Deutsche Bank Shares Slip Despite Better-than-expected Q4 2022 Profit Haul Due to Macroeconomic Uncertainty

UTC by Tolu Ajiboye · 3 min read
Deutsche Bank Shares Slip Despite Better-than-expected Q4 2022 Profit Haul Due to Macroeconomic Uncertainty
Photo: Depositphotos

German banking powerhouse Deutsche Bank sustained a Q4 2022 slide in shares even though it took higher profit. 

Deutsche Bank recently saw its shares slide despite its 10th consecutive quarterly profit achievement. The German multinational investment bank and financial services platform reported a $1.8 billion euro ($1.98 billion) net profit in Q4 2022 attributable to shareholders. Although this figure was almost double the consensus estimate of a 910.93-million-euro net profit for the period, Deutsche Bank shares slipped. According to analysts, this slippage was due to an uncertain macroeconomic outlook and micro factors within the investment bank.

Deutsche Bank’s Q4 net profit haul saw the German financial powerhouse realize a full-year 2022 annual net income of 5 billion euros. This sum marked a 1.59% increase from the year-ago period, also surpassing a projection of 4.29 billion euros in the new year. However, the banking giant’s shares were trading 2.4% lower by mid-morning in Europe. Furthermore, a key indicator of the stated macroeconomic issues plaguing Deutsche was the bank’s reluctance to embark on a share buyback scheme.

Deutsche Bank CEO Comments on Latest Shares Dip & Profit Haul Development

Deutsche Bank CEO Christian Sewing honed in on the positive takeaways from the company’s full-year performance. According to Sewing, the bank underwent a successful transformation over the last three and a half years. Furthermore, the CEO viewed the 2022 result as a notable improvement from the 1.9 billion euros reported in the preceding year. In Sewing’s own words:

“By refocusing our business around core strengths, we have become significantly more profitable, better balanced, and more cost-efficient. In 2022, we demonstrated this by delivering our best results for fifteen years.”

In addition, the Deutsche Bank chief executive officer also said:

“Thanks to disciplined execution of our strategy, we have been able to support our clients through highly challenging conditions, proving our resilience with strong risk discipline and sound capital management.”

Barclays European banks equity research co-head Amit Goel described Deutsche’s results as “a bit mixed.” The reason is that the bank’s strong revenue message for 2023 was weakened by several lower-than-anticipated fourth-quarter metrics, particularly in investment banking.

Furthermore, Goel also noted that the less-than-stellar fourth-quarter outing “was also largely driven by lower IB and corporate center result partly offset by the better corporate bank; within the IB both FIC and origination and advisory were lower.”

Deutsche Bank’s Q4 total revenues from its investment bank unit plunged 12% compared to last year. Furthermore, its contribution to Deutsche’s core bank pre-tax profit slid 6% to 3.5 billion euros.

2019 Restructuring Agenda

Deutsche Bank’s 2022 full-year results come almost four years after its announced sweeping restructuring plan in 2019. At the time, the Frankfurt-based banking giant said it would exit its global equities business and trading operations. In addition, Deutsche planned to slash up to 18,000 jobs and scale back its investment banking by the end of last year.

At the time, Deutsche Bank sought to reduce costs by 6 billion euros. However, the German banking giant also expected its restructuring plan to cost 7.4 billion euros at the end of last year.

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