Deutsche Bank Hits 2025 Targets, Sets Sights on Higher Returns Amid Strategic Shift
Frankfurt – Deutsche Bank AG (NYSE: DB) struck a confident tone in its fourth-quarter 2025 fixed income investor call, announcing it had met its financial targets for the year while charting a course for more ambitious profitability in the coming years. The call, led by Group Treasurer Richard Stewart with CFO James von Moltke and incoming CFO Raja Akram participating, served as a progress report on the bank's multi-year transformation.
Management confirmed the bank delivered a post-tax return on tangible equity (RoTE) of 10.3% for 2025, hitting its full-year goal of above 10%. This milestone, executives framed, is a foundational step toward a more ambitious target of greater than 13% RoTE by 2028.
"We have built a materially more resilient and profitable bank," Stewart stated, pointing to revenue of approximately €32 billion for the year. This figure represents a 7% year-over-year increase and a striking 26% growth since 2021. This top-line expansion was coupled with rigorous cost control, resulting in non-interest expenses of €20.7 billion, down 10% from the prior year. The combination, Stewart noted, generated "significant operating leverage," with a pre-provision profit of €11.4 billion—triple the level from 2021.
Looking forward, the strategy hinges on focused growth and capital discipline to lower the cost-income ratio below 60% from 64% in 2025. A key revenue driver is expected to be net interest income (NII) from core banking activities, which the bank projects will rise to around €14 billion in 2026, aided by a structural hedge rollover expected to contribute an incremental €600 million.
The bank's balance sheet showed continued strength. Deposits surged by €29 billion in the fourth quarter, primarily from corporate clients, while loan growth remained steady. Liquidity metrics were robust, with a liquidity coverage ratio of 144% and high-quality liquid assets of €260 billion. The bank's CET1 capital ratio stood at 14.2% at quarter-end, and a recent decision by the Financial Stability Board to lower its systemic risk bucket will reduce its 2026 leverage ratio requirement by 25 basis points.
Not all segments were without clouds. During the Q&A, CFO von Moltke addressed provisions for commercial real estate (CRE), expressing continued caution, particularly for office exposures in markets like Seattle and Los Angeles. "We've seen false dawns before," he warned, indicating the bank is not yet ready to call a bottom in the sector.
Stewart also announced strategic updates on funding and ratings. The bank's improved earnings profile has led to multiple rating agency upgrades, including Standard & Poor's revising its outlook to positive. For 2026, Deutsche Bank plans to reduce total issuance to a target range of €10 billion to €15 billion, down from €18.7 billion in 2025, reflecting lower funding needs and a comfortable loss-absorbing capacity (MREL) surplus.
Incoming CFO Raja Akram, commenting on the bank's aspiration to become a "European champion," emphasized that the 13% RoTE target is an intermediate step. He highlighted the bank's aim to leverage technology and talent to build market-leading positions. "Being a champion is about sustained, superior returns and competitive strength in our core segments," Akram stated.
Market Voices: Analysts and Investors Weigh In
Klara Schmidt, Portfolio Manager at Horizon Capital: "The targets are being met, which is the baseline expectation. The real test is the path to 13%. The projected NII growth from the hedge roll is concrete, but achieving the cost ratio target will require flawless execution in a potentially less favorable economic climate."
David Chen, Senior Banking Analyst at Breslin & Co.: "The deposit growth is impressive and speaks to franchise health. The reduced issuance guidance for 2026 is a clear signal of rising capital self-sufficiency. My focus remains on the CRE book; their caution is warranted, but the size of the eventual provisioning cycle is still the biggest unknown on the P&L."
Michael Rourke, Independent Financial Commentator: "A 'champion'? Let's not get ahead of ourselves. This is a bank still digging out from a decade of problems. Hitting a 10% RoTE after a massive restructuring is the minimum. The 13% goal feels like a wish tied to a perfect macro environment. And their 'AI-powered' ambition is just buzzword bingo until we see tangible efficiency gains."
Elena Petrova, Head of Fixed Income Research at Varde Partners: "The funding update is the quiet star here. Tightening spreads on their AT1 and Tier 2 issuance show real investor confidence returning. The clear, lower issuance path provides technical support for their debt curves. The upgrade to the sustainable finance framework is also a timely move to tap growing investor demand."
Deutsche Bank, founded in 1870 and headquartered in Frankfurt, is a leading global banking and financial services company offering a full range of services to corporate, institutional, and private clients worldwide.