DB - Deutsche Bank says new job cuts capital efficiency moves stock buybacks coming

2023-04-27 07:51:10 ET

Deutsche Bank ( NYSE: DB ), Germany's largest bank, said Thursday it's reducing its non-client facing workforce by 5%, will limit new hiring, and is streamlining its mortgage operations.

CEO Christian Sewing emphasized in prepared remarks that the job cuts won't compromise the bank's controls. The moves were announced with the bank's Q1 results . Deutsche Bank ( DB ) common stock gained 1.6% in U.S. Thursday premarket trading.

In the intensified efficiency drive, Deutsche Bank ( DB ) increased its target for incremental cost savings to €2.5B from €2.0B. Also part of that plan are measures to optimize its retail distribution network and improve operations by automating processes, the company said.

"In addition, we are working on a series of productivity measures including sophisticated capacity planning in several areas, including anti-financial crime," Sewing said.

Capital efficiency is also part of Deutsche's ( DB ) Global Hausbank strategy, which was announced last March. The bank plans to reduce €15B-€20B in risk weighted assets by 2025 from lower-yielding portfolios and from optimization with minimal revenue impact. That will enable redeployment and distributions to shareholders and, as a result, improve RoTE1.

Deutsche Bank ( DB ) plans to conduct further buybacks later this year, Sewing said. And management has proposed a cash dividend of €0.30 per share for approval at the annual general meeting in May.

Even as the company focuses on driving down costs, it aims to outperform on its previously communicated revenue targets "though platform growth in capital-light businesses," it said. "Specific measures include investments in technology, selective hiring and additional growth initiatives in the Corporate Bank and Investment Bank; investments in digital and direct sales and accelerated hiring in Wealth Management in the Private Bank; and in Asset Management, the expansion of Passive and Alternatives together with strategic partnerships and product innovations."

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