Fund company DWS with less surplus

The higher-margin, actively managed equity, mixed funds and alternative investments, on the other hand, collected some new capital on balance, amounting to 0.7 billion euros, 0.6 billion euros and 1.6 billion euros. According to this, individual well-known funds such as the equity fund “DWS Top Dividende” and the mixed fund of the well-known fund manager Klaus Kaldemorgen “Concept Kaldemorgen” are primarily responsible for this. In the case of alternatives, risk hedging products and infrastructure funds were in demand.

In the first half of the year, capital outflows totaled 26 billion euros. The assets under management at DWS have therefore fallen by EUR 69 billion to EUR 833 billion since the end of March because of the price losses in shares and bonds.

However, Hoops emphasizes a strong financial result in the announcement: “Although the environment continued to deteriorate significantly in the second quarter, we managed to achieve the highest adjusted pre-tax profit that we have ever achieved in a second quarter and a first half”, says the new boss. Thanks to the diversified business model, DWS has remained resilient, he emphasizes with a view to continued demand for high-margin alternative investments and active funds.

Group result falls by 17 percent

Revenues climbed 7 percent year-on-year to 689 million euros in the second quarter. Accordingly, management fees remained unchanged compared to the first quarter, but less favorable market values ​​of the guarantees for guarantee products, among other things, led to the fact that revenues fell by three percent compared to the previous quarter.

In the first half of the year, income increased by eight percent to 1.36 billion euros compared to the same period last year.

Adjusted pre-tax profit increased by 11 percent year-on-year to EUR 273 million in the second quarter. Compared to the previous quarter there is a minus of two percent. In the first half of the year, the adjusted pre-tax profit also rose by eleven percent compared to the same period last year to 552 million euros.

Net income fell 17 percent from the previous quarter. In the first half of the year, it remained unchanged compared to the previous year at 341 million euros.

Adjusted costs rose five percent year-on-year to EUR 398 million in the second quarter. Compared to the previous quarter, they fell slightly. In the first half of the year, they climbed by six percent to 808 million euros.

The adjusted cost/income ratio fell by 1.3 percentage points to 59.3 percent in the second quarter compared to the same period of the previous year. In the first half of the year, the rate improved “to the very good level of 59.4 percent,” emphasizes CFO Claire Peel.

DWS does not give a new outlook with reference to its annual report from spring. There, Hoop’s predecessor Asoka Wöhrmann had confirmed DWS’ growth goal of achieving average annual net growth of more than four percent in the medium term and a sustainable adjusted cost-income ratio of 60 percent in 2024. At the same time, however, he had attuned to headwinds for the industry due to inflation and, above all, the Ukraine war.

Because of greenwashing allegations: Large customers question mandates

Two things should comfort the new DWS boss: He is not yet responsible for these figures. And Wöhrmann, who had to resign at the beginning of June because of the fund provider’s smoldering greenwashing affair and a dubious mixture of private and business interests, felt the same way after he took office. For 2018, he had to report net capital outflows of a good 22 billion euros and a 38 percent slump in consolidated profit.

At that time, turbulent stock exchanges also weighed on the fund business and tough competition from the increasingly popular ETF and Wöhrmann’s predecessor who acted without luck after DWS went public. DWS is currently also citing the extremely weak stock and bond markets.

However, insiders report that some large customers have questioned mandates as a result of the greenwashing allegations. Customers wanted to see evidence of the sustainability processes. Some large investors who want their money invested according to ethical criteria have withheld funds.

Despite ongoing official investigations and a raid on the company headquarters of DWS and Deutsche Bank at the end of May, DWS has rejected the allegations from the start. In addition, the fund provider repeatedly emphasizes that the greenwashing allegations have not yet been reflected in the business figures. Hoops, the former head of Deutsche Bank’s corporate bank, has taken it upon himself to restore trust in DWS.

>> Read also: Deutsche Bank moves away from key targets for 2022

However, business with major competitors was apparently more stable in the first half of the year. In a first look at the figures for the first half of the year, Georg Stocker, CEO of the savings bank subsidiary Dekabank, reported that he assumed that his bank had posted net sales of over 15 billion euros in the first six months. According to reports, a significant proportion of this flowed into funds in addition to certificates. “Private investors in particular have continued to invest,” he says. In addition, securities savings plans are still in demand.

“However, he also sees that investors have become more cautious over the course of the second quarter,” reports the Dekabank boss. The combination of high inflation, a turnaround in interest rates, the war in Ukraine and the risk of recession are also having an impact on private investors. But it’s still too early to make a concrete assessment, he says. It should look similar for the other major providers.

More: Skeptical investors and angry employees: the difficult mission of the new DWS boss