A Record Year Marred by Concerns for Deutsche Bank

Deutsche Bank’s latest annual report presented a paradox that captured market attention: historic profits paired with a significant share price decline. While the 2025 financial year was officially the most profitable in the institution’s history, a specific warning within its own report triggered investor unease, focusing scrutiny on its expanding private credit business.

Leadership Transition and Strategic Ambitions

The bank is navigating a key executive change alongside its financial disclosures. Chief Financial Officer James von Moltke is set to depart upon the conclusion of his contract in June 2026. His successor, Raja Akram, who previously served as Deputy CFO at Morgan Stanley, joined the management board in January 2026. He is expected to instill greater capital market discipline within the organization.

Deutsche Bank has set ambitious medium-term targets, aiming for a return on tangible equity (RoTE) above 13% and a cost-income ratio below 60% by 2028, supported by net revenues of approximately €37 billion. For the current year, 2026, the institution forecasts net revenues around €33 billion and has authorized capital distributions totaling €2.9 billion. This includes a dividend of €1.00 per share and a share buyback program worth €1.0 billion. A Common Equity Tier 1 (CET1) ratio of 14.2% underscores a solid capital position, sitting just above the bank’s own target range.

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

Spectacular Profits Overshadowed by Risk Warnings

The core financial achievements for 2025 were undeniably strong. Net profit doubled to €7.1 billion, and the RoTE climbed to 10.3%. However, the publication of the certified annual report on March 12 shifted the narrative.

Investor focus zeroed in on the bank’s private credit portfolio, which grew by roughly 6% in 2025 to nearly €26 billion. Within the report, Deutsche Bank explicitly acknowledged potential exposure to indirect credit risks stemming from interconnected portfolios. This caution emerged amid a heightened market focus on underwriting standards and fraud risks, partly driven by defaults among US sub-prime lenders. Although management emphasizes its conservative credit standards, the combination of rapid growth in this area and its own risk assessment was enough to dampen sentiment. On March 12, Deutsche Bank shares fell approximately 5.7%, making it the worst performer in the DAX index on that day.

The true resilience of the bank’s underwriting practices in private credit will face a closer test when first-quarter figures for 2026 are released on April 29. Analysts and investors are likely to pay particular attention to the portfolio’s cost of risk at that time.