Deutsche Bank is cutting 3,500 jobs as it pushes ahead with an arrangement to reduce costs by €2.5 billion ($2.7 billion) by 2025.
Germany’s biggest lender revealed on Thursday February 1 that it had made progress towards the target but still had to find savings of €1.6 billion ($1.7 billion), some of which would be driven by “simplified workflows and automation.”
Back-office functions will account for the majority of job losses. The reduction add up to around 4% of the organization’s global labor force. In a statement, the institution added.
Additionally, Deutsche Bank announced that 2023 profit before taxes reached its highest level in 16 years, rising by 2% over the previous year to €5.7 billion ($6.1 billion). However, as its tax bill increased, net profit decreased by 14% to €4.9 billion (5.3 billion).
As per Deutsch Bank CEO Christian Sewing, they have… delivered growth well ahead of target and kept up with their emphasis on cost discipline while putting resources into key regions.
Through dividends and share buybacks, the bank said it would return €1.6 billion (1.7 billion) to shareholders in the first half.
Deutsche Bank (DB) is just the latest in a string of lenders to announce layoffs in recent months, as banks look to reduce costs and boost profits.
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Meanwhile, Citibank (C) said earlier in January that it would cut 20,000 jobs over the next two years, saving $2.5 billion in the long term. UBS (UBS), meanwhile, is shedding 3,000 jobs in Switzerland alone as it absorbs Credit Suisse, with more cuts anticipated elsewhere.
In November, Barclays (BCS), Lloyds, and Metro Bank all made announcements about layoffs.
Several of the banks have cited increased automation as a reason for reducing staff numbers, as worries grow over the impact that advances in generative artificial intelligence could have on jobs. Lloyds, for example, said it was ditching certain roles but hiring for data and technology positions.
But they may also be bracing for a tougher business environment as the impact of elevated interest rates works through the economy, leading to growing losses on loans, and in anticipation of lower rates to come, which may eat into banks’ margins.
Deutsche Bank said it had increased provisions for potential bad debts by €300 million to €1.5 billion ($1.6 billion) in 2023, which it said reflected “the continued challenging impact of macro-economic and interest rate conditions.”
Then again, as interest rates come down, lending becomes less profitable for banks.
