(AOF) – Although the war in Ukraine, inflation and recession worries have changed the face of the world since then, Deutsche Bank Chief Financial Officer James von Moltke believes that the forecasts for 2025 published in March 2022 is rock solid, he said in an interview with the German financial daily, Boersen-Zeitung.
The German bank is targeting a return on tangible equity above 10% in 2025 for a cost/income ratio below 62.5%. It also forecasts average annual growth in its revenues of between 3.5% and 4.5% between 2021 and 2025. This improvement in its profitability should enable it to distribute 8 billion euros to its shareholders over this same period. Deutsche Bank also expects a core capital ratio (CET1) of around 13%.
“Of course, we have wondered whether the developments of recent months require a change in our strategy. But we have come to the conclusion that the events since February even confirm to us that our orientation is the right one,” said James von Moltke. .
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The negative effects of rising interest rates
The rise in interest rates normally causes an increase in bank income through the loans granted. In Europe, according to a survey conducted by S&P among 85 banking establishments, the sector expects an average increase of 18% in its net interest income. However, this new inflationary context also has undesirable effects, in particular an increase in refinancing costs. It is also accompanied by the fear of a new recession, which would then affect all the bank’s businesses, ranging from loans to asset management, whose income is correlated to market valuations. Reassuring element: the banks of the euro zone are sufficiently solid to face a deterioration of their environment.