Deutsche Bank AG Earnings - Q4 2025 Analysis & Highlights
Deutsche Bank AG's Q4 2025 earnings call highlighted strong financial performance, including meeting return on tangible equity targets and significant revenue growth, alongside strategic initiatives for future growth, capital optimization, and a positive outlook for 2026.
Key Financial Results
Post-tax return on tangible equity in 2025 was 10.3%, meeting the full-year target of above 10%.
Revenue ambition of around €32 billion was delivered in 2025, an increase of 7% year-on-year, or 26% since 2021.
Non-interest expenses came in at €20.7 billion in 2025, down 10% year-on-year.
The 2025 cost base is nearly €1 billion lower than in 2021, a reduction of around 4% over this period.
Operating leverage of 17% was delivered in 2025 alone.
Pre-provision profit was €11.4 billion, up threefold since 2021.
Net interest income (NII) across key banking book segments and other funding was €3.4 billion in the fourth quarter and €13.3 billion for the full year.
Business Segment Results
All four businesses delivered a reduction in their cost/income ratios and a substantial improvement in profitability since 2021, leading to double-digit returns in 2025.
Corporate Bank delivered revenue growth of more than 40% since 2021.
The Corporate Bank's revenue mix benefited from a normalized interest rate environment and actions to increase fee income, helping to deliver stable revenues in 2025 despite lower rates and FX pressures.
In FIC, efforts focused on deepening and broadening the franchise led to gaining market share and increasing client activity by a further 11% in 2025 compared to the previous year.
Private Bank achieved an improved cost/income ratio of 70% and returns above 10% in 2025.
Asset Management arm, DWS, attracted €85 billion of net new assets since 2021, with assets under management surpassing €1 trillion in 2025.
Private Bank continued to deliver steady NII growth and improved its net interest margin by around 30 basis points year-on-year.
Momentum continued in FIC Financing with sequential growth in NII supported by loan growth.
Corporate Bank NII was slightly up quarter-on-quarter, reflecting a significant deposit increase.
Loans grew by €5 billion within operating businesses during the fourth quarter, adjusted for FX effects.
FIC Financing saw continued growth momentum, mainly driven by new loan originations in asset-backed financing and infrastructure lending, and an acquisition of an aviation portfolio.
Corporate Bank portfolio also saw continued growth, primarily within its flow and structured Trade Finance business.
Private Bank continued to deliver on its strategic commitment to a capital-efficient balance sheet through further targeted mortgage reductions.
Deposit growth was most pronounced in the Corporate Bank, with substantial growth in sight deposits from corporate clients.
The Private Bank portfolio also grew during the quarter, supported by ongoing deposit campaigns in Germany.
Capital Allocation
The fourth quarter Common Equity Tier 1 (CET1) ratio came in at 14.2%, a decrease of 30 basis points compared to the previous quarter.
The CET1 MDA buffer now stands at 293 basis points, or €10 billion of CET1 capital.
The fourth quarter leverage ratio remained flat at 4.6%.
The MREL surplus of €23 billion decreased by €3 billion in the last quarter.
Total issuance volume in 2025 was €18.7 billion, in line with the target range of €15 billion to €20 billion.
€3 billion was issued in senior preferred and AT1 format during November and December.
A €1 billion Tier 2 bond was issued in early January.
A €1 billion AT1 security was also recently issued.
Industry Trends and Dynamics
The Corporate Bank's revenue mix benefited from a normalized interest rate environment.
FIC gained market share and increased client activity.
Commercial real estate (CRE) provisions are influenced by new appraisals, lease activity, and market valuations.
The focal point for broader commercial real estate challenges remains office, West Coast office.
The German yield curve is at its steepest since 2019.
Competitive Landscape
The decision to no longer seek the Moody's advanced loss given failure (LGF) notch aligns Deutsche Bank with its European peers.
Deutsche Bank aims to be in a market-leading position in all key segments as a European bank.
Deutsche Bank already has a leading position in FIC in Europe.
The bank aims to be number five in the US in FIC, which would make it the leading European bank in that space.
From a returns perspective, Deutsche Bank aims to be leading the returns versus its European peers.
Macroeconomic Environment
The Corporate Bank's revenue mix benefited from a normalized interest rate environment.
Corporate Bank is expected to benefit from fiscal stimulus tailwinds in Germany.
The discontinuation of the transitional rule for unrealized gains and losses on sovereign debt impacted the CET1 ratio.
Growth Opportunities and Strategies
Deutsche Bank is positioned to further increase value creation by scaling its Global Hausbank.
The bank aims to transform into a simpler, more focused business with a significantly improved financial profile.
Operational efficiencies enabled self-funding of foundational investments in technology architecture, control environment, and client franchise.
The Corporate Bank is well positioned to scale the Global Hausbank model by leveraging its global network, product capabilities, and client relationships.
The Investment Bank is repositioning Investment Banking & Capital Markets (IBCM) by building on German leadership, investing in sector and product expertise, and expanding Advisory and ECM capabilities.
The strategy aims to increase return on tangible equity from over 10% in 2025 to greater than 13% over the next three years.
Plans include further improving the cost/income ratio to below 60%, from 64% in 2025.
This will be achieved via three levers: focused growth, strict capital discipline, and a scalable operating model.
The bank aims to further grow in most value-accretive segments in 2026 while maintaining strict capital discipline.
Focus in 2026 remains on growing SVA accretive deposits in the Private Bank and the Corporate Bank.
The bank will discontinue the MDBRS Group mandate to streamline efforts and reduce costs, focusing on Moody's, S&P, and Fitch.
The sustainable instruments framework was updated to allow for the issuance of bonds compliant with the European Green Bond Standard.
The long-term goal is to become the European Champion.
The bank aims to be an AI-powered bank.
The bank also wants to be a destination of choice for talent.
Financial Guidance and Outlook
NII across key banking book segments is expected to increase to around €14 billion in 2026.
This NII increase is mainly driven by the structural hedge rollover, expected to yield around €600 million more in 2026 compared to the prior year.
Growth is expected to be most pronounced within FIC Financing and the Corporate Bank in 2026.
Issuance needs in 2026 are materially lower compared to 2025, with a target full-year issuance volume of €10 billion to €15 billion.
The biggest driver of the reduction in issuance is lower senior non-preferred volumes following the decision regarding the Moody's LGF notch.
Maturities are relatively modest at €11 billion to €12 billion per year over the coming years.
Business momentum going into 2026 has been good.
Improvements in operating performance are planned every year, including in 2026.
Provision for credit losses is expected to trend moderately downwards in 2026 towards a lower expected average run rate of around 30 basis points through 2028.
