Deutsche Bank’s chief executive Christian Sewing announced a new profitability target that will raise the bank’s return on tangible equity (RoTE) each year beginning in 2026. The commitment follows the bank’s 2025 RoTE goal of more than 10% and signals a shift toward sustained, incremental profitability growth.
In 2023 the bank posted a post‑tax RoTE of 7.4%, which climbed to 8.7% in the first quarter of 2024. The 2025 target of over 10% was reached in the second quarter, and the bank’s latest quarterly report showed a RoTE above 10%, confirming that the 2025 goal is on track.
Sewing outlined a longer‑term trajectory that aims for a RoTE greater than 13% by 2028. The strategy relies on a combination of cost discipline, a shift toward higher‑margin business lines, and disciplined capital deployment. The bank plans to keep its cost‑to‑income ratio below 65% in 2025 and below 60% by 2028, a move that should support margin expansion even as the bank invests in technology and talent.
In a conference speech, Sewing said the bank’s ‘key profit metric would improve year‑on‑year in 2026, with further growth expected in 2027 and 2028.’ He added that the bank would pursue ‘no limits’ on restructuring efforts and that a higher payout ratio of 60% would be pursued from 2026 onward, underscoring a commitment to shareholder returns.
Analysts noted that while the long‑term targets are ambitious, progress is expected to be back‑end loaded. Kepler Cheuvreux highlighted that the 2026 pre‑tax profit estimates may need to be trimmed by about 3% to reflect the timing of the upside. The market reaction to the announcement was muted, with investors focusing on the timing of the upside rather than the magnitude of the commitment.
The RoTE commitment reflects Deutsche Bank’s broader transformation into a ‘Global Hausbank’ that balances universal banking services with disciplined capital use. By targeting incremental RoTE growth, the bank aims to strengthen its competitive position in Europe, support future capital deployment, and deliver higher shareholder returns, while navigating ongoing macroeconomic headwinds and regulatory pressures.
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