Deutsche Bank CEO Says Revenue Is Next Big Goal of His Plan

(Bloomberg) -- Deutsche Bank AG Chief Executive Officer Christian Sewing says showing skeptical analysts that he can hit revenue targets is the next big challenge, after the lender convinced the market on cost and capital.

Speaking at a conference in Frankfurt, Sewing affirmed his target for a pretax profit this year, even though analysts expect the bank to post a loss of 463 million euros ($549 million). He said analysts have come to believe the bank will hit cost targets and they’ve also stopped asking “the capital question.” He’s now setting out to convince them his revenue plans are realistic too.

Sewing last year kicked off a four-year restructuring plan aimed at boosting profitability by slashing costs while growing revenue. So far, none of the analysts following the Frankfurt-based bank believes he will meet his 2022 targets for profitability or revenue.

Still, revenue forecasts for Deutsche Bank have been rising this year after the lender benefited from a trading boom during the first half. Sewing has said he expects that trading boom to level off in the second half.

“Falling volatility across key fixed-income products” signals a slower third quarter for trading across the industry, Bloomberg Intelligence analyst Alison Williams wrote in a note Tuesday.

Sewing said at the conference on Wednesday that not the entire increase in Deutsche Bank’s trading business during the first half was a result of market factors and that his restructuring has contributed to the positive development too. The lender reported weaker growth in fixed-income trading than most of its competitors.

Payments Unit

Deutsche Bank is working on measures to offset the impact on revenue from euro-area interest rates that are now expected to stay negative for even longer, Sewing said. He cited the lending and securities business as examples.

Another focus is the corporate bank led by Stefan Hoops. The division is the only one where staff has grown since Sewing announced his restructuring last year. The German lender recently hired at least four executives from Wirecard AG, the payments company that has filed for insolvency. That continues a hiring spree that also saw a tech team joining Hoops’s unit.

Deutsche Bank is also considering buying some Wirecard assets, though the insolvency administrator sees the lender’s indicative bid as too low, Bloomberg News has reported.

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