Deutsche Bank AG — FY 2023 Form 20-F
Business context and reporting period. Annual report for the year ended December 31, 2023, filed March 14, 2024. Deutsche Bank reports under IFRS as issued by the IASB; these SEC financial statements differ from the bank’s EU-endorsed IFRS statements, including in their treatment of fair-value macro hedges. The group operates Corporate Bank, Investment Bank, Private Bank and Asset Management, with Corporate & Other also reported.
Key financial metrics
| Metric | FY 2023 | FY 2022 | Change |
|---|---|---|---|
| Net revenues | €31.2bn | €27.1bn | +15% |
| Profit before tax | €8.0bn | €5.4bn | +46% |
| Net profit | €6.5bn | €5.6bn | +16% |
| Profit attributable to Deutsche Bank shareholders | €5.8bn | €4.9bn | +17% |
| Provision for credit losses | €1.5bn | €1.2bn | +23% |
| Noninterest expenses | €21.7bn | €20.4bn | +6% |
| Adjusted costs (non-GAAP) | €20.6bn | €20.0bn | +3% |
| Cost/income ratio | 69.6% | 75.3% | Improved |
| Post-tax return on tangible equity (non-GAAP) | 10.2% | 9.1% | Improved |
| Net interest income | €16.1bn | €14.0bn | +15% |
Interest income benefited from higher rates and portfolio hedge effects. Trading gains also increased, while commissions and fees declined 6% to €9.2bn, reflecting lower activity and margin pressure in some businesses. The 2023 effective tax rate was 19%; tax expense was €1.5bn versus a €107m tax benefit in 2022. Net profit included a positive €1.0bn deferred-tax-asset valuation adjustment, compared with €1.4bn in 2022.
Cash flow and balance sheet. Operating activities generated €5.6bn of cash in 2023, versus €2.1bn used in 2022; investing activities used €2.6bn and financing activities used €2.9bn. Cash and cash equivalents decreased €1.9bn to €163.8bn. Total assets were €1.317tn, down 2%; total equity was €76.3bn, up 6%. Deposits were €625.5bn, down 1%, and loans at amortized cost were €479.4bn, down 2%. Long-term debt was €119.4bn; total debt in the filing’s capitalization table was €130.4bn.
Capital and liquidity. CET1 ratio rose to 13.7% from 13.4%; Tier 1 ratio was 16.1%, total capital ratio 18.6%, and leverage ratio 4.5%. High-quality liquid assets were €219bn; liquidity reserves were €261bn. LCR was 140% versus 142%, and NSFR was 121% versus 120%.
Material changes versus FY 2022
- Revenue growth and lower cost/income ratio lifted profitability, though noninterest expenses and credit provisions increased.
- Corporate Bank profit before tax rose to €3.0bn from €1.8bn; Investment Bank profit fell to €1.8bn from €3.2bn, reflecting lower FIC revenues, higher provisions and costs, including a €233m goodwill impairment related to Numis.
- Private Bank profit before tax fell to €1.0bn from €1.7bn. Results included €468m of nonoperating costs and did not repeat €430m of specific 2022 revenues. Asset Management profit before tax fell 32% to €396m as revenues declined 9%.
- Stage 3 credit-loss provisions increased, particularly in commercial real estate (CRE). Stage 1 and 2 provisions were a net release of €33m, compared with €204m of provisions in 2022.
- RWA fell €10.3bn to €349.7bn, supporting the increase in the CET1 ratio. Total equity rose partly on reported profit, while dividends, share repurchases and currency translation were offsets.
Guidance, management commentary and risks
Strategy and outlook. The bank reaffirmed its 2025 targets: post-tax return on average tangible equity above 10%, cost/income ratio below 62.5%, CET1 ratio around 13%, and a 50% total payout ratio from 2025. RoTE was 10.2% at year-end 2023; the cost/income target remains unmet at 69.6%. The 2021–2025 revenue CAGR target was raised at the beginning of 2024 from 3.5–4.5% to 5.5–6.5%; reported CAGR through 2023 was 10.5%.
The bank aims for a quarterly adjusted-cost run rate of €5bn in 2024 and total noninterest expenses of about €20bn in 2025. Its €2.5bn operational-efficiency program includes process and technology changes and an expected reduction of about 3,500 roles, mainly in non-client-facing areas. Management also targets €25–30bn of RWA reductions by 2025; €13bn was achieved in 2023.
For 2023, the Management Board planned to propose a €0.45-per-share dividend, subject to shareholder approval. The bank completed €450m of buybacks in 2023 and received supervisory approval for a €675m repurchase in 2024. It targets a 50% payout ratio for 2024 and subsequent years, and cash dividends of €0.68 per share for 2024 and €1.00 for 2025, subject to earnings, regulatory approval and legal requirements. These are plans and targets, not assurances.
Risks and unusual items. Risks include persistent inflation and interest-rate uncertainty, geopolitical conflicts and sanctions, weaker economic activity, CRE refinancing and valuation pressure, market volatility, competition, cyber threats, litigation and regulatory requirements. The bank reported a €233m Numis goodwill impairment and €566m of restructuring and severance expenses. A 2023 Federal Reserve consent order imposed a U.S. $186m civil monetary penalty and additional remediation obligations. BaFin’s AML/KYC special representative appointment was extended through October 2024.
CRE remains a key credit risk: the non-recourse CRE portfolio was €38.2bn, including €31.2bn in the higher-risk stress-tested portfolio. A bespoke, multi-year liquidation stress scenario indicated approximately €1.1bn of potential losses; the filing notes this is a stress estimate, not the expected loss, and is sensitive to assumptions. Postbank’s 2023 customer migration caused service issues and backlogs; most processes were remediated by year-end, with some backlog resolution expected mostly by the end of Q1 2024.
Significant legal matters include Postbank takeover litigation with claims totaling almost €700m, excluding significant interest; Polish foreign-currency mortgage claims exceeding €685m across more than 5,000 cases, against a €534m provision; and a UK FX-derivatives claim by Palladium Hotels Group alleging approximately €500m in losses. The filing states that outcomes may exceed provisions. Management assessed disclosure controls and internal control over financial reporting as effective at December 31, 2023; the auditor issued unqualified opinions on the financial statements and internal control.
Most important facts for investors to verify
- Whether earnings growth converts into durable returns and progress toward the 2025 cost/income target.
- CRE portfolio quality, refinancing outcomes, collateral values and how realized losses compare with the disclosed stress scenario.
- Whether Postbank service remediation is completed and customer, operational and regulatory impacts are contained.
- Developments in Postbank, Polish mortgage, FX-derivative and cum-ex matters, including changes to provisions or contingent liabilities.
- CET1 and liquidity buffers after regulatory changes, business growth and shareholder distributions, and whether the proposed dividend and buyback proceed.
- Reconciliation of SEC IASB-IFRS figures with EU-endorsed IFRS results, particularly the disclosed fair-value macro-hedge accounting effects.