Deutsche Bank Aktiengesellschaft (DB) Q4 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call summary and Q&A section reveal a positive outlook. The company is on track to meet revenue goals, expects strong profitability, and maintains solid asset quality. Strategic investments and operational efficiencies are projected to enhance future growth. The management's focus on shareholder returns, including potential buybacks, adds to the positive sentiment. Despite some concerns about margin compression and regulatory impacts, the overall strategic positioning, supported by fiscal stimulus and market confidence, suggests a positive stock price movement in the short term.
Key Financial Performance
Revenue EUR 32 billion, representing a compound annual growth of 6% since 2021 and a 7% increase compared to the prior year. Growth attributed to diversified business mix and revenue composition.
Cost Income Ratio 64%, in line with the target of below 65%. Achieved through EUR 2.5 billion of operational efficiencies.
Credit Loss Provisions EUR 1.7 billion, down 7% year-on-year. Decrease attributed to improved macroeconomic forecasts and portfolio effects.
Pre-tax Profit EUR 9.7 billion, up 84% year-on-year. Improvement driven by successful execution of the global Hausbank strategy.
Net Profit EUR 7.1 billion, record profits for 2025. No specific reasons mentioned.
Post-tax Return on Tangible Equity 10.3%, meeting the full-year target of above 10%. No specific reasons mentioned.
CET1 Ratio 14.2%, strong capital position despite capital headwinds in Q4. Supported by robust organic capital generation and capital efficiency program.
Shareholder Distributions EUR 2.9 billion for 2025, including EUR 1 billion share buyback and EUR 1 dividend per share. Cumulative distributions for 2021-2025 reached EUR 8.5 billion, exceeding the EUR 8 billion target.
Noninterest Expenses EUR 20.7 billion, down 10% year-on-year. Reduction due to lower litigation expenses and cost discipline.
Operating Leverage 17% in 2025, driven by cost reduction and strong revenue growth.
Pre-provision Profit EUR 11.4 billion, up threefold since 2021. No specific reasons mentioned.
Corporate Bank Revenue Growth More than 40% since 2021. Growth attributed to normalized interest rate environment and increased fee income.
Net Inflows in Private Bank EUR 110 billion since 2021. No specific reasons mentioned.
Net New Assets in Asset Management (DWS) EUR 85 billion over the last 4 years. No specific reasons mentioned.
Sustainable Finance Volumes EUR 98 billion in 2025, the highest annual volume since 2021. Cumulative total of over EUR 470 billion since 2020.
Tangible Book Value Per Share EUR 30.98, a 4% increase year-on-year and a 25% increase since 2021. No specific reasons mentioned.
Diluted Earnings Per Share EUR 3.09 for the full year. No specific reasons mentioned.
Liquidity Coverage Ratio 144%, robust liquidity metrics. No specific reasons mentioned.
Net Stable Funding Ratio 119%, robust liquidity metrics. No specific reasons mentioned.
Net Interest Income (NII) EUR 13.3 billion for the full year, in line with plans when adjusted for FX effects. Growth supported by higher deposit revenues and structural hedge portfolio.
Adjusted Costs EUR 20.3 billion for the year, in line with guidance. No specific reasons mentioned.
Provision for Credit Losses EUR 1.7 billion for the full year, 7% lower than in 2024. Decrease attributed to improved macroeconomic forecasts and portfolio effects.
Assets Under Management (DWS) EUR 1.08 trillion in 2025. No specific reasons mentioned.
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Operating Highlights
Global Hausbank Strategy: The company has transformed into a simpler, more focused business with a significantly improved financial profile. This includes scaling the global Hausbank model by leveraging global networks, product capabilities, and client relationships.
Sustainability Agenda: Sustainable finance volumes reached EUR 98 billion in 2025, with a cumulative total of over EUR 470 billion since 2020. ESG ratings have significantly improved.
Market Share in Investment Banking: The company gained market share in investment banking, with client activity increasing by 11% in 2025 compared to the previous year.
Asset Management Expansion: DWS attracted EUR 85 billion of net new assets over the last 4 years, surpassing EUR 1 trillion in assets under management in 2025.
Operational Efficiencies: Achieved EUR 2.5 billion in operational efficiencies, reducing the cost base by nearly EUR 1 billion since 2021. Noninterest expenses were down 10% year-on-year.
Cost-to-Income Ratio: Delivered a cost-to-income ratio of 64%, meeting the target of below 65%.
Capital Distribution: Proposed EUR 1 dividend per share and authorized a EUR 1 billion share buyback, with cumulative distributions for 2021-2025 reaching EUR 8.5 billion, exceeding the original EUR 8 billion target.
Strategic Goals for 2028: Plans to increase post-tax return on tangible equity to greater than 13% and improve the cost/income ratio to below 60% by 2028.
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Risk or Challenges
Credit Loss Provisions: Provision for credit losses was EUR 1.7 billion in 2025, with ongoing headwinds in commercial real estate and a larger single name event in the investment bank. This indicates potential vulnerabilities in asset quality and exposure to specific sectors.
