The stark reality.
Deutsche Bank boss Christian Sewing warned employees that he will not let up the pace of cost cuts as the lender confirmed that profits fell by 14 per cent year-on-year.
The bank reported net income of €401m (£357m) during the second quarter, in line with figures contained in a surprise release earlier this month prompted by a significantly above-expectations earnings.
However, in a message to staff accompanying the official results today Sewing said the bank will not “slow down” in its “transformation” of the business. He added: “a fourth-quarter spike in costs, as we saw last year, must not be repeated.”
Sewing was appointed chief executive in April, after previous boss John Cryan was ousted amid concerns over his strategy focused on the underperforming investment bank. Previously head of the bank’s retail operations, Sewing quickly started a programme of cost cutting, although he has already had to contend with failing the US Federal Reserve’s stress test and being included on a US list of “problem banks”.
Sewing warned bankers that more cuts are on the way, saying: “In most areas we are as determined as necessary. But I also notice that, in respect of restructuring pace and costs, we’re still not universally acting as we want to.
“Please don’t assume that it’s up to others to cut costs. Those days are over.”
The “leverage reduction” in the corporate and investment bank has “cost us some revenue”, Sewing today admitted, but said he revenues in the division – formerly one of the world’s titans – to “increase sequentially”. The restructuring of the bank’s equities business is mostly complete, he suggested.
Sewing said he was “very confident” the bank will hit its cost-cutting targets for 2018 as a whole of €23bn. Staff numbers will fall below 93,000, he said.
We reduced the number of employees by 2,100 in the first half of the year, including 1,700 in the second quarter.