Deutsche Bank wants to get the misery at its subsidiary Postbank completely under control by the end of the year. That costs them a lot of money. Nevertheless, it is well on its way to exceeding its 2025 targets.
Despite the problems at Postbank, confidence is growing at the parent company, Deutsche Bank. The board of directors is confident that it will not only be able to achieve the strategic goals set for 2025, but even exceed them, wrote CEO Christian Sewing in a letter to employees on the occasion of the balance sheet for the third quarter.
CFO James von Moltke estimated the additional costs associated with the Postbank problems at around 30 to 35 million euros in the fourth quarter. In the third quarter it was less than 10 million euros.
In recent months there have been significant complaints from Postbank customers, particularly in connection with an IT change. According to consumer advocates, they complained, for example, about blocked accounts and delayed follow-up financing. A special representative on behalf of the financial regulator Bafin is now monitoring that Deutsche Bank gets the problems under control.
Since last year, twelve million Postbank customers have been gradually brought together on one platform with seven million Deutsche Bank customers in Germany. The group recently reported great progress in resolving the problems. This particularly applies to seizure protection accounts and payouts of construction financing at the DSL Bank.
Sewing: Two thirds of the backlog processed
According to Sewing, two thirds of the backlog has now been processed. “This gives us great confidence that we will be able to offer our customers the level of service that they rightly expect from us as planned by the end of the year,” wrote the CEO.
In connection with the Postbank problems, Deutsche Bank set aside 25 million euros as risk provisions for possible loan defaults. A similar amount could be incurred in the fourth quarter, said CFO von Moltke in a conference call with journalists.
In the third quarter, the group suffered a decline in profits due to higher taxes. While pre-tax profit rose by seven percent to 1.7 billion euros, shareholders received a surplus of over one billion euros, eight percent less than a year earlier. However, analysts had expected a steeper decline. The financial institution only set aside 245 million euros for possible loan defaults, around 100 million less than a year earlier.
Strong business in the corporate bank
Despite the sharp rise in interest rates, the group’s total income only grew by three percent to 7.1 billion euros. While there was a significant increase in the corporate bank and a slight increase in the private customer bank, the group suffered declines in the investment bank and the fund subsidiary DWS. The more difficult market environment slowed down business in both segments.
The fact that Deutsche Bank earned more before taxes than in the previous year was thanks to its in-house corporate bank. The division doubled its pre-tax earnings to 805 million euros, while the other areas achieved less profit before taxes than in the third quarter of 2022. CEO Sewing now expects higher earnings for the group for the year as a whole: They should reach around 29 billion euros, or about that upper end of the previous target range.
Source: Stern
