The bank wants to further reduce its costs. Therefore, it also strives to reduce business travel expenses.
(Photo: dpa)
Frankfurt Business trips are also increasingly falling victim to Deutsche Bank’s austerity measures. Travel requests have to be better and better justified and are being rejected more and more often, several employees of the institute told the Handelsblatt. According to financial circles, trips that do not go to customers should be avoided as far as possible.
Employees of the infrastructure units are said to be particularly affected. This is how the bank describes areas without direct customer contact, such as IT, risk management and other administrative tasks. According to financial circles, employees from the infrastructure units should hold their meetings digitally instead of traveling.
A spokesman for Deutsche Bank said when asked: “The bank controls its travel expenses and approves trips based on the purpose of the trip and the available budget.”
An employee says there is no official new travel policy and no written instructions to travel less. “But it is made clear to everyone that travel is actually undesirable,” said the Deutschbanker, who wished to remain anonymous. Since the spring, there has been a sense of greater rigor when it comes to travel expenses.
“There’s a lot of pressure on the boiler,” confirms another Deutsche Bank insider. In the management it is clear to everyone that more savings efforts are necessary. “The costs have to go down.” Measured against the earnings situation, the institute’s expenses are still too high.
Commerzbank is making faster progress
Within the money house, many see the high costs as a major reason why Deutsche Bank’s share price has been languishing for months. The institute announced additional steps in April that are intended to reduce costs. The savings target for the next three years was increased by 500 million euros to 2.5 billion euros.
There’s a lot of pressure on the boiler. The costs have to go down. A Deutsche Bank insider
According to insiders, the fact that the dissatisfaction at Deutsche Bank is so great is also due to the fact that its smaller neighbor Commerzbank is developing much better. Commerzbank shares have gained a good 25 percent since the beginning of the year, while Deutsche Bank shares have lost four percent.
At around eleven euros, the Commerzbank share price is above that of Deutsche Bank at around ten euros for the first time in a long time. Deutsche Bank’s market capitalization is still higher at 20 billion euros. However, the gap to Commerzbank, which comes to almost 14 billion euros, has narrowed significantly.
Many within Deutsche Bank also attribute this to the fact that Commerzbank boss Manfred Knof is making better progress than his former colleagues at Deutsche Bank when it comes to cutting costs and cutting jobs. At Commerzbank, the cost-to-income ratio fell to 69 percent last year and at Deutsche Bank it was 75 percent.
Profit expectations diverge
Germany’s second-largest private bank is also in a better position than the largest in another important key figure: At Commerzbank, the ratio of market value to equity, the so-called price-to-book ratio, is 0.5 percent. Deutsche Bank only comes to 0.33 percent.
cost-income ratio
75
cent
is what Deutsche Bank currently has to spend to earn one euro. Commerzbank only needs 69 cents.
Analysts expect Deutsche Bank to only marginally improve its cost/income ratio this year. On average, the financial experts are anticipating rising earnings, but they also believe that costs should continue to rise.
For the second quarter, the analysts expect Deutsche Bank to post a pre-tax profit of EUR 1.2 billion. In the same period last year, the institute had earned 1.5 billion euros before taxes. According to the analysts, this is due to the fact that costs in the second quarter are likely to have risen much faster than income. In addition, the bank is likely to have made higher risk provisions.
At the much smaller Commerzbank, analysts expect an average increase in pre-tax profit of 14 percent to 825 million euros in the second quarter. The analysts at Deutsche Banken also assume that Commerzbank will again raise its forecast for net interest income in 2023.
In addition, Commerzbank is likely to announce another share buyback program for the end of the year – the analysts at Deutsche Bank expect a volume of 400 million euros. The institute only completed its first share buyback program in the amount of 122 million euros in June.
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