(new: statements from press conference on job cuts, Postbank problems and return target; current share price reaction to Deutsche Bank and DWS)

FRANKFURT (dpa-AFX) - Deutsche Bank intends to cut significantly more jobs than previously planned following a decline in profits: A total of around 3,500 jobs are to be cut by the end of next year, Germany's largest financial institution announced on Thursday. This includes the reduction of 800 jobs already announced in April, explained Group CEO Christian Sewing at the presentation of the balance sheet in Frankfurt. The message about the planned savings was well received on the stock market.

Deutsche Bank shares rose by five percent at times in the morning. At lunchtime, it was still the leader of the DAX with a price increase of around 3.7 percent. In doing so, it more than made up for the losses it had suffered since the turn of the year.

The bank intends to cut jobs primarily in areas that are not directly related to customers. The sales network in Germany is to be streamlined and internal processes are to be simplified and automated. In this way, the Management Board intends to save a further 1.6 billion euros. At the end of last year, the Group had 90,130 full-time positions worldwide.

Last year, Deutsche Bank had to accept a fall in profits on the bottom line. The net profit attributable to shareholders fell by around 16 percent to 4.2 billion euros. However, analysts had expected a much sharper decline after the bank had benefited from a one-off tax credit in the billions from its US business in the previous year.

At almost 5.7 billion euros, the bank achieved its highest pre-tax profit in 16 years in 2023. Sewing therefore drew a positive balance: the bank had grown more strongly than planned. Earnings - i.e. total income - rose by six percent to around 28.9 billion euros. They are expected to grow to around 32 billion by 2025, which is more than previously planned.

The year 2024 has "started very strongly", said Sewing. He believes the bank is on course to achieve a return on tangible equity of more than ten percent next year. Last year, it was just 7.4 percent.

Like other financial institutions, Deutsche Bank benefited from the global rise in interest rates in 2023. Shareholders are to share in this positive development: The dividend is to be increased from 30 cents to 45 cents per share - a total of around 900 million euros. The bank plans to return a further 675 million euros to shareholders via share buybacks by the end of June. This will mathematically increase earnings per share. The Management Board is targeting a dividend of one euro per share for the 2025 financial year.

The problems at the Group subsidiary Postbank have still not been fully resolved. In connection with an IT changeover, there had been an accumulation of complaints from customers who could no longer access their accounts at times or complained about delays in mortgage lending. The financial supervisory authority Bafin sent a special watchdog to the bank. Contrary to what Group CEO Sewing had promised in the fall, not all problems could be resolved by the end of 2023.

On Thursday, Sewing said he assumed that the teams "in the customer-relevant processes (a) will have completed the processes and the missing things that we have not yet tidied up in the first quarter of 2024". He again admitted mistakes: "We have disappointed Postbank's customers, we have not provided a good service." According to him, the chaos at Postbank has cost the bank 40 million euros so far.

The conversion of the computer systems at the subsidiary DWS is also not working as originally planned. The fund company wants to break away from its parent company for many administrative processes - provided it can do it itself and more cheaply. In the fall, DWS CEO Stefan Hoops admitted that the IT project would take longer and be significantly more expensive than planned. After the project was expected to cost around 100 million euros last year, he anticipated further costs of this amount for 2024.

Despite billions in cash inflows, DWS's profit fell last year: due to lower income and the renewal of IT, net profit fell by five percent year-on-year to 567 million euros. Hoops expects an increased inflow of client money in 2024.

The news from DWS was poorly received on the stock market: The DWS share lost more than five percent by lunchtime, making it the biggest loser in the small-cap index SDax. Analysts were disappointed by the business figures for the fourth quarter.

Deutsche Bank, the majority shareholder of DWS, can be pleased about an unusually high profit distribution. In addition to a regular dividend of EUR 2.10 per share, the fund provider has announced a special dividend of EUR 4 per share for the past year. This brings the total distribution to a good 1.2 billion euros - of which the Lowen share will go to Deutsche Bank./stw/ben/niw/stk