Deutsche Bank AG Q3 FY2025 earnings call

Management Statement and Operational Highlights

• Delivered record profitability in the first 9 months of 2025 with 9 months revenues at EUR 24.4 billion, adjusted costs at EUR 15.2 billion, Post-tax return on tangible equity 10.9%, and cost/income ratio 63%, all in line with full-year goals.
• Operating leverage drove profit growth, with pre-provision profit at EUR 9 billion in the first 9 months YOY up nearly 50%. Revenue growth 7% with momentum across businesses, 74% of revenues from predictable streams.
• On track to meet or exceed 2025 strategic goals, with compound annual revenue growth since 2021 at 6%, operational efficiencies at EUR 2.4 billion (95% of EUR 2.5 billion goal), and RWA reductions at EUR 30 billion.
• Strong capital position with CET1 ratio at 14.5% due to organic capital generation, completed share buyback program of EUR 1 billion in 2025, and cumulative distributions since 2022 at EUR 5.6 billion.
• All 4 businesses (Corporate Bank, Investment Bank, Private Bank, Asset Management) delivered double-digit profit growth and RoTE in the first 9 months, with each business showing distinct strengths (e.g., Corporate Bank recognized as best trade finance bank, Private Bank with 71% profit growth in 9 months).

Segment Performance

• Corporate Bank: Achieved a strong post-tax return on tangible equity of 16.2% and a cost/income ratio of 63% in Q3. Fee growth of 5% in the first 9 months, with loans and deposits essentially flat on a reported basis but adjusted for FX, loan volumes increased by EUR 5 billion YOY.
• Investment Bank: Revenues increased 18% YOY in Q3, driven by FIC and O&A. Provision for credit losses was EUR 308 million, significantly higher YOY due to model updates and Stage 3 impairments.
• Private Bank: Profit before tax doubled in Q3, return on tangible equity rose to 12.6%. Revenues increased with net interest income from deposits and lending up 9%, while net commission and fee income was flat. Cost/income ratio improved by 9 percentage points to 68%.
• Asset Management: Profit before tax improved by 42% YOY, return on tangible equity increased to 28%. Assets under management grew to EUR 1.05 trillion in Q3, with net inflows of EUR 12 billion.

Guidance

• Confident in achieving 2025 targets with momentum continuing into Q4. Revenue side, investment banking pipeline and predictable businesses (Private Bank, Asset Management) look solid, with potential upside in Asset Management performance fees.
• Expect lower provisioning levels in the second half of 2025 relative to the first half, supported by solid asset quality. Strong capital position provides a foundation for 2026, with plans to continue distributions to shareholders in line with targets.
• Reiterated commitment to outperforming the EUR 8 billion distribution target payable between 2022 and 2026.

Risks

• Geopolitical uncertainties and market volatility could impact revenue and provisioning levels.
• CRE provisions remain elevated, with Stage 3 provision for credit losses increasing in Q3. Model effects in the Investment Bank led to higher Stage 1 and 2 provisions, though expected to be a one-off.
• Operational risk RWA update required by year-end, expected to lead to a 19 basis point drawdown in CET1 ratio terms.

Question and Answer Q: Run us through thoughts on achieving 2025 targets and Q4 trend?

A: Christian Sewing confident Q4 will see momentum, with revenue side robust, predictable businesses solid, and potential upside in Asset Management.

Q: How does Deutsche Bank benefit from German fiscal stimulus?

A: Christian Sewing optimistic on Germany's growth, citing government reforms and initiatives like Made for Germany, expecting Germany to leave flat growth scenario and return to growth, benefiting the bank.

Q: Perspective on private credit and outlook?

A: James Von Moltke states private credit is a bank book business with good capabilities, disciplined underwriting, and opportunities to innovate despite spread compression.

Q: Expectation of buybacks in 2026?

A: James Von Moltke indicates expectation of buybacks in 2026, with excess capital potentially allowing for distributions down to 14% CET1 ratio.

Q: Op risk RWA impact?

A: James Von Moltke explains an annual update to operational risk RWA is expected by year-end, with a pro forma CET1 ratio impact of ~19 basis points.

Q: Corporate Bank revenues and fee growth?

A: Christian Sewing and James Von Moltke confident in continued momentum in Corporate Bank, with profitability increasing despite slight revenue softness, driven by efficiency and technology investments.

Q: Investment Bank provisions and model effects?

A: James Von Moltke elaborates model effects drove higher Stage 1 and 2 provisions in Investment Bank, expected to be a one-off, with focus on portfolio visibility and pipeline.

Q: Private Bank cost savings and loan development?

A: Christian Sewing and James Von Moltke discuss continuous cost savings in Private Bank through branch closures and digital transformation, with expected flattish loan growth and focus on asset gathering and wealth management.