Business context and reporting period
Deutsche Bank AG’s Form 20-F, filed March 11, 2022, reports the fiscal year ended December 31, 2021. It is an annual report, not a standalone fourth-quarter filing; the supplied text includes full-year results and year-end balances. SEC financial statements use IFRS as issued by the IASB, which differs in certain respects from the EU-endorsed IFRS statements published elsewhere.
The Group operates through the Corporate Bank, Investment Bank, Private Bank, Asset Management, Capital Release Unit and Corporate & Other. It reported total assets of €1.325 trillion and 82,969 full-time-equivalent employees at year-end.
Financial performance and position
| Metric | 2021 | 2020 |
|---|---|---|
| Net revenues, IFRS | €25.023bn | €22.219bn |
| Net interest income | €11.117bn | €11.548bn |
| Provision for credit losses | €515m | €1.792bn |
| Noninterest expenses | €21.505bn | €21.216bn |
| Profit before tax | €3.518bn | €1.003bn |
| Net profit | €2.595bn | €612m |
| Profit attributable to Deutsche Bank shareholders | €2.025bn | €101m |
| Cost/income ratio | 84.2% | 88.4% |
| Net interest margin | 1.18% | 1.25% |
Reported net revenues rose 13%, while net interest income fell 4%; higher fee income and gains on financial assets contributed to revenue growth. Credit-loss provisions declined 71%, to 12 basis points of average loans. Expenses rose 1%, including €1.0bn of transformation charges and €466m of litigation-related expenses. The effective tax rate was 26%.
Cash flow from operating activities was negative €2.952bn, compared with positive €30.736bn in 2020; investing activities provided €23.595bn and financing activities provided €1.630bn. Cash and cash equivalents ended the year at €179.946bn. Bank cash flows can be volatile; these figures should be considered alongside the liquidity disclosures.
At year-end, deposits were €604.4bn, long-term debt was €144.5bn and total equity was €68.1bn. Total regulatory capital was €62.7bn. The CET1 ratio was 13.2% (13.6% in 2020), and the fully loaded leverage ratio was 4.9% (4.7%). The leverage ratio would have been 4.5% without the temporary exclusion of eligible central-bank exposures. High-quality liquid assets were €207bn; total liquidity reserves were €241bn. The liquidity coverage ratio was 133% and the net stable funding ratio was 121%.
Material changes versus prior year
- Net profit increased to €2.595bn from €612m, supported by higher revenues and substantially lower credit-loss provisions.
- Net interest margin declined by 7 basis points. Noninterest expenses increased slightly despite continued cost reductions, reflecting higher transformation and litigation charges.
- Risk-weighted assets rose to €351.6bn from €329.0bn. The CET1 ratio declined 40 basis points.
- Assets under management at Asset Management increased 17% to €928bn; net inflows were €48bn. Private Bank assets under management rose to €553bn, with €30bn of net inflows.
- Capital Release Unit leverage exposure fell to €39bn from €72bn, and the transfer of its Global Prime Finance and Electronic Equities platform to BNP Paribas was completed by year-end.
Outlook, management commentary and risks
Management’s 2022 targets are post-tax return on average tangible equity of 8% for the Group and above 9% for the Core Bank, a 70% cost/income ratio, CET1 above 12.5% and a fully loaded leverage ratio of approximately 4.5%. For 2025, targets are Group post-tax return on average tangible equity above 10%, revenue CAGR of 3.5%–4.5% from 2021, and a cost/income ratio below 62.5%. These are forward-looking targets, not guarantees. Management expects 2022 credit-loss provisions of around 20 basis points of average loans.
The Management Board proposed a €0.20-per-share dividend for 2021 and announced a €300m share buyback for 2022, subject to regulatory and shareholder approvals and legal requirements. Management intends to increase the dividend per share by 50% annually over the next three years, conditional on meeting its targets. These distribution plans remain subject to capital, profitability and regulatory constraints.
Management cited inflation, supply-chain pressures, COVID-19, low or rising interest rates, China-related risks and the Russian invasion of Ukraine, which began February 24, 2022, as sources of uncertainty. Sanctions, energy-price shocks and market volatility could affect revenues, credit losses, capital, liquidity and operations. The filing also identifies competition, litigation, regulatory change, cyber and operational risks, and the need to strengthen controls. BaFin orders relating to anti-money-laundering and correspondent-banking controls remain subject to monitoring by a special representative. Despite these concerns, management and the auditor concluded that internal control over financial reporting was effective as of December 31, 2021, and the auditor issued an unqualified opinion.
Notable legal and regulatory matters include Postbank takeover litigation, with related claims totaling almost €700m excluding interest; ongoing cum-ex investigations and related tax or civil claims; and a 2021 DOJ deferred prosecution agreement. On February 28, 2022, the Bank agreed to extend an existing monitorship through February 2023 after the DOJ found a violation involving untimely reporting of allegations related to ESG information at DWS. Outcomes and potential financial effects of several proceedings remain uncertain.
Most important facts for investors to verify
- Reconcile the IFRS net-revenue figure of €25.023bn with management’s rounded €25.5bn Group/Core Bank presentation and understand the differing definitions.
- Review the assumptions behind 2022 credit-loss expectations and assess the effects of Ukraine-related sanctions, energy prices and broader market stress on exposures.
- Track progress against 2022 and 2025 profitability, cost, capital and revenue targets, including transformation costs and the cost/income ratio.
- Confirm regulatory approval, shareholder authorization and execution of the proposed dividend and 2022 buyback; assess capital headroom and the leverage-ratio treatment of central-bank exposures.
- Monitor developments in Postbank, cum-ex, AML-control and DOJ/DWS matters, including provisions, potential claims and required remediation.