Deutsche Bank Aktiengesellschaft Q1 Earnings Call Highlights

Deutsche Bank Aktiengesellschaft NYSE: DB highlighted what it described as a strong start to 2026 during its first-quarter fixed income call, pointing to record net profits, improving profitability metrics, and a capital and liquidity position that management said remains comfortably above regulatory requirements. Group Treasurer Richard Stewart said the bank “proved our resilience in an environment of heightened uncertainty,” while reaffirming confidence in the group’s strategic goals and 2028 financial targets.

First-quarter performance and divisional mix

Stewart said post-tax return on tangible equity rose to 12.7% and the cost-income ratio improved to below 59%. Group revenues were EUR 8.7 billion, up 2% year-over-year, or 6% excluding foreign-exchange impacts, which Stewart attributed to “focused growth areas and improving business mix.”

He also emphasized a shift in earnings mix, saying “our non-investment banking businesses with more predictable earning streams account for a larger share of group profits compared to the same quarter of last year.” Stewart added that all four divisions were “due to return on tangible equity of either close to or well above 13%.”

Stewart cited several operating highlights across the franchise:

• Private Bank: client assets increased by EUR 30 billion since the start of the year, including EUR 11 billion of net assets under management inflows, “primarily driven by investment products.”
• Asset Management: achieved EUR 11 billion of total net flows, “mainly in passive and cash.” Stewart also said DWS agreed to acquire a 40% minority stake in Nippon Life India AIF Management Limited.
• Corporate Bank: business volumes grew year-on-year, with loans up 6% and deposits up 2%, according to Stewart.
• Investment Bank: client activity increased 8% versus a strong prior-year quarter, with Stewart saying the bank continued to support clients amid volatile markets.

Strategy, macro views, and risk positioning

Stewart said geopolitical developments continued to underscore “the importance of resilience and disciplined execution,” adding that the conflict environment reinforced Europe’s need for “self-reliance and strategic autonomy and investment in defense and other capabilities.”

On Germany, Stewart said that despite lower forecast growth rates for 2026, the bank’s medium-term view was unchanged due to expected tailwinds from fiscal stimulus and the potential for additional measures beyond a reform framework announced earlier in the month. He said Deutsche Bank intended to “actively leverage” its leadership position in Germany and saw growth opportunities linked to private-sector investment and reforms, along with defense and infrastructure plans.

From a risk perspective, Stewart said the bank had “very limited direct exposure to the Middle East.” He added that portfolio performance remained within expectations, while the bank implemented a “management overlay to reflect broader macroeconomic uncertainties.”

Stewart also pointed to operational initiatives, saying AI is “advancing rapidly” and the bank was working across businesses and functions to improve productivity and the client experience.

Capital, RWA movement, and loss-absorbing capacity

Stewart said the bank ended the quarter with a CET1 ratio of 13.8%, down 38 basis points from the fourth quarter but “well within” the operating range of 13.5% to 14%. He said net income (net of AT1 coupon deductions) contributed 53 basis points, while deductions for distributions of 32 basis points reflected a 60% payout ratio for 2026. Other deductions of 11 basis points were “mainly” related to equity compensation, partly offset by reduced capital deduction items.

Risk-weighted assets increased by EUR 12 billion excluding FX effects (which added EUR 2 billion), driven by several factors. Stewart said the increase included EUR 6 billion from business growth in credit risk RWA, “notably in loans” in the Corporate Bank and Investment Bank, as well as derivatives and secured financing transactions. Market risk contributed another EUR 2 billion, and “other” reflected changes in operational risk RWAs and smaller model effects.

Addressing a question on the size of the move, Stewart said the first-quarter RWA increase was “a bit exceptional” and “can certainly not be extrapolated to future quarters.” He added that market risk and operational risk increases of about EUR 2 billion each were not expected to repeat in the second quarter. He also said that, excluding FX, credit RWA rose by EUR 8 billion, “mostly” in the investment bank, including financing opportunities and volatility-driven increases, particularly in derivatives and SFT credit exposure.

On buffers, Stewart said the CET1 MDA buffer stood at 260 basis points, or EUR 9 billion of CET1 capital. The total capital buffer to requirements was 270 basis points, which he said was lower partly due to the AT1 call and Tier 2 maturity haircuts. The leverage ratio ended the quarter at 4.4%, down 12 basis points from the prior quarter, with an MDA buffer of EUR 12 billion.

