Deutsche Bank Sets RoTE Above 13% & Outlines Growth Plan by 2028

Deutsche Bank AG DB has outlined a new multi-year strategy that sets fresh growth and profitability targets through 2028, marking the next phase of its Global Hausbank expansion plan. The bank expects stronger revenue momentum, higher returns, and improved cost discipline as it scales its core franchises.

DB’s New RoTE Target

The company has reinforced that its longer-term vision is to become the European champion in banking through leadership in key segments, market-leading returns, and a deep global presence supported by a resilient business model leveraging AI and a strong balance sheet.

At its latest strategy update, DB announced a new Return on Tangible Equity (RoTE) target of more than 13% by 2028. For 2025, the company plans to achieve a RoTE of more than 10%.

Additionally, management highlighted additional upside potential beyond its 13% RoTE target, supported by several external factors. These include stronger-than-expected fiscal stimulus effects, deeper structural reforms in Germany, and AI-driven benefits that may surpass the bank’s current base-case assumptions. Further upside could arise from EU-wide developments, including capital markets harmonization, the proposed Savings and Investment Union, and regulatory adjustments intended to create a level playing field with the United States.

DB’s Other Strategies & Financial Goals

Deutsche Bank introduced new revenue, cost and capital objectives aimed at driving “market-leading returns” over the next three years. Management emphasized that these goals will be achieved by deploying three key levers, namely, focused business growth, strict capital discipline, and a scalable operating model. These levers are reinforced by disciplined use of the bank’s Shareholder Value Add performance framework.

DB aims to deliver compound annual revenue growth of above 5%, with revenues expected to rise from roughly €32 billion ($37.1 billion) in 2025 to around €37 billion ($42.9 billion) in 2028. Management expects to achieve incremental revenues of about €5 billion ($5.8 billion) by scaling the Global Hausbank across asset gathering, payments servicing, and advisory.

Deutsche Bank intends to generate about €2 billion ($2.3 billion) of its growth in Germany by leveraging home-market leadership across its businesses and capturing opportunities related to fiscal stimulus, structural reforms, private-sector investment, and long-term transformation spending. Further, the company targets a cost/income ratio of below 60% by 2028.

The bank also intends to maintain its Common Equity Tier 1 (CET1) capital ratio within the operating range of 13.5%-14.0%, while selectively deploying capital to high-return businesses. DB reiterated its objective to remain disciplined on pricing, capital allocation, and return hurdles.

DB’s Enhanced Shareholder Distribution Plans

Starting in 2026, DB plans to lift its payout ratio to 60% of net profit attributable to shareholders, up from the current 50% target for 2025. Additional upside for distributions or growth deployment is possible when the CET1 ratio is sustainably above 14%.

Deutsche Bank has raised its shareholder distributions by roughly 50% per year since 2022. The bank aims to further increase capital capacity by reallocating capital away from sub-hurdle portfolios and through disciplined balance-sheet management.

DB’s 2025 Outlook Remains on Track

Deutsche Bank reaffirmed its 2025 guidance, indicating that the current transformation initiatives remain on schedule. Management continues to project full-year revenues of around €32 billion ($37.1 billion) and non-interest expenses of approximately €20.6 billion ($23.8 billion), reflecting progress under the €2.5 billion ($2.9 billion) efficiency program.

The bank expects a CET1 capital ratio of roughly 14% by 2025-end, maintaining discipline on balance-sheet optimization and capital allocation. This supports the planned payout ratio of 50% of net income for 2025.

DB also reiterated its 2025 profitability targets, including RoTE above 10% and a cost/income ratio below 65%, consistent with its medium-term objectives.

DB’s Price Performance & Zacks Rank

Over the past six months, shares of Deutsche Bank have gained 29.3% on the NYSE compared with the industry’s growth of 18.9%.

Currently, the company sports a Zacks Rank #1 (Strong Buy).

Other Stocks Worth Considering

Other notable foreign bank stocks are The Bank of N.T. Butterfield & Son Limited NTB and Nordea Bank NRDBY. Each stock presently sports a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.

NTB’s earnings estimates for 2025 have been revised upward to $5.52 per share in the past 30 days. Its shares have gained 4.2% over the past six months.

NRDBY’s 2025 earnings estimates have also been revised upward to $1.76 per share in the past 30 days. Its shares have gained 16.8% over the past six months.

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This article originally published on Zacks Investment Research (zacks.com).

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