How Deutsche Bank Plans to Achieve RoTE Above 13% by 2028

Deutsche Bank AG DB has laid out an ambitious but structured plan to lift its return on tangible equity (RoTE) above 13% by 2028. The strategy rests on a combination of revenue growth, tighter cost discipline, capital optimization and higher shareholder payouts.

At the core of DB’s profitability ambitions is top-line expansion. Management expects to achieve incremental revenues of €5 billion ($5.8 billion) by scaling the Global Hausbank across asset gathering, payments servicing and advisory. The company intends to generate €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.

Deutsche Bank is also placing heavy emphasis on cost control and efficiency gains. The bank has set a target to reduce its cost-income ratio to below 60% by 2028, a notable improvement from earlier medium-term goals. This improvement is expected to come from €2 billion in gross cost efficiencies, driven by process simplification, automation, and increased use of digital and AI-enabled platforms. 

Another pillar of Deutsche Bank’s RoTE ambition is strict capital management. The bank intends to maintain its Common Equity Tier 1 (CET1) ratio at 13.5-14%, balancing resilience with return optimization. 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. Higher dividends and share buybacks serve two strategic purposes: they enhance shareholder returns directly and reinforce management’s confidence in the sustainability of earnings. By reducing equity through distributions while maintaining earnings growth, payouts also mechanically support higher returns on equity over time.

How Other Financial Firms Are Expected to Fare in Terms of ROTCE

Wells Fargo & Company WFC is aiming for a 17-18% return on tangible common equity (ROTCE) over the medium term, up from the earlier target of 15%. This move underscores the company’s growing confidence in its profitability outlook as it transitions from years of regulatory remediation to a renewed focus on sustainable growth.

Wells Fargo’s upgraded ROTCE target reflects several structural and operational tailwinds. The chief among them is the removal of the Federal Reserve’s asset cap, which now allows Wells Fargo to boost deposits, grow its loan portfolio and broaden its securities holdings. 

Meanwhile, Citigroup, Inc. C is advancing its multi-year strategy to streamline operations and focus on its core businesses. Aligned with its goal of achieving leaner operations, Citigroup has overhauled its operating model and leadership structure, reduced bureaucracy and complexity while enhancing efficiency. 

Citigroup expects revenue to witness a 4-5% compounded annual growth rate (CAGR) through 2026. The company also anticipates achieving $2-2.5 billion in annualized run-rate savings by 2026, reflecting the tangible benefits of its simplification and efficiency initiatives. ROTCE is expected to be 10-11% by 2026.

DB’s Price Performance & Zacks Rank

Over the past six months, shares of Deutsche Bank have gained 35.5% on the NYSE compared with the industry’s growth of 24.8%.

Currently, the company carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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

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