Stewart said the bank’s MREL surplus was EUR 17 billion, which he said provides “flexibility to pause issuing new eligible liabilities for at least one year.” He added the MREL requirement was expected to reduce by about 100 basis points in the second quarter based on a decision from resolution authorities, increasing the surplus by around EUR 3.5 billion.

Liquidity, balance sheet trends, and net interest income outlook

On liquidity, Stewart said Deutsche Bank’s liquidity coverage ratio was 140%, with EUR 245 billion of high-quality liquid assets. He said both HQLA and surplus above requirements “normalized” after a seasonally elevated year-end, while the overall liquidity position remained robust. The net stable funding ratio was 119%, with available stable funding of EUR 651 billion.

Loans grew by EUR 5 billion in the quarter adjusted for FX effects, with Stewart saying the loan book’s underlying quality remained strong, reflecting conservative underwriting. He said the Private Bank continued portfolio rebalancing by expanding wealth management while reducing the German mortgage book, while the Corporate Bank saw loan growth including “encouraging growth” in trade finance.

Deposits fell by EUR 8 billion to EUR 687 billion (FX-adjusted), which Stewart attributed primarily to the Corporate Bank, where balances normalized from a year-end spot peak “in line with our expectations and prior guidance.” Private Bank deposits were “broadly stable,” supported by campaign inflows in Germany.

Net interest income (NII) in key banking book segments and other funding was EUR 3.5 billion. Stewart said deposit-related NII had been stable over the past year as headwinds from rates were offset with volume growth in the hedge portfolio and that the bank anticipated tailwinds. He guided to full-year 2026 NII across those segments increasing to around EUR 14 billion.

In response to an analyst question, Stewart said “higher rates are beneficial” for Deutsche Bank’s NII and that market-implied rates were higher than the planning assumptions used for its Investor Deep Dive, creating tailwinds for 2026 and 2028. However, he said the bank was not changing overall revenue guidance for 2026 or 2028, while adding that rate developments supported confidence in meeting and “potentially outperforming” targets.

Issuance update and funding actions

On issuance, Stewart said market conditions had been challenging due to geopolitical uncertainty and lower primary market activity, but Deutsche Bank continued to make progress. As of end of April, the bank had issued EUR 6 billion toward its EUR 10 billion to EUR 15 billion plan for the year, driven by five benchmark transactions across three currencies.

Stewart highlighted a Tier 2 transaction in January, a U.S. dollar Senior Non-Preferred issue in February that he described as the bank’s “tightest” in that format, and a EUR 500 million green Senior Non-Preferred bond, its first under the European Green Bond format. He also noted a multi-tranche Panda bond transaction totaling CNY 5.5 billion, which he said was the largest Panda bond issuance by a commercial bank to date. In early April, Deutsche Bank issued another U.S. dollar Senior Non-Preferred transaction and, despite geopolitical uncertainty, attracted more than $6 billion in orders to price a $1 billion deal with “minimal concession.”

Stewart added that the bank completed a tender offer for several Pfandbrief benchmarks, repurchasing EUR 1.6 billion, which he said would help manage the Pfandbrief curve.

In closing remarks, Stewart reiterated confidence in revenue ambitions of around EUR 33 billion, confirmed expense guidance, and reiterated 2026 guidance for provisions for credit losses. He said the bank expected second-quarter expense increases primarily from restructuring and severance costs in the Private Bank tied to front-to-back optimization, as well as hiring across divisions.

During the Q&A, CFO Raja Akram declined to comment directly on potential competitor transactions, but said such developments would not change Deutsche Bank’s plan or strategy, and he suggested a potential deal between competitors could be “slightly net positive” in certain cases for market share and talent. Akram also cautioned against viewing the quarter’s investment bank RWA share as a “new normal or an aspired state,” saying the bank’s goal is to keep FICC performing while increasing revenue and profit contribution from “non-RWA consuming businesses.”

About Deutsche Bank Aktiengesellschaft NYSE: DB

Deutsche Bank Aktiengesellschaft is a global banking and financial services company headquartered in Frankfurt, Germany. Founded in 1870 to support German foreign trade, the firm has grown into a full-service bank offering a wide range of banking, advisory and transaction services to corporate, institutional, and private clients. Over its history the bank has expanded internationally and developed capabilities across capital markets, investment banking, retail and commercial banking, and wealth management.

The bank's core business activities include corporate and investment banking—covering financing, advisory, sales and trading, and capital markets services—along with private & commercial banking for individual and small-to-medium enterprise clients.

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