Deutsche Bank to cut 3,500 jobs as cost-cutting continues

German banking giant Deustche Bank has declared a €1.6bn capital return to shareholders as it unveiled measures to cut 3,500 jobs in its ongoing restructuring programme.

The bank, which employs just under 90,000 workers, is over halfway through its €2.5bn cost efficiency programme and expects to save further costs through infrastructure and technology efficiencies.

These include "application de-commissioning and operating model improvements; optimisation of the bank’s platform in Germany; and front-to-back process redesign, including simplified workflows and automation," it said in a statement.

The measures are expected to lead to a reduction of around 3,500 roles, mainly in non-client-facing areas, Deustche Bank said.

The news came as the lender delivered a 2% increase in pre-tax profits to €5.7bn in 2023, its highest pre-tax profit in 16 years, while revenues rose 6% to €28.9bn.

Fourth-quarter net profits dropped sharply, from €1.8bn to €1.26bn, as a result of restructuring expenses and one-off costs, though consensus forecasts was closer to €832m, according to Visible Alpha.

Shares rose strongly on the news, with the stock up 4.02% at €12.52 by 1235 in Frankfurt.

"Our performance in 2023 underlines the strength of our Global Hausbank strategy as we help our clients navigate an uncertain environment," said chief executive Christian Sewing.

"Our strong capital generation enables us to accelerate distributions to shareholders. This gives us firm confidence that we will deliver on our 2025 targets."

Deutsche Bank said it would increase both share repurchases and dividends by at least 50% in 2024. It will buy back €675m of shares in the first half, following €450m of share repurchases in 2023, and plans to recommend 2023 dividends totalling €900m or €0.45 per share, up from €0.30 the year before.

"Having raised its capital outlook by € 3 billion in October 2023, the bank is well positioned to exceed its capital distribution goal of € 8 billion in respect of the financial years 2021-25, paid in 2022-26."

The bank also expects to pay a dividend of €1 per share for the 2025 financial year, subject to hitting financial targets and to achieving a 50% payout ratio.