A message from Christian Sewing on Q3 results 2024
Dear Colleagues,
Once again, we can all look back on three eventful months. The third quarter was marked by a further escalation in the Middle East conflict, even fiercer fighting in the war in Ukraine and some larger-than-expected interest rate cuts. Many of these developments have a direct or indirect impact on markets and thus on our clients, and our most important task is to support them with our expertise.
Our third-quarter results show that we succeeded in this task. In the months from July to September, we increased our revenues by 5 percent year on year to 7.5 billion euros. Our pre-tax profit increased by 31 percent to 2.3 billion euros, with net income of 1.7 billion euros. As in the previous quarter, these figures were once again impacted by the litigation surrounding the takeover of Postbank - this time to our advantage, though. While we had to record a provision of 1.3 billion euros in the second quarter, we were now able to release approximately 440 million euros of this after reaching settlements with the bulk of the plaintiffs. We are now covered for all scenarios that may arise as a result of today’s hearing at the Higher Regional Court of Cologne. The remaining provision would also fully cover a court decision that did not go in our favour.
To see how well we are doing on an operating level, it is best to look at our results without the one-off effects from the Postbank proceedings. On this basis, we still increased our pre-tax profit by 6 percent year-on-year and achieved a record level for a third quarter. Taking a nine-month perspective, we generated a pre-tax profit of 5.6 billion euros, which is 13 percent higher than the result in the same period of last year and only around 100 million euros short of our full-year earnings in 2023.
This is a strong result. And it is especially pleasing to see the progress we made in the third quarter in all three dimensions of our strategy:
We have clearly demonstrated the revenue generating strength of our four core businesses: the Investment Bank and Asset Management have each increased their revenues by 11 percent year-on-year. At the same time, the Corporate Bank and the Private Bank were able to largely offset the anticipated negative effects of the normalising interest rate environment by significantly increasing commissions and fee income.
We continue to make progress in our operating efficiency. We once again achieved our guidance of 5.0 billion euros in adjusted costs per quarter, thanks to continued discipline across all divisions. In addition, we implemented further operational efficiency measures that will enable us to reduce our cost base in the coming quarters.
Finally, we further optimised our capital efficiency thanks to improvements in our processes and in the use of data. So far, we have achieved 22 billion euros in risk-weighted asset benefits, which significantly relieves the burden on our capital. This is one of the reasons why our Common Equity Tier 1 ratio, at 13.8 percent, was strong at the end of the third quarter.
Despite this progress, in this economic environment we cannot let up in our efforts to reach our goals. Provisions for credit losses in the third quarter were 494 million euros, which were mainly driven by a few specific events, as well as the residual impact from the backlog caused by the Postbank integration. Given the high quality of our overall loan portfolio, we believe this is only a transitory increase, especially as our risks in commercial real estate financing are now receding and forward indicators are healthy.
We on the Management Board are convinced that over the following quarters, the opportunities for our bank clearly outweigh the risks. Our positioning as a Global Hausbank is and remains the right one in a time of complex risks and an enormous need for financing, risk management and advice for our clients, for years to come. So there are no grounds to get distracted from our path as we focus even more strongly on our clients’ needs. Our This is Deutsche Bank framework can unleash enormous power here. It is very encouraging to see how many of you have been involved in many ways since the launch in May. This tells us how well our purpose, which puts the lasting success and financial security of our clients at the centre of what we do, resonates with you. Now it's up to us all to bring about the changes, on both a small and a large scale, that are needed to further strengthen our client focus and develop the way we work so that we can live up to our aspirations even better.
For me, a more open exchange at all levels is one of the keys to unlocking our potential. That's why we on the Management Board have taken more time for direct interaction with you in recent months. And we will continue to do so.
I am looking forward to working with you to finish 2024 on a high note. Doing so will give us the momentum we need as we start into 2025, which is a particularly important year for us. We have set ourselves clear targets for 2025 and we remain on track to achieve them.
From all of us on the Management Board: thank you for all your hard work and dedication, without which our strong results would not be possible.
Home
Dear Colleagues,
Once again, we can all look back on three eventful months. The third quarter was marked by a further escalation in the Middle East conflict, even fiercer fighting in the war in Ukraine and some larger-than-expected interest rate cuts. Many of these developments have a direct or indirect impact on markets and thus on our clients, and our most important task is to support them with our expertise.
Our third-quarter results show that we succeeded in this task. In the months from July to September, we increased our revenues by 5 percent year on year to 7.5 billion euros. Our pre-tax profit increased by 31 percent to 2.3 billion euros, with net income of 1.7 billion euros. As in the previous quarter, these figures were once again impacted by the litigation surrounding the takeover of Postbank - this time to our advantage, though. While we had to record a provision of 1.3 billion euros in the second quarter, we were now able to release approximately 440 million euros of this after reaching settlements with the bulk of the plaintiffs. We are now covered for all scenarios that may arise as a result of today’s hearing at the Higher Regional Court of Cologne. The remaining provision would also fully cover a court decision that did not go in our favour.
To see how well we are doing on an operating level, it is best to look at our results without the one-off effects from the Postbank proceedings. On this basis, we still increased our pre-tax profit by 6 percent year-on-year and achieved a record level for a third quarter. Taking a nine-month perspective, we generated a pre-tax profit of 5.6 billion euros, which is 13 percent higher than the result in the same period of last year and only around 100 million euros short of our full-year earnings in 2023.
This is a strong result. And it is especially pleasing to see the progress we made in the third quarter in all three dimensions of our strategy:
Despite this progress, in this economic environment we cannot let up in our efforts to reach our goals. Provisions for credit losses in the third quarter were 494 million euros, which were mainly driven by a few specific events, as well as the residual impact from the backlog caused by the Postbank integration. Given the high quality of our overall loan portfolio, we believe this is only a transitory increase, especially as our risks in commercial real estate financing are now receding and forward indicators are healthy.
We on the Management Board are convinced that over the following quarters, the opportunities for our bank clearly outweigh the risks. Our positioning as a Global Hausbank is and remains the right one in a time of complex risks and an enormous need for financing, risk management and advice for our clients, for years to come. So there are no grounds to get distracted from our path as we focus even more strongly on our clients’ needs. Our This is Deutsche Bank framework can unleash enormous power here. It is very encouraging to see how many of you have been involved in many ways since the launch in May. This tells us how well our purpose, which puts the lasting success and financial security of our clients at the centre of what we do, resonates with you. Now it's up to us all to bring about the changes, on both a small and a large scale, that are needed to further strengthen our client focus and develop the way we work so that we can live up to our aspirations even better.
For me, a more open exchange at all levels is one of the keys to unlocking our potential. That's why we on the Management Board have taken more time for direct interaction with you in recent months. And we will continue to do so.
I am looking forward to working with you to finish 2024 on a high note. Doing so will give us the momentum we need as we start into 2025, which is a particularly important year for us. We have set ourselves clear targets for 2025 and we remain on track to achieve them.
From all of us on the Management Board: thank you for all your hard work and dedication, without which our strong results would not be possible.
Best wishes,
Christian
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