Deutsche Bank’s shares fell sharply on Thursday, following the release of disappointing fourth-quarter earnings for 2024, which revealed a steep drop in profits due to high litigation costs.
The German banking giant reported a net profit of €106 million for Q4 2024, a staggering 92% decline from the same period in 2023. This was also well below analysts’ expectations of €282.39 million, according to an LSEG poll.
The significant drop in profit was attributed to a €329 million charge linked to a scandal involving the mis-selling of Polish residential mortgages. Following the earnings update, Deutsche Bank’s share price dropped 4.35%.
The bank also revised its 2025 cost-income ratio target, now expecting it to be under 65%, an increase from the previously set target of under 62.5%. Despite the disappointing quarterly results, Deutsche Bank reported a rise in net revenue, which increased by 8% year-on-year to €7.2 billion in Q4 2024. However, profit before tax fell 17% to €583 million, primarily due to litigation-related costs of €594 million.
For the full year, Deutsche Bank’s net profit attributable to shareholders was €2.7 billion, a 36% decline compared to 2023.
Deutsche Bank CEO Christian Sewing remained optimistic, commenting in the earnings report: “2024 was a vital year for Deutsche Bank. Our strong and growing operating performance reflects the turnaround achieved in recent years.” He added that the bank remains confident about reaching its Return on Tangible Equity (RoTE) target of above 10% in 2025 and plans to increase shareholder distributions.
CFO James von Moltke highlighted the impact of non-operating costs, particularly from long-standing litigation, but expressed confidence that these issues had been addressed, setting the stage for improved results in 2025.
Deutsche Bank also announced a new €750 million share repurchase program and proposed a higher dividend for 2024, raising it to €0.68 per share, up from €0.45 in 2023.
