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Deutsche Bank reported a plunge in profits for the final quarter of 2024 and warned investors that costs in 2025 would be higher than expected.
Germany’s largest lender said on Thursday that it had missed its 2024 cost targets as it was hit by a sharp rise in litigation charges and higher than expected loan losses.
Deutsche said it was now targeting a cost-income-ratio — a key efficiency benchmark — of less than 65 per cent this year.
The new target is higher than its previous aim of keeping costs below 62.5 per cent of income but would still represent a far better performance than the 76 per cent ratio it achieved in 2024.
Shares fell 6 per cent in early trading on Thursday.
Deutsche narrowly missed its target of keeping costs — excluding litigation charges and restructuring expenses — below €20bn in 2024.
In the fourth quarter, net profit attributable to shareholders fell to €106mn, a 92 per cent decrease on the same period a year earlier and well below the €380mn figure expected by analysts. The bank blamed a €329mn hit linked to a long-running mis-selling scandal in the Polish residential mortgage market.
Sewing said he still had “firm confidence” the lender would meet its target of lifting returns on tangible equity to more than 10 per cent in 2025, after they fell to 4.7 per cent last year. Andrew Coombs, analyst at Citibank, wrote that reaching the 10 per cent target “looks increasingly challenging”.
Sewing called 2025 a “year of reckoning”, adding that the bank wanted to “lay the foundations” to become “the European champion”.
He said Deutsche was still aiming to generate revenues of more than €32bn in 2025, adding that the lender had made a “strong start . . . this year”.
The bank has announced a new share buyback programme of €750mn and proposed a dividend of €0.68 a share, up from €0.45 a share for 2023 lifting total payouts to shareholders for 2024 to €2.1bn.
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