result: Strongest Quarterly Revenues Since 2016, Announces Efficiency Improvement Strategy, May Commence Buyback in H2 2023

  • Deutsche Bank AG DB reported Q1 2023 revenue growth of 5% to €7.7 billion, the highest since 2016.
  • Revenue growth, which aligns with DB's growth objectives of 3.5%-4.5% CAGR through 2025, was achieved despite planned business exits and challenging financial markets. 
  • Corporate Bank net revenues increased 35% Y/Y to €2.0 billion on growth across all regions and businesses, and Private Bank revenues rose 10% Y/Y to €2.4 billion.
  • Investment Bank net revenues declined 19% Y/Y to €2.7 billion mainly on lower Fixed Income & Currencies revenues (-17% Y/Y), and Asset Management revenues were down 14% Y/Y. 
  • Noninterest expense grew 1% Y/Y to €5.5 billion on investments in business growth, technology and controls.
  • The bank reported net profit of €1.3 billion, 8% Y/Y.
  • Provision for credit losses stood at €372 million (up from €292 million in Q1 2022) on higher provision for credit losses in the Private Bank (€267 million vs. €101 million a year ago).
  • Provision of credit losses represented 30 basis points of average loans, and DB expects it to be with 25-30 bps of average loans in 2023.
  • Common Equity Tier 1 capital ratio improved to 13.6% from 12.8% in Q1 2022.
  • Global Hausbank strategy: DB now targets incremental cost savings of €2.5 billion, up from €2.0 billion through non-client-facing staff reduction, simplifying the mortgage platform, optimizing the retail distribution network and automating processes.
  • Last week, the company announced Karl von Rohr would not renew his contract as a management board member after October 2023.
  • DB also plans to reduce €15 billion-€20 billion risk-weighted assets in lower yield portfolios by 2025.
  • The bank expects to start share buybacks in the second half of 2023. 
  • Price Action: DB shares are trading higher by 2.54% at $10.92 on the last check Thursday.
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