Capital Headwinds: The CET1 ratio of 14.2% was achieved despite capital headwinds in Q4, including the discontinuation of transitional rules for unrealized gains and losses on sovereign debt and operational risk-weighted asset updates. These factors could strain capital adequacy in adverse conditions.
Interest Rate and FX Pressures: Corporate Bank revenues were stable despite lower rates and FX pressures, which could continue to impact profitability if these conditions persist.
Commercial Real Estate Exposure: Ongoing headwinds in commercial real estate were noted, with provisions expected to trend moderately downwards in 2026. However, this sector remains a risk area.
Cost Management Challenges: While noninterest expenses were reduced, higher performance-related compensation and deferred equity compensation costs could pressure cost management efforts.
Regulatory and Taxation Changes: The German tax reform and geographical mix of income impacted the tax rate, which is expected to increase to 28% in 2026. Regulatory changes could pose additional challenges.
Market Risk-Weighted Assets: Higher market risk-weighted assets due to increased trading activity reduced the CET1 ratio by 9 basis points, indicating potential risks from market volatility.
Stage 3 Credit Events: Higher provisions in Stage 3 credit events, particularly in the Corporate Bank and investment bank, highlight risks from specific credit exposures.
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Guidance & Outlook
Revenue Expectations: The company expects full-year revenues to increase to around EUR 33 billion in 2026, driven by banking book NII growing to EUR 14 billion and growth in net commission and fee income.
Corporate Bank Revenue: A modest increase in full-year Corporate Bank revenues is expected, with accelerating sequential growth as the year progresses. Interest rate and FX headwinds will impact year-on-year comparisons in the first half of the year, but growth is expected to be more pronounced in the second half.
Investment Bank Revenue: Revenues are expected to be slightly higher compared to 2025, with growth in IBCM revenues and flat FIC revenues.
Private Bank Revenue: Continued growth is expected, with full-year revenues slightly higher than in 2025.
Asset Management Revenue: A modest increase in revenues is anticipated for 2026.
Noninterest Expenses: Noninterest expenses in 2026 are expected to increase to slightly above EUR 21 billion, including around EUR 900 million of incremental investments to unlock growth and efficiencies.
Provision for Credit Losses: Provisions are expected to trend moderately downwards in 2026 as commercial real estate provisions ameliorate and other portfolios normalize, approaching an average run rate of around 30 basis points through 2028.
Capital Distributions: The company plans to increase its payout ratio to 60% starting in 2026, with modest but continuous growth in dividends per share, complemented by share buybacks. Additional shareholder distributions are planned for the second half of 2026, subject to authorizations.
Strategic Goals for 2028: The company aims to increase post-tax return on tangible equity from 10% in 2025 to greater than 13% by 2028 and improve the cost/income ratio to below 60% from 64% in 2025. This will be achieved through focused growth, strict capital discipline, and a scalable operating model.
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Shareholder Return Plan
Proposed Dividend for 2025: EUR 1 per share, totaling approximately EUR 1.9 billion.
Cumulative Distributions (2021-2025): EUR 8.5 billion, exceeding the original EUR 8 billion target.
Payout Ratio for 2025: 50% of net income.
Future Payout Ratio: Increase to 60% starting in 2026.
Authorized Share Buyback for 2025: EUR 1 billion.
Cumulative Share Buybacks (2021-2025): Part of the EUR 8.5 billion total distributions.
Additional Share Buyback in 2026: Planned for the second half of 2026, subject to authorizations.
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Key Q&A
Q:Can you clarify how you intend to reach EUR 33 billion in revenues for 2026, including the impact of FX rates and the moving parts for Q1?
A:Christian Sewing explained that the revenue growth is expected across all operating businesses, with modest increases in the Corporate Bank, Investment Bank, Private Bank, and Asset Management. He highlighted strong momentum in Corporate Bank lending and fee business, growth in Investment Bank advisory and debt origination, and positive trends in Private Bank and Asset Management. Raja Akram added that FX assumptions are manageable and investments will support future growth.
Q:What are you spending the EUR 900 million investment on, and how will it support your business going forward?
A:Raja Akram stated that the investment is part of a $1.5 billion program over three years, aimed at generating operating efficiencies and incremental operating leverage in 2027 and 2028. The focus is on maintaining positive operating leverage starting in 2026.
Q:How do you plan to use the excess capital, and what is the update on FRTB?
A:Raja Akram mentioned prioritizing safety, soundness, and shareholder returns, with plans for in-year buybacks in 2026. M&A is a lower priority. On FRTB, he noted that assumptions are conservative, and regulatory simplifications are expected.
Q:What are your expectations for deposit volume growth and pricing, especially in Germany?
A:Raja Akram noted stable deposit pricing trends in the Corporate Bank and confidence in deposit growth strategies in the Private Bank. He mentioned potential challenges in managing excess deposits and emphasized the bank's operational reliability and network advantages.
Q:What is the outlook for credit loss provisions (CLPs) in 2026?
A:James von Moltke and Raja Akram expect CLPs to trend down towards 30 basis points, with improvements in credit quality and a gradual resolution of commercial real estate (CRE) issues. They anticipate a modest reduction in CLPs year-over-year.
