Deutsche Bank posts weaker-than-expected profit and ditches 2025 cost target
Deutsche, Germany's largest lender, also abandoned a key cost target, and it announced plans to buy back more shares.
The bank recorded net profit attributable to shareholders of 106 million euros ($110.43 million) in the quarter, down from a profit of 1.26 billion euros a year earlier. It is worse than analyst expectations for a profit of around 380 million euros.
For the full year, Deutsche recorded profit of 2.70 billion, down from 4.21 billion euros for 2023. That was worse than expectations of profit of nearly 3 billion euros.
The results set the stage for a crucial year for Deutsche as Chief Executive Officer Christian Sewing seeks to meet a series of ambitious profit and cost targets he has set to further underpin the once-troubled bank. Some analysts have been sceptical that Deutsche will reach all its goals.
The bank on Thursday abandoned a cost target for 2025, saying it wanted to make investments in business. It now aims for a cost-to-income ratio of below 65%, compared with previous plans for less than 62.5%.
"We have always said that 2025 will be decisive for us. At the end of this year, we will be judged by whether we have been successful with our transformation and growth strategy," Sewing wrote in a memo to employees.
The past year marked the fifth consecutive in the black after years of turmoil and losses. Even so, over the past decade the bank has still lost more than it has earned.
A 15-quarter profit streak at Germany's largest lender was interrupted in the second quarter last year after it made a large provision for investor lawsuits at its Postbank retail division.
Deutsche Bank is one of several big European banks publishing its quarterly report card in the coming weeks. European banks on the whole are expected to report a sharp rise in profits for the final three months of last year, helped by still-robust margins from lending and bumper investment banking revenues.
($1 = 0.9599 euros)
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Zawya
a day ago
- Zawya
US-China trade war could push ECB to continue easing: Mike Dolan
(The opinions expressed here are those of the author, a columnist for Reuters) LONDON - The impact of U.S. tariffs on world trade flows will reverberate in numerous ways for years to come, but a potential re-routing of Chinese exports to Europe could slow inflation there and heap pressure on the ECB for further monetary easing. The European Central Bank appears to have convinced most people last week that the bar for more interest rate cuts in this cycle is quite high. Inflation is near its target, a tariff shock in the euro zone has likely been avoided following the bloc's deal with Washington this week, and a major German fiscal stimulus promises to stoke a 2026 euro zone upturn. Money markets no longer fully price another rate cut in this cycle, and major financial houses such as Deutsche Bank now reckon the easing cycle is over. But as Washington prepares its final list of tariffs for the world at large on Friday, there's another pressure for the ECB to consider. In a blog published on Wednesday, ECB economists detailed how a major flow of Chinese trade away from the United States could lower euro zone inflation further next year, causing the central bank to significantly undershoot its 2% target. Various models considered the potential impact of having higher U.S. tariffs on Chinese goods versus the levies on the rest of the world. The conclusion was that Chinese imports to the euro zone could rise 7%-10%, with Europe's already significant reliance on Chinese imports making it more likely it will absorb cheaper redirected goods. Some 75% of all products imported by big euro zone countries already have at least one Chinese supplier, they point out. Chinese authorities have pledged to support their exporters as they seek new markets at home or in third countries. What's more, China's yuan has fallen almost 10% against the euro over the past six months, making Chinese imports to Europe even cheaper. The direct disinflationary impact seems pretty clear before even discussing the effect on European companies of a new wave of lower-cost competition. "With trade tensions between China and the United States reaching new heights, Chinese exports may be redirected to the euro area," the blog concludes. "In a severe scenario, this additional supply and the accompanying lower import prices could bring down euro area inflation by as much as 0.15 percentage points (next year)." Smaller effects would persist through 2027, they added. GREAT WALL OF IMPORTS Given that the ECB already forecasts that headline inflation will be below its target next year at a rate of 1.8% and only rise to 2% in 2027, added deflationary pressure risks causing a bigger undershoot that may force the central bank to cut interest rates at least once more this cycle. The ECB blog tallies with a column written by Bank of Italy economists last month entitled "The Great Wall of Chinese goods." It argues that a tariff-related diversion of Chinese exports to Europe could cut core euro zone inflation by 0.3 points over two years. They highlight the fact that equipment and machinery such as batteries, lighting, and appliances, as well as electronic goods such as computers, televisions, and cameras, make up the lion's share of EU imports from China. And they show that the euro zone imported about $400 billion of manufactured goods from China, more than 20% of total imports to the bloc. "The findings highlight how protectionism abroad can bring disinflation to open economies like the euro area," they wrote. The studies concentrate solely on the exporting powerhouse that is China, but much higher U.S. tariffs are also being levied against some other BRICS nations, Brazil, India and South Africa. Re-routing of goods from these countries to the EU may be a factor at the margins, exaggerating the disinflationary effect. And demand in Europe for cheap imports may be boosted by the effects of higher government spending in the euro zone starting next year. Whether the ECB should look through another period of sub-target inflation is then a big question. Further easing may do little to directly address diverted imports and may even stoke demand for them further. Moreover, the retreat of the euro in recent weeks might take some of the pressure off. But with a singular inflation-targeting mandate unlike the Federal Reserve, the ECB may feel obliged to address persistent undershooting with more rate cuts. With everyone now guessing about the wider fallout from the tariff war, it may be premature to assume the ECB is at the end of its easing road yet. The opinions expressed here are those of the author, a columnist for Reuters -- Enjoying this column? Check out Reuters Open Interest (ROI), your essential new source for global financial commentary. Follow ROI on LinkedIn. Plus, sign up for my weekday newsletter, Morning Bid U.S.
