Germany’s biggest bank wants to increase investor rewards despite falling profits, laying off staff to finance new plans.
ADVERTISEMENTGermany’s biggest bank added detail to long-term redundancy plans on Thursday, as it prepares to lay off 3,500 employees by 2025.
The move comes in response to floundering share prices and falling financial gains, with Deutsche Bank announcing a net profit of €1.26 billion in the final three months of 2023.
This figure is down from the €1.8 billion recorded a year earlier, as the bank was weighed down by restructuring expenses, one-off costs, and a higher tax bill.
Revenue, the income generated without accounting for expenses, was up 5% on the year at €6.66 billion euros, and pretax profit was down 10% at €698 million.
Yet despite underwhelming earnings, the firm wants to increase shareholder dividends.
Deutsche Bank announced that it was on course to return €1.6 billion to investors in the first half of this year, including a €675 million share buyback.
A buyback means that Deutsche Bank will buy previously sold shares, reducing the amount of shares in circulation and increasing the stakes held by remaining investors.
Deutsche Bank said this strategy will allow them to reach their goal of paying €8 billion to shareholders between 2022 and 2026.
Revenue targets have also been scaled up at the bank, with the company expecting €32 billion of revenue in 2025.
This would satisfy the annual growth target of 5.5% to 6.5%, raised from the previous expectation of 3.5% to 4.5%.
Thanks to eurozone interest rates hovering at a high, Deutsche Bank has been earning larger yields on investments recently, although this is soon likely to change with expected ECB rate cuts this year.
Deutsche Bank hopes that trimming staff numbers will boost profitability despite a less advantageous yield climate.
The Frankfurt Stock Exchange reacted positively to the news delivered on Thursday, with Deutsche Bank’s shares jumping almost 6% by the late afternoon.