Q:What are the main changes observed during James von Moltke's tenure as CFO?
A:James highlighted cultural changes in accountability and discipline, as well as the adoption of SVA tools for decision-making. Christian Sewing praised James for his integrity, credibility, and long-term strategic thinking, which have significantly benefited the bank.
Q:What is the trajectory for the EUR 21 billion cost guidance in 2026?
A:Raja Akram explained that investments will build up gradually over the year, with no outsized quarterly impact. Revenue growth may drive volume-related expenses, but the bank remains committed to its expense guidance.
Q:What is the potential for additional capital distribution in 2026?
A:Christian Sewing stated that additional buybacks depend on delivering on plans and maintaining strong capital ratios. Discussions with regulators will follow successful execution.
Q:What are the drivers for the EUR 33 billion revenue target in 2026 and beyond?
A:Raja Akram and Christian Sewing cited growth in the Corporate Bank, Investment Bank, Private Bank, and Asset Management, supported by investments, market share gains, and German fiscal stimulus. They emphasized the bank's diversified revenue base and strategic initiatives.
Q:What is the impact of hedges on net interest income (NII) in 2026?
A:James von Moltke explained that hedge rollovers contribute significantly to NII growth, with a gap between current swap rates and maturing hedges driving the benefit. Deposit and loan growth also support NII.
Q:What is the status of the U.S. commercial real estate (CRE) portfolio?
A:James von Moltke noted that the CRE portfolio is in the tail of its cycle, with some remaining challenges in the West Coast office submarket. He expects gradual improvement but remains cautious about potential downward revisions in appraisals.
Q:What is the outlook for Private Bank fees and growth?
A:Christian Sewing and Raja Akram expect continuous improvement in Private Bank revenues, driven by investment business growth and cost management. They anticipate positive developments starting in Q1 2026.
Q:What is the base case assumption for SRTs in 2026?
A:Raja Akram stated that the bank plans to increase SRTs by approximately 25% over the next two years, with EUR 5 billion incremental for 2026-2027.
Q:What are the expectations for margin trends in the Personal Bank and Corporate Bank?
A:Raja Akram noted some margin compression in the Personal Bank due to competitive deposit pricing but expects stabilization. In the Corporate Bank, margin headwinds are expected to subside in the second half of 2026, with sequential growth anticipated.
Q:What is the impact of German stimulus and deregulation on the bank's business?
A:Christian Sewing highlighted positive momentum in defense and infrastructure financing, supported by government reforms and European initiatives. He expects significant revenue contributions from German stimulus in 2027-2028.
Q:Review of Unclear Management Responses
A:Management avoided providing specific details on the exact timing and magnitude of additional capital distributions, as well as the precise mix of U.S. dollar-denominated deposits in the Corporate Bank. They also did not fully address the potential impact of regulatory changes on FRTB or elaborate on the data center lending exposure.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Bank revenue
CFO role
Corporate Bank
DWS
Deutsche Bank
EUR inflow
FIC
FX
IBCM
NII
Private Bank
Stage
bank
basis point
benefit
book
champion
client
compensation
cost income
credit loss
deposit revenue
distribution respect
dividend
effect
equity
fee
franchise
income ratio
momentum
point basis
product
profitability
provision credit
reduction
share buyback
target
DB Transcript
Deutsche Bank Aktiengesellschaft (DB) Q4 2025 Earnings Call Transcript
Positive1-29
The earnings call summary and Q&A section reveal a positive outlook. The company is on track to meet revenue goals, expects strong profitability, and maintains solid asset quality. Strategic investments and operational efficiencies are projected to enhance future growth. The management's focus on shareholder returns, including potential buybacks, adds to the positive sentiment. Despite some concerns about margin compression and regulatory impacts, the overall strategic positioning, supported by fiscal stimulus and market confidence, suggests a positive stock price movement in the short term.
Deutsche Bank Aktiengesellschaft (DB) Presents at European Financials Conference 2025 Transcript
Neutral11-20
Capital Power Corporation (CPX:CA) Q3 2025 Earnings Call Transcript
Positive10-29
The earnings call summary indicates strong financial performance with robust revenue growth, effective cost management, and a solid capital position. The company is on track to exceed its distribution target, and the positive outlook in investment and private banking sectors supports this sentiment. The Q&A section highlights ongoing strategic initiatives and potential expansion, which adds optimism. No significant negative trends or risks were identified. Overall, the sentiment is positive, suggesting a likely stock price increase over the next two weeks.
Deutsche Bank Aktiengesellschaft (DB) Q3 2025 Earnings Call Transcript
Positive10-29
The earnings call summary reveals strong financial performance, effective cost management, a robust capital position, and positive outlooks for various business segments. The Q&A section highlights confidence in capital distribution and strategic growth areas, with no significant negative sentiments from analysts. While some responses lacked specific details, the overall tone remains optimistic, especially with the potential for two buybacks next year. These factors suggest a positive sentiment, likely leading to a stock price increase in the next two weeks.
DB Report
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