Deutsche Bank keeps talking about a turnaround that never comes

Bearer of bad news.
Bearer of bad news.
Image: Reuters/Kai Pfaffenbach
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Deutsche Bank says it’s on track to turn an annual profit for the first time since 2014.

For real this time.

The German bank has promised to turn around its flagging fortunes for years, without much to show for it. Despite eking out a profit, the bank reported its weakest third-quarter revenue since 2010 today, pushing its shares down near an all-time record low. As Reuters succinctly described it, “After three years of losses, a failed stress test, several attempts to restructure, a leadership shake-up and a ratings downgrade, many investors have lost faith in Germany’s biggest bank, whose shares have fallen by 43 percent this year.”

Deutsche Bank remains one of the world’s largest banks by assets. The thing is, investors don’t trust the bank to use those assets wisely: Deutsche Bank trades at around 30% of book value, a damning assessment of the bank’s ability to destroy value. Put another way, investors reckon that a euro on the bank’s balance sheet is really only worth 30 cents. By contrast, JPMorgan trades at 160% of book value, Goldman Sachs at 100%, and Barclays at around 40%.

Christian Sewing, Deutsche Bank’s fourth CEO in the past three years, tried to put a positive spin on the bank’s results. Like his predecessors—John Cryan, Jürgen Fitschen, and Anshu Jain—he suggested that the restructuring is progressing according to plan, with a turnaround on the way… eventually.

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“We are very confident that we will meet our 2018 targets. On the other hand we have not yet achieved a turnaround in terms of revenues.”

Christian Sewing, Oct. 24, 2018

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“We all agree that we should get this transformation done as quickly as possible. 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.”

Christian Sewing, July 25, 2018

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“We have to act decisively and to adjust our strategy. There is no time to lose as the current returns for our shareholders are not acceptable.”

Christian Sewing, April 26, 2018

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“Are we heading in the right direction? Yes.
Are we gaining momentum? Yes.
Are we regaining once lost trust? Yes.
Are we satisfied with our current results? Absolutely not!”

John Cryan, Feb. 2, 2018

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“While the revenue environment remained challenging, we have made significant progress on our key initiatives … We are convinced that the benefits of our efforts will step by step become more apparent in the coming quarters and years.”

John Cryan, Oct. 26, 2017

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“Despite the significant improvement, this level of profitability falls short of our longer term aspirations.”

John Cryan, July 27, 2017

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“Let’s try not to go through some of the low points of 2016 again. One such experience in a lifetime is more than enough.”

John Cryan, April 27, 2017

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“Let’s restore Deutsche Bank, this institution so rich in tradition, to its former strength. We want to be a bank that contributes to economic growth and to the good of the community. A bank that can generate a positive impact – for its clients, employees, investors and society.”

John Cryan, Feb. 2, 2017

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“In spite of these achievements, I do not want to paint a flattering picture. We have a lot of work ahead of us.”

John Cryan, Oct. 27, 2016

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“If this weak economic environment persists, we will need to be still more ambitious in our restructuring. We will do everything in our power to accelerate the measures we have already planned.”

John Cryan, July 27, 2016

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“We continue to make important progress in transforming the bank.”

John Cryan and Jürgen Fitschen, April 28, 2016

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“We are focused on 2016 and continue to work hard to clear up our legacy issues. Restructuring work and investment in our platform will continue throughout the year.”

John Cryan, Jan. 28, 2016

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“Today we announced to the market some new important financial information. The news is not good, and I expect a number of you will be very disappointed by it.”

John Cryan, Oct. 7, 2015

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“Solid revenue growth underscores the fundamental strengths of our businesses and the commitment of our people. However, our challenges are also evident in the unacceptably high level of our costs, our continuing burden of heavy litigation charges, a balance sheet that must be more efficient, and the poor overall returns to our shareholders.”

John Cryan, July 30, 2015

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“We embark on the next phase of our strategy from a position of strength.”

Jürgen Fitschen and Anshu Jain, April 26, 2015 (pdf)