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Deutsche Bank: Revenue to stay `broadly flat' this year

Mar 20 2017 10:32
Bloomberg: Steven Arons and Nicholas Comfort

Frankfurt - Deutsche Bank, which runs Europe’s biggest investment bank by revenue, said it expects revenue to be little changed this year as an improved environment for banks helps offset the impact of disposals.

“The outlook reflects the expected modest economic recovery in Europe, while growth in the Americas is expected to benefit from fiscal stimulus, as well as the positive impact of an improving interest rate environment,” the bank said in its annual report published on Monday.

“We expect a meaningful client activity pick-up in 2017, of which we have already seen evidence in the beginning of this year.”

Chief executive officer John Cryan, 56, is seeking to boost revenue after spending almost two years navigating legal probes and cutting back risk in the investment bank.

In a strategic about-face announced this month, Cryan said he would tap shareholders for new cash to rebuild capital buffers and abandon a planned sale of a German consumer-banking unit to help the bank to return to a “modest growth mode.”

Deutsche Bank is raising €8bn by issuing new shares at €11.65 apiece, the bank said on Sunday, a discount of about 35% from Friday’s close. The bank said previously that the move would boost its common equity Tier 1 ratio, a key benchmark of financial strength, to 14.1% from 11.9% at the end of 2016. It vowed to keep it “comfortably above” 13%.

The bank’s shares have gained 69% since closing at a record low on September 26, the second-best performer in the Bloomberg Europe 500 Banks and Financial Services Index.

The bank now plans to reintegrate the Deutsche Postbank unit it had planned to sell as well as combine its trading and corporate and investment banking divisions. Deutsche Bank wants to free up another €2bn of capital by selling assets including shares in its asset management business.

Deutsche Bank said earlier this month that the new phase of its overhaul will cause the loss of additional jobs, without specifying how many. That comes after an announcement in 2015 that it would eliminate about 9 000 jobs by the end of 2018 to cut costs.

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deutsche bank  |  companies  |  financial services

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