Deutsche Bank would like to let it be known that it's back. Bonuses are up. The transformation is nearly over. Clients are back and January is going unusually well.
Speaking during today's investor call, CEO Christian Sewing said Deutsche's investment bank is having the best start to the year for a while. "In the IB, we are ahead of last year's numbers for the past three years," said Sewing of the bank's performance in January. The investment banking business is "healthy and sustainable," said Sewing: "I can see the pipeline. I can see the momentum."
After a challenging few years, Sewing said clients have been returning to Deutsche Bank and that the market share gains made in 2021 are likely to endure. - Deutsche outperformed rivals in both fixed income trading and M&A last year.
Having all but completed its transformation, DB is due to update investors with a new strategy in March. Although January has started well, Sewing and CFO James von Moltke said banking revenues may "normalize" in 2022. Nonetheless, they expect revenues of €9bn in the investment bank this year (down from €9.6bn in 2020), with at least €6.7bn of revenues from the fixed income sales and trading business. “Don’t underestimate the stability of our financing platform and the market share gains in our trading business," said Sewing, adding that last year's ratings upgrades have also helped encourage clients to return.
With costs for the whole bank coming in at €21.5bn, Deutsche missed its €18.9bn cost target in 2021. This was partly due to the higher bonus pool in the investment bank, but von Moltke said he was fine with this and was furthermore happy with DB's, "ability to compensate revenue generating staff in a competitive way." Sewing added that Deutsche's investments in areas like fixed income trading and financing are paying off: "We can compete with the Wall Street banks."
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