Deutsche Bank is facing more challenges in its ongoing transformation than originally thought. Due to the tightening of low interest rates in the Eurozone, the earnings of the Core Bank should not grow as much as expected in the coming years.
Although the bank wants to stick to the return targets of eight percent for 2022, but these have become "ambitious," wrote Deutsche Bank CEO Christian Sewing in a letter to the employees.
Chief Executive Officer Sewing wants to offset the burdens of even lower interest rates by expanding the bank's lending business and, in certain cases, passing on negative interest rates to corporate clients and wealthy private clients. Especially in the retail and corporate bank, the low interest rates should depress the earnings, they said.
Hope in difficult times draws Sewing from the return of important customers. "More than three dozen corporations and large institutional clients have decided to come back to us over the past few months."
Deutsche Bank wants to reduce costs by 2022 by six billion euros
However, according to its own statements, the bank is making good progress in its large-scale restructuring. "We are not only on schedule with the implementation of our strategy, but have made even faster progress than expected in several areas," Sewing wrote to the employees.
Sewing reiterated the objective of reducing the Bank's adjusted costs by 6 to 17 billion euros by 2022. In the current year, they are expected to decline to 21.5 billion euros, next year to 19.5 billion euros. The billions in burdens for the conversion and the associated job losses are not included in the sums. Due to high costs, such as severance payments and depreciation, management expects a significant loss for the current year.
The Bank also intends to streamline the bank's private customer segment, which has around 20 million customers. The costs in the private customer sector should decrease by 2022 by a total of 1.4 billion euros. At the same time, management expects stagnating revenues of around 5.1 billion euros.
Many of the employees have to leave the group as part of the renovation. Since the summer, the bank has 18,000 jobs on the strike list.
