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Deutsche Bank has suffered a 92pc slump in its profits amid a major downturn in the German economy.
Germany’s largest lender on Thursday vowed to slash jobs after its profits attributable to shareholders dropped to €106m (£89m) in the final three months of 2024, down from €1.26bn in the fourth quarter of 2023.
Shares in the bank fell by as much as 6pc on the update.
The slump comes after Germany’s economy contract for a second year in a row in 2024. Higher energy prices as a result of the war in Ukraine have undermined the competitiveness of German industry at a time when the country’s car manufacturers are also facing intense competition from rivals in China.
The collapse of Olaf Scholz’s coalition government in November 2024 has also thrown the country into a political crisis that is further undermining efforts to revive economic growth.
Christian Sewing, Deutsche Bank’s chief executive, said mortgages and “middle-market lending” in Germany were pulling down the wider business. He said: “The real challenge which we are working on is in retail Germany.”
Germany’s economic struggles have also hit Europe’s broader economy. The European Central Bank (ECB) on Thursday warned the bloc was “still facing headwinds” as officials cut interest rates by another 0.25 percentage points in an effort to revive the economy. The interest rate reduction, from 3pc to 2.75pc, marks the fifth time the eurozone’s central bank has lowered rates since last summer.
Mr Sewing said Deutsche Bank was considering cutting entire layers of management to help repair profits. He said: “Our clear ambition is to operate the bank with a lower headcount ... We plan to actively reduce management layers and roles.”
Deutsche Bank has more than 90,000 employees in offices across the globe, including almost 7,000 staff in the UK. It outlined plans to cut 3,500 staff worldwide in February 2024 in an effort to cut costs and boost its share price.
Mr Sewing was appointed as Deutsche Bank’s chief executive in April 2018 with a mandate to restore profitability after a string of annual losses that weighed on its stock price. He was largely successful before the recent downturn in performance.
While Deutsche Bank’s core business has improved since Mr Sewing took over, it has struggled with legacy problems. The German lender has been fined by regulators in Britain and the US over laundering Russian money and over its relationship with disgraced financier Jeffrey Epstein.
Litigation costs weighed heavily on the bank’s most recent quarter, costing it €1.7bn. Much of that stemmed from its takeover of German lender Postbank in 2018. Deutsche Bank reached settlements with dozens of former Postbank shareholders in August over allegations that they had been short-changed in the takeover.