Finance

Legal provisions weighed on the bottom line at Germany’s largest lender Deutsche Bank, with litigation costs over the fourth quarter coming in at 594 million euros.
Net profit attributable to shareholders hit 106 million euros ($110.4 million) over the period, compared with a 282.39-million-euro forecast.
The bank said it now targets a cost-income ratio of below 65% this year, compared with an initial goal of below 62.5%. It also launched a 750-million-euro share buyback.

Germany’s largest lender Deutsche Bank on Thursday reported weaker-than-expected profit that fell sharply in the last three months of 2024, as legal provisions weighed on the bottom line.
Frankfurt-listed shares of the bank were down 3.43% at 12:57 p.m. London time on Thursday.

Net profit attributable to shareholders hit 106 million euros ($110.4 million) in the fourth quarter, compared with the 282.39 million euros forecast in an LSEG poll of analysts. The result marked a significant fall from the 1.461 billion euros achieved in the third quarter.
Full-year net profit attributable to shareholders came in at 2.698 billion euros, down 36% from 2023.
Revenue reached 7.224 million euros in the fourth quarter, versus an LSEG analyst poll of 7.125 billion euros — but was eroded by litigation costs over the period to the tune of 594 million euros. Full-year 2024 revenue grew 4% year-on-year to 30.1 billion euros.
Deutsche Bank CFO James von Moltke admitted that the bank saw “a very high level of non-operating costs in 2024.”
“We are not happy with one-off expenses or surprises and most of these things have really been … issues arising from the past, sometimes the distant past, the PostBank takeover litigation matter in 2024 is a good example. Which, on a net basis, represents about 900 million of costs in ’24,” von Moltke told CNBC’s Annette Weisbach in a Thursday interview.

“So in a sense, the only good news thing you can say about it: it’s behind us. And importantly, therefore, the risk profile of the company is dramatically changed,” he added
The bank said it now targets a cost-income ratio of below 65% this year, compared with an initial goal of below 62.5%. Despite the drop in quarterly profit, Deutsche Bank also launched a 750 million-euro share buyback.
Other fourth-quarter highlights included:

Profit before tax of 583 million euros, down 17% year-on-year;
Provision for credit losses of 420 million euros, down 14% year-on-year;
CET 1 capital ratio, a measure of bank solvency, was 13.8%, unchanged from the third quarter.

Deutsche Bank declared a post-tax return on tangible equity (ROTE) rate of 4.7% across full-year 2024, down from 7.4% in the previous year — and well below the lender’s target of above 10% ROTE this year.

Investment bank revenues shine in fourth quarter

The fourth-quarter profit drop marks a setback for the lender, which had returned to black in the third quarter, after breaking its profit streak with a 143-million-euro loss in the three months to the end of June, as it made a provision for litigation over its Postbank division. Deutsche Bank previously embarked on a 2.5-billion-euro cost-saving drive after hitting a post-financial crisis low in 2019 that crowned a decade of weak earnings, with shares progressively gaining ground to add more than 30% last year.
Previously buoyed by buybacks and a high interest rate environment, European banks must now contend with the partial loss of that support as the European Central Bank continues last year’s cycle of loosening monetary policy. The ECB is widely expected to trim rates once more at its meeting later in the Thursday session.
“The strong tailwind from higher interest rates has come to an end. We believe that banks focusing more on fee-based income rather than solely on net interest income, and those with potential for mergers and acquisitions, are better positioned for 2025. This includes banks in Germany, Italy, Spain, and France,” ING analysts noted in their Bank Outlook 2025 report released in November.
Deutsche Bank, for its part, has recently seen robust performance from its investment banking operations — a main driver of its third-quarter revenues and a core growth pillar over the period. The investment banking unit’s revenues picked up by 30% year-on-year to 2.4 billion euros in the fourth quarter, also rising 15% year-on-year to 10.6 billion euros in 2024.
German banks have also been weathering the storm of a dimmed outlook for Europe’s largest economy this year, along with political volatility ahead of upcoming general elections in February.
“We also share the frustration that I think is pretty pervasive in Europe, that growth has been relatively stagnant over the last couple of years as Europe has worked through a transition on a number of items, energy costs, inflation, interest rate cycle and what have you,” von Moltke told CNBC on Thursday. “We’d like to see a policy mix that focuses on growth and competitiveness in Europe.”
Domestically, Deutsche Bank could stand to benefit from uncertainty surrounding the fate of Germany’s second-largest lender Commerzbank, in which Italy’s UniCredit has been building a stake since September, stoking speculation of a potential takeover.
Speaking to CNBC on Thursday, von Moltke said Deutsche Bank is looking at how to compete or benefit, as well as assessing strategic ramifications from any “change in our landscape” that would be triggered by a successful UniCredit takeover.

Transatlantic

European banks have come under pressure to compete with the scale, growth and profitability of peers in the U.S., where Deutsche Bank has been steadily investing to strengthen its foothold. Deutsche’s operations in the country now account for around 20% of measures including balance sheet and revenue, von Moltke said Thursday.
“It’s a cumulative investment that we see pay off. So you’ve seen, for example, in hiring bankers, corporate finance bankers, we’ve… increased that footprint, and so we expect to benefit there,” he told CNBC. “Similarly, on the market side, we’ve been making some really strategic investments, and we’re seeing that pay off already.”
He added that the U.S. business still has room to “deliver and crystallize in the future,” agreeing that he shares the optimism of transatlantic counterparts over the regional outlook.  Following U.S. President Donald Trump’s return to office, market participants are now watching whether the White House leader will make good on his pledge of lighter touch regulation — and the potential impact of such a step on banks operating in the U.S. commercial space and on their competitiveness over European lenders. More

