Deutsche Bank Stock Rises on Strong Q4 Profit, Stock Buybacks, and Layoffs
Deutsche Bank (NYSE: DB) made several important announcements on Thursday, including a better-than-expected Q4 profit, a boost to its shareholder returns, and significant layoffs. The bank’s shares rose 5% in premarket trading.
Deutsche Bank Announces 1.6B EUR in Shareholder Returns for 2024
Shares of Deutsche Bank rose more than 5% in premarket trading Thursday after the bank surpassed Q4 profit expectations by some distance.
More concretely, the bank posted a net profit of 1.3 billion euros ($1.4 billion), exceeding analyst expectations of 785.61 million euros. Still, the figure represents an almost 30% decline from last year.
Net revenues increased by 5% from the previous year, reaching 6.7 billion euros and culminating in an annual total of 28.9 billion euros. Despite this year-over-year growth, the revenues fell below analysts’ expectations, mainly due to a soft performance in the fixed-income segment, where trading income only increased by about 1%
Deutsche Bank also announced plans to boost shareholder returns with a 50% increase in share buybacks and dividends, amounting to 1.6 billion euros for 2024. This includes an additional share buyback of 675 million euros to be completed in the first half of the year, on top of the 450 million euros repurchased in 2023, and a proposed dividend of 900 million euros for 2023 to be discussed at the Annual General Meeting in May.
For the full fiscal year, Deutsche generated 4.2 billion euros in net income attributable to shareholders, compared to the 3.68 billion projected by analysts.
Looking ahead, the lender now expects to hit revenue of 32 billion euros by 2025 after topping its expectations over the past two years.
Corporate Layoffs Surge as Companies Strive to “Do More With Less”
In addition to earnings and a stock buyback program, Deutsche also announced it intends to reduce its workforce by 3,500 positions in the coming years.
The move is part of the bank’s ongoing strategy, led by CEO Christian Sewing, to enhance profitability and increase shareholder returns. The job cuts, which will primarily affect back-office functions, align with the cost-saving measures previously declared by the Frankfurt-based banking giant.
Deutsche is the latest organization to announce layoffs this month, joining PayPal (NASDAQ: PYPL), UPS (NYSE: UPS), Block (NYSE: SQ), and iRobot (NASDAQ: IRBT). PayPal CEO Alex Chriss said the company would cut around 2,500 jobs, while iRobot intends to reduce as much as 31% of the workforce after its deal with Amazon fell apart.
These reductions are part of a broader trend in tech and other sectors, with companies realizing they can “do more with less.”
During the earnings season, executives highlighted challenges such as macroeconomic pressures, foreign exchange headwinds, and reduced spending by clients and consumers. Moreover, tech companies are responding by reallocating resources and spending towards areas that drive revenue, such as AI, while also seeking ways to reduce long-term computing, supply chain, and inventory management expenses.
What are your expectations for the banking sector’s performance this year when the Fed begins cutting interest rates? Let us know in the comments below.
Disclaimer: The author does not hold or have a position in any securities discussed in the article.
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