Deutsche Bank Shares Face Headwinds but Analysts See Significant Upside

Deutsche Bank CEO Christian Sewing set a cautious tone at the Morgan Stanley Financials Conference, indicating the institution’s investment banking division is likely to post flat overall revenues for the first quarter of 2026. This outlook fell short of market expectations for growth.

A Challenging Quarter Ahead

The bank anticipates that total investment banking revenue for Q1 2026 will remain roughly level with the prior-year period. Expected increases in its issuance and advisory operations are projected to be offset by declines in the fixed-income segment, resulting in a net standstill. Management cited a high comparison base from Q1 2025 and ongoing geopolitical risks as primary headwinds. Furthermore, pressure on net interest income from the lower interest rate environment presents an additional challenge.

The market’s reaction was a share price decline of approximately 1.5%, a relatively measured move given the news. However, the stock has shed around 27% since its peak in early January and is now trading notably below its 200-day moving average.

Full-Year Targets Intact Amid Private Credit Scrutiny

Despite the soft start to the year, Deutsche Bank’s leadership reaffirmed its full-year financial targets. These include group revenues of approximately €33 billion and a cost-to-income ratio below 65%. Provided its Common Equity Tier 1 (CET1) ratio remains sustainably above 14%, the bank plans to raise its payout ratio to 60% starting in 2026.

Should investors sell immediately? Or is it worth buying Deutsche Bank?

A separate area of investor focus in recent weeks has been the bank’s exposure to private credit, which stands at about €26 billion, equating to roughly 5% of its total loan book. While the bank stated it currently sees no significant direct risks, it acknowledged that indirect vulnerabilities could emerge through interconnected portfolios. Plans to expand this business area remain in place.

Strong Analyst Conviction Persists

Following Sewing’s presentation, Barclays analyst Flora Bocahut reiterated her Overweight rating on Deutsche Bank shares, with a price target of €39. This represents a potential near-doubling from the current price of around €24.50. Analysts at RBC Capital Markets and JP Morgan also maintain positive stances. For the full 2026 fiscal year, the consensus analyst forecast is for earnings per share of €3.37.

The bank concluded its 2025 fiscal year with a net profit of €7.1 billion and a return on tangible equity (RoTE) of 10.3%, marking the first time it achieved its long-term profitability goal. Whether the first quarter of 2026 signifies a loss of momentum or merely a temporary pause will become clearer when the complete Q1 figures are published on April 29.