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There are various ways to look at the unexpected €13.3bn ($13.9bn) bid that Monte dei Paschi di Siena (MPS) made for Mediobanca on January 24th. At first glance, it testifies to a remarkable recovery by MPS, the world’s oldest bank, which was bailed out by the Italian state in 2017 at a cost of €5.4bn. And if MPS’s attempted purchase of Italy’s pivotal investment bank is accepted, the deal would lead to welcome consolidation in Italy’s fragmented banking industry. But there is also another way to look at the bid. In a country where politics and money overlap to an unusual degree, it is perhaps the most useful. Consider what the deal would mean for Giorgia Meloni, Italy’s prime minister. More

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DoubleLine Capital CEO Jeffrey Gundlach said Wednesday he expects only one rate cut for 2025 — two reductions at most — as the Federal Reserve patiently awaits incoming data to assess the state of the labor market and inflation.
The central bank kept interest rates unchanged Wednesday after three consecutive cuts to end 2024.

Jeffrey Gundlach speaking at the 2019 SOHN Conference in New York on May 6, 2019.
Adam Jeffery | CNBC

DoubleLine Capital CEO Jeffrey Gundlach said Wednesday he expects only one rate cut for 2025 — two reductions at most — as the Federal Reserve patiently awaits incoming data to assess the state of the labor market and inflation.
“Maximum two cuts this year. And I mean maximum, I’m not predicting two cuts. I just think that’s the most you can possibly think about,” Gundlach said on CNBC’s “Closing Bell.” “At the present moment, if you had made me pick a number, I would say now one cut would be the base case and maximum two.”

The central bank kept interest rates unchanged Wednesday after three consecutive cuts to end 2024. Fed Chair Jerome Powell emphasized that the central bank is in no hurry to adjust its policy stance, particularly as the economy remains strong.

“It’s going to be a slow process to get to a hurdle to cut rates again. … I don’t think you’re going to see a cut at the next Fed meeting,” Gundlach said. “He’s obviously focused on the stability in the unemployment rate right now in terms of not feeling a need to cut rates.”
The notable fixed income investor thinks long-duration Treasury yields have more room to rise. He noted that the benchmark 10-year rate has increased about 85 basis points since the Fed cut rates for the first time last year.
“I think that rates have not peaked on the long end,” he said. “I think rates will have another move up on the long end.”
Gundlach cautioned against owning high-risk assets right now because of his view on long-term interest rates and his observation that valuations are high.

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The announcement comes after complaints from Republicans that banks have treated some conservatives unfairly.
Trump Media’s Truth.Fi financial products would focus on “American growth, manufacturing, and energy companies as well as investments that strengthen the Patriot Economy,” according to the release.
President Donald Trump indirectly owns 114,750,000 shares of the parent company, held in a revocable trust.

This illustration shows an image of President-elect Donald Trump next to a phone screen that is displaying the Truth Social app, in Washington, D.C., on Feb. 21, 2022.
Stefani Reynolds | AFP | Getty Images

Trump Media is expanding into financial services, including investment vehicles, the firm announced Wednesday.
Shares of the Truth Social parent company, which trade under the ticker DJT, jumped 6.8% on Wednesday. President Donald Trump indirectly owns 114,750,000 shares of the company, held in a revocable trust.

The financial services division will be known as Truth.Fi, and it will be started with up to $250 million from the company that will be custodied with brokerage firm Charles Schwab, according to a news release. That money will be allocated to customized exchange-traded funds and cryptocurrencies, among other investment vehicles.
The company said it expects to launch products and services, including its own investment vehicles, later this year.
“Truth.Fi is a natural expansion of the Truth Social movement. We began by creating a free-speech social media platform, added an ultra-fast TV streaming service, and now we’re moving into investment products and decentralized finance,” Trump Media CEO and Chairman Devin Nunes said in the release.
“Developing American First investment vehicles is another step toward our goal of creating a robust ecosystem through which American patriots can protect themselves from the ever-present threat of cancellation, censorship, debanking, and privacy violations committed by Big Tech and woke corporations,” added Nunes, a former congressman from California.
The release did not specify what types of investment vehicles Truth.Fi would offer, but said Schwab would “broadly advise” the company’s investments and strategy. The products would focus on “American growth, manufacturing, and energy companies as well as investments that strengthen the Patriot Economy,” according to the release.

Samantha Schwab, a granddaughter of the namesake founder of Charles Schwab, recently became the deputy chief of staff at the U.S. Department of the Treasury.
The announcement comes after complaints from Republicans that banks have treated some conservatives unfairly. During a remote appearance last week at the World Economic Forum in Davos, Switzerland, Trump complained to Bank of America CEO Brian Moynihan that the firm was locking out and de-banking conservatives.
“I hope you start opening your bank to conservatives because many conservatives complain that the banks are not allowing them to do business within the bank, and that included a place called Bank of America,” Trump said.
The president also took on Jamie Dimon, CEO of JPMorgan Chase, the largest U.S. bank by assets.
“You and Jamie and everybody, I hope you’re going to open your banks to conservatives because what you’re doing is wrong,” Trump said.
The remarks continued a simmering feud between Republicans and the nation’s largest banks, with a flashpoint coming last year when a group of state attorneys general filed a complaint alleging that the institutions were discriminating against customers based on religious and political affiliations. Officials at the banks have denied wrongdoing.
Complaints about de-banking are also common among the crypto community, which was aligned with Trump during his presidential campaign.
Truth.Fi comes on the heels of the Trump memecoin, which launched shortly before the inauguration and resulted in on-paper gains of billions of dollars for the Trump Organization and its affiliates.
The new financial services firm may end up being a competitor to Elon Musk’s X, which announced a deal with Visa on Tuesday as part of its push to expand beyond social media. Musk is a close advisor to President Trump.

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