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Deutsche Bank to boost shareholder payouts following strong Q3 performance

EditorRachael Rajan
Published 25-10-2023, 07:08 pm
© Reuters.

Deutsche Bank (ETR:DBKGn) disclosed it plans to increase shareholder payouts on the back of a solid Q3 performance. The bank's Q3 pre-tax profit rose by 7% to €1.7 billion, surpassing analyst predictions due to higher interest rates favoring its corporate and private banking divisions. Shareholder net profit, however, fell 8% to €1 billion due to a tax hike but still exceeded expectations, leading to a rise in shares of over 5%.

The bank is on track for its highest annual revenue in seven years, estimated at €29 billion, following a 3% YoY revenue increase to €7.13 billion in Q3. This robust performance aligns with analyst predictions and sets the bank on course to approach the upper end of its estimated annual revenue.

CEO Christian Sewing acknowledged a botched IT migration at its German retail business but confirmed that two-thirds of the backlog has been cleared. He committed to returning to normal service levels by year-end. Despite these issues, the bank saw billions of euros in inflows in Q3.

The bank's improved balance sheet, with a "common equity tier one ratio" (CET1) of 13.9%, sets Deutsche Bank to increase dividends and share buybacks, surpassing its previous commitment of "€8 billion in dividends and buybacks". CFO James von Moltke pointed out that an additional €3 billion in capital could be unlocked, emphasizing a potential capital return.

While it's premature to determine the exact division of additional capital between investors and company reinvestment, von Moltke suggested that buybacks next year might exceed previous guidance. Deutsche Bank had signaled its intention to buy back about €450 million worth of stock this year and plans to increase this amount by 50% annually.

The bank's shares surged by as much as 6.3% in Frankfurt trading, leading it to top a Bloomberg index of financial services companies in Europe.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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