FRANKFURT (dpa-AFX) - Weak financial markets, high inflation and in-house problems hit Deutsche Bank's fund subsidiary DWS hard last year. "2022 was the 'ultimate super bear scenario' for DWS: all asset classes under pressure, a war in Europe and worries about the German economy," company CEO Stefan Hoops said at the presentation of the annual results in Frankfurt on Thursday. "In addition, there were challenges specific to DWS." Customers withdrew money from the funds in a big way, and profits slumped because of increased costs. Shares in the SDax-listed company went down after the news.

Hoops, who has led DWS since the middle of last year, wants to turn things around this year, at least in terms of cash inflows. Net cash flows are expected to return to positive territory, driven by the "Alternatives" and "Passive" growth areas. In the "Passive" segment, DWS offers ETFs on indices, for example. In the "Alternatives" segment, for example, real estate investments are offered to mainly German institutional customers.

In 2022, DWS customers withdrew almost 20 billion euros due to the difficult environment, including high inflation, after the fund company had recorded an inflow of almost 48 billion euros the year before.

Although earnings remained almost at the previous year's level, as the outflow of funds was largely confined to low-margin products. However, as the company's costs rose sharply, profits fell 23 percent to 599 million euros. Nevertheless, the dividend, which mainly benefits Deutsche Bank as a major shareholder, is to rise by five cents to 2.05 euros.

However, this did not help on the stock market. The DWS share price slipped by up to around seven percent to 30.76 euros in the morning, falling back to the level at the turn of the year. Most recently, the stock was still at the bottom of the SDax with a discount of another five percent to 31.48 euros.

Deutsche Bank had listed its fund company DWS in 2018 for 32.50 euros per share. The financial institution still holds just under 80 percent of DWS shares. JPMorgan analyst Angeliki Bairaktari was disappointed by the annual profit. However, the outlook is optimistic, she wrote in the morning.

DWS CEO Hoops expects 2023 earnings adjusted for special effects to be essentially at the previous year's level. The adjusted cost-income ratio (CIR) is expected to rise but remain below the 65 percent mark.

Last year, adjusted earnings decreased by one percent to just under 2.7 billion euros. However, costs, adjusted among other things for charges relating to the Group's restructuring, grew by three percent to just over 1.6 billion euros. The adjusted cost/income ratio (CIR) therefore deteriorated by two and a half percentage points to 60.6 percent.

By 2025, Hoops aims to push this ratio below the 59 percent mark in line with the financial targets presented in December. Earnings per share are to rise to 4.50 euros. Last year, this figure fell by 23 percent to 2.99 euros. The DWS boss is primarily counting on double-digit percentage growth in the "Alternatives" and "Passive" segments. Hoops also wants to expand the DWS business with the help of acquisitions.

In addition, the volume of passively managed assets is to grow by more than twelve percent in the coming years. For alternative assets under management, the Executive Board is targeting an annual increase of more than ten percent. In addition, the product range in the area of alternative investments is to be expanded, as is the expansion and use of digital platforms and other technology such as blockchain. Here, DWS also sees the opportunity to save a lot of money.

By 2025, the company aims to achieve total annual efficiency gains of around 100 million euros. 40 percent of this will be accounted for by the establishment of an independent IT platform. The rest is to come from further cost-cutting measures. Hoops had also announced in December that it would be selling off business units, reducing hierarchies and scaling back its regional presence. More than half of the 100 million euros are to be saved as early as next year./zb/stw/jha/