Web Release
2 days ago
- Web Release
Fashion Arena Prague Outlet Collaborates with VFS Global to Promote Czechia's Shopping Appeal in the Gulf & Middle East
Fashion Arena Prague Outlet, part of the VIA Outlets portfolio, is pleased to announce a new collaboration with VFS Global's Tourism Services Unit to jointly promote the outlet's appeal to travelers from the Gulf and Middle East region. This partnership is designed to enhance awareness of Fashion Arena Prague Outlet as a preferred European shopping destination among GCC travelers. Offering over 200 international and Czech fashion brands with year-round discounts of 30%–70%, the outlet is conveniently located just 20 minutes from Prague's city centre. It operates seven days a week and provides a seamless shopping experience across fashion, sportswear, accessories, cosmetics, and home décor. Through this collaboration, Fashion Arena Prague Outlet and VFS Global will work together on a coordinated promotional strategy that engages both travel trade professionals and consumers. The joint efforts will include outreach to travel agents and tour operators across key Gulf cities through roadshows, trade workshops, and shared marketing initiatives. Travel partners will be supported with tailored incentives, VIP group access, and co-branded promotional opportunities. Consumer-facing activities will focus on influencer-led campaigns, seasonal promotions, and curated shopping experiences that resonate with GCC travelers. These will be complemented by value-added services such as extra discounts, dining vouchers, and VAT refund assistance to enrich the overall visitor experience. This collaboration reflects a shared commitment to connecting GCC travelers with premium shopping experiences in Europe and to strengthening Czechia's positioning as a fashion and lifestyle destination. Quotes from the Partners- Petr Vejvoda K?ivonožka, Senior Tourism & Partnerships Manager, Fashion Arena Prague Outlet, shared: 'We look forward to working closely with VFS Global to welcome more guests from the Gulf and Middle East. Their regional expertise and strong industry relationships will be instrumental in showcasing the outlet's unique appeal.' GB Srithar, Head – Tourism Services, VFS Global stated: 'We are delighted to support Fashion Arena Prague Outlet in its outreach initiatives to travellers from the GCC region. This collaboration reflects our shared commitment to promoting premium shopping experiences in Czechia through meaningful engagement with the travel trade.'
Al Etihad
3 days ago
- Al Etihad
Tata Motors to buy Italy's Iveco for $4.4bn
ROME (AFP) Tata Motors of India will buy Italy's Iveco Group for 3.8 billion euros ($4.4 billion) in a bid to create a "global champion" in the commercial vehicles sector, the two companies said Wednesday. The deal excludes Iveco's defence division for armoured vehicles, which is to be sold to Italian defence and aerospace group Leonardo, in a 1.7-billion-euro deal announced earlier Wednesday. The combined company after Tata's takeover aims to sell around 540,000 vehicles a year for total annual revenues of 22 billion euros, of which half would come from Europe, 35 percent from India and 15 percent from the Americas. Tata and Iveco -- which also makes engines and buses -- said in a joint statement there was "no overlap in their industrial and geographic footprints, creating a stronger, more diversified entity" which would use a shared strategic vision to drive long-term growth. The deal is expected to close in the first quarter of 2026, underscoring the status of Tata in Europe, with Jaguar Land Rover notably a wholly owned subsidiary of Tata Motors. "The reinforced prospects of the new combination are strongly positive in terms of the security of employment and industrial footprint of Iveco Group as a whole," Iveco's chairwoman Suzanne Heywood said in the statement. For Natarajan Chandrasekaran, chairman of Tata Motors, "this is a logical next step following the demerger of the Tata Motors Commercial Vehicle business, and will allow the combined group to compete on a truly global basis with two strategic home markets in India and Europe. "The combined group's complementary businesses and greater reach will enhance our ability to invest boldly. I look forward to securing the necessary approvals and concluding the transaction in the coming months," he added in the statement. Iveco Group's CEO Olof Persson said the merger was "unlocking new potential to further enhance our industrial capabilities, accelerate innovation in zero-emission transport, and expand our reach in key global markets." He added: "This combination will allow us to better serve our customers with a broader, more advanced product portfolio and deliver long-term value to all stakeholders." Separately, Iveco's armoured vehicles unit will be sold to Leonardo, whose chief Roberto Cingolani said the move would make it a "reference player in the European land defence market". Leonardo has announced it plans to integrate its electronic systems, including new-generation combat sensors, into Iveco Defence vehicles to "guarantee optimal effectiveness of operational solutions offered".
