Deutsche Bank AG(DB) - 2025 Q2 - Quarterly Report

Economic Overview - The global economy grew by 3.0% as of June 30, 2025, down from 3.3% at the end of 2024, with emerging markets growing at 4.0%[4] - The global economy is expected to grow by 3.0% in 2025, with inflation projected to decrease to 3.8%[100] - The U.S. economy is anticipated to grow by 1.6% in 2025, contingent on favorable tariff negotiations and trade agreements[100] - Economic performance in Europe remains subdued, with growth forecasts for Germany improving but still below trend, influenced by U.S. trade policies and geopolitical tensions[136] Deutsche Bank Financial Performance - Deutsche Bank's compound annual revenue growth rate since 2021 was 6.1% at the end of the first half of 2025, within the target range of 5.5% to 6.5%[14] - Profit before tax for the first half of 2025 was €5.4 billion, more than double the first half of 2024, driven by a 12% revenue growth to €16.5 billion[28] - Post-tax return on average shareholders' equity (RoE) improved to 9.8%, up from 2% in the prior year period, while post-tax return on average tangible shareholders' equity (RoTE) was 10.9%, up from 2.2%[29] - Profit before tax for the first six months of 2025 was €1.4 billion, up 13% year on year, with a post-tax RoE of 14.8%, an increase from 14.4% in the prior year[51] Revenue and Profitability - Net revenues in the second quarter of 2025 rose 14% year on year to €8.3 billion, aligning with the bank's full-year 2025 revenue ambition of around €32 billion[33] - The bank's cost/income ratio target is below 65%[17] - Noninterest expenses decreased by 15% year on year to €10.2 billion in the first half of 2025, reflecting a substantial reduction in nonoperating costs[34] - Corporate Bank reported a profit before tax of €1.4 billion, up 13% year on year, with a post-tax RoE of 14.8%[31] Business Segment Performance - Investment Bank's profit before tax increased by 18% year on year to €2.4 billion, with a cost/income ratio of 54%[31] - Private Bank achieved a profit before tax of €1.1 billion, up 50% year on year, with a post-tax RoE of 9.3%[31] - Asset Management's profit before tax rose 52% year on year to €429 million, with a post-tax RoTE of 24.1%[31] - The Private Bank's total net revenues for the first half of 2025 were €4.8 billion, a 2% increase year-on-year[66] Capital and Liquidity - Deutsche Bank aims for a Common Equity Tier 1 capital ratio within an operating range of 13.5% to 14%[11] - The Common Equity Tier 1 (CET1) capital ratio improved to 14.2% at the end of Q2 2025, up from 13.8% in Q1 2025[41] - Customer deposits were €655 billion in Q2 2025, down from €667 billion in Q1 2025, but up from €646 billion in Q2 2024[46] - The Liquidity Coverage Ratio was 136% at the end of Q2 2025, above the regulatory requirement of 100%[45] Cost Management - The bank's operational efficiency program is on track to complete its €2.5 billion target, with significant cost savings realized through restructuring and workforce reductions[15] - The cost/income ratio improved to 59.5% in Q2 2025, down from 91.7% in the prior year quarter[47] - Noninterest expenses for the Private Bank decreased by 8% year-on-year to €1.6 billion, primarily due to lower nonoperating costs[65] Credit Quality and Provisions - Provision for credit losses was €423 million in the second quarter of 2025, down 11% from the second quarter of 2024, indicating improved credit quality[38] - Provision for credit losses decreased to €22 million in Q2 2025 from €135 million in the prior year quarter, reflecting a model update[50] - Provision for credit losses was €399 million for the six months ended June 30, 2025, compared to €492 million for the twelve months ended December 31, 2024[187] Strategic Initiatives and Outlook - Deutsche Bank reaffirms its revenue goal of around €32 billion at Group level in 2025, before foreign exchange rate effects[112] - The bank's strategic Global Hausbank strategy aims to build a foundation for sustainable profit growth and achieve its 2025 financial targets[108] - Deutsche Bank expects a reduction in provisions for credit losses in the second half of 2025 compared to the first half, maintaining solid asset quality[122] - The bank has completed the majority of its current €750 million share repurchase program and is seeking approval for a second program in 2025, potentially enabling capital distributions exceeding €2.1 billion[124] Regulatory and Geopolitical Environment - The geopolitical landscape, including conflicts in the Middle East and Ukraine, continues to pose risks to market confidence and the bank's financial results[142][143] - Regulatory changes in the EU, including the CMDI review and proposed changes to securitization rules, may impact Deutsche Bank's operations and capital objectives[150][154] - The U.S. Federal Reserve has maintained interest rates while the European Central Bank has cut rates four times in 2025, leading to a diverging monetary policy landscape[137] Technology and Innovation - Deutsche Bank continues to adopt AI technologies, launching "Paula," a client-facing Generative AI chatbot in 2025, aimed at enhancing productivity[169] - The bank is actively monitoring emerging cyber threats and adapting mitigation strategies to address evolving risks in its operations[156][157]