By
Chimamanda U. Martha
December 15th, 2023
German banking powerhouse Deutsche Bank posted commendable Q1 2023 figures and remained on track to outperform revenue growth targets.
Deutsche Bank registered its 11th straight quarterly profit according to its Q1 2023 earnings report released Thursday. For the period-ended March 31st, the German banking giant posted a net profit of 1.158 billion euros, or $1.28 billion. In addition, Deutsche’s net profit attributable to shareholders also comfortably surpassed the consensus estimate of 864.54 million euros, up from Q1 2022’s 1.06 billion euros.
Deutsche’s first-quarter revenue came in at 7.7 billion euros, up from the 7.33 billion euros reported in Q1 2022. According to the bank, it logged this impressive haul despite challenging conditions in financial markets. Furthermore, the company realized net inflows of 12 billion euros for the quarter across its Private Bank and Asset Management.
Meanwhile, Deutsche’s credit loss provision for the first quarter was 372 million euros versus 292 million euros in the year-ago quarter. However, deposits declined by 592 billion euros from the 621.5 billion euros recorded in the last quarter of 2022.
Other Deutsche figures included a pretax profit of 1.85 billion euros versus the 1.63 billion estimated and a CET 1 capital ratio of 13.6% versus 13.3% expected. Meanwhile, net interest income stood at 3.42 billion euros compared to the consensus estimate of 3.61 billion euros.
As of press time, Deutsche’s shares were up almost 2% and traded at 9.73 euros.
Deutsche Bank CEO Comments on Q1 2023 Outing
Christian Sewing, chief executive officer of the Frankfurt-based investment banking company, expressed delight at its first-quarter performance, saying:
“Our first quarter results demonstrate the relevance of our Global Hausbank strategy to our clients and underscore that we are well on track to meeting or exceeding our 2025 targets.”
Furthermore, Sewing also touched on several objectives for the full year, explaining:
“We aim to accelerate the execution of our strategy through a number of measures announced today: raising our ambitions for operational efficiency, boosting capital efficiency to drive returns and support shareholder distributions, and seizing opportunities to outperform on our revenue growth targets.”
According to the Deutsche Bank CEO, solid organic capital generation enables the company to reaffirm its distribution commitment. In addition, Sewing concluded that the prominent bank sought to conduct further share buybacks later in the year.
In addition to representing an 11th straight quarterly profit, the Deutsche Bank Q1 2023 figures underscore the bank’s emergence from a turbulent month. Even as it completed its sweeping four-year restructuring plan, the German banking powerhouse was caught up in market apprehensiveness regarding a global banking crisis. The bank hoped to slash costs and improve profitability when it initiated an overhaul in July 2019. Its cost-cutting measures at the time included massive layoffs and exiting its global equities sales and trading business.
Deutsche to Downsize Further to “Speed Up Initiatives” Despite Rousing Quarterly Performance
However, despite a solid first quarter in 2023, Deutsche plans to cut an additional 800 jobs as part of a new cost-saving initiative. When asked by reporters about the fresh downsizing, Sewing said the banking corporation needed to expedite its operability. As the Deutsche CEO put it, “We need to further speed up, and that’s what we are doing.”
Although the job cuts will happen across the bank, reports state that there would be an emphasis on senior non-client-facing roles. Executives also said that the retrenchment is one of several measures by Deutsche to reduce costs by an extra 500 million euros over the next few years.