Deutsche Bank AG (DB.US) has released its fourth-quarter financial results. The bank achieved a record profit in the fourth quarter of 2025, with net profit attributable to shareholders reaching €1.3 billion ($1.56 billion), surpassing analyst expectations of €1.12 billion. Total revenue for Q4 stood at €7.73 billion, a 7.1% year-over-year increase, largely in line with the LSEG estimate of €7.72 billion. Earnings per share were €0.76, exceeding the market forecast of €0.55. For the full 2025 fiscal year, net profit attributable to shareholders was €6.12 billion ($7.3 billion), driven by robust performance in its global investment banking division. This figure is significantly higher than the €2.7 billion reported a year earlier and slightly above analyst expectations of nearly €6 billion. Management plans to propose a dividend of €1 per share for 2025 at the annual general meeting in May 2026, totaling €1.9 billion, representing an approximately 50% increase from the 2024 dividend of €0.68 per share.

The bank stated in a Thursday announcement that revenue from its fixed income and foreign exchange trading division grew 6% year-over-year, marking its best-ever fourth-quarter performance and exceeding the anticipated 4% growth. Germany's largest bank also announced an additional €1 billion share buyback program. Combined with the €1 per share dividend, this would bring the total capital return to 50% of last year's profit. Driven by higher trading revenue, the bank achieved a record level of profitability, providing a significant boost for Chief Executive Officer Christian Sewing. This comes just one day after the bank's Frankfurt offices were raided by regulators. Chief Financial Officer James von Moltke noted in an interview that Deutsche Bank has had a "very strong" start to the year and plans further capital returns in the second half.

In the fourth quarter, the bank delivered an excellent performance despite a significantly stronger euro, which resulted in lower profit growth for its fixed-income traders compared to U.S. dollar-denominated peers. The average revenue growth for fixed-income trading at the largest Wall Street banks was 4%. von Moltke remarked in the interview, "Macro products, particularly foreign exchange and emerging markets, were particularly strong." Nevertheless, Deutsche Bank anticipates first-quarter trading volumes will be broadly in line with the prior-year period. While Q4 trading results exceeded expectations, a 4% decline in advisory and origination business partially offset this growth. Sewing has been heavily investing in this business in recent years in anticipation of a market rebound. During the Q4 earnings season, most U.S. competitors expressed optimism about this business, as their revenues saw significant increases in the final three months of last year.

This week's searches by prosecutors investigating alleged money laundering at Deutsche Bank have cast a shadow over the strong earnings report. Frankfurt prosecutors stated they are investigating unidentified individuals and bank employees. Sewing indicated that the case stems from alleged late filings of suspicious activity reports, related to transactions occurring between 2013 and 2018. Following the earnings release, Deutsche Bank's shares fell nearly 3% in pre-market trading on Thursday, extending losses from Wednesday when the bank's headquarters were searched. This raid adds a new legal challenge for Sewing, who had already dealt with several costly legacy issues early in his tenure. However, rising interest rates and a trading rebound have been instrumental in Deutsche Bank's turnaround. In November, Sewing raised key profitability targets and pledged to return 60% of profits to shareholders.

In a message to staff, Sewing said, "We are clear about our goals and will not be diverted from this path. The presence of EU prosecutor officials yesterday does not change that." According to people familiar with the matter, the searches of Deutsche Bank offices are part of a money laundering investigation examining past transactions between bank employees and companies linked to the sanctioned Roman Abramovich. One source indicated the allegations involve transactions from 2013 to 2018. Deutsche Bank has stated it will "fully cooperate with the investigation." Other legal challenges facing Sewing include a lawsuit from a group of former managers who claim they were wrongly blamed in the accounting scandal at Banca Monte dei Paschi di Siena SpA.

Looking ahead, Deutsche Bank expects revenue to grow to approximately €33 billion this year, primarily driven by increases in loan and fee income. For the investment banking division, revenue is forecast to be slightly above last year's level, with growth in advisory and capital markets businesses, while trading revenue is expected to be largely flat. Non-interest expenses are projected to be slightly above €21 billion, consistent with the guidance provided last November. Late on Wednesday, Deutsche Bank's asset management subsidiary, DWS Group, raised its medium-term profit targets and announced a special dividend after successfully controlling costs and fending off a large-scale acquisition attempt.

Furthermore, in the fourth quarter, credit loss provisions were €395 million, equivalent to 33 basis points of average loans. This was below analyst forecasts of €408.3 million, representing a 5% decrease from the previous quarter and a 6% decrease from the €420 million reported in the same period last year. Total deposits at the end of 2025 stood at €692 billion, an increase of €26 billion from the end of 2024. Its CET1 capital ratio, a key measure of bank solvency, was 14.2% in Q4, slightly lower than the 14.5% in the previous quarter but higher than the 13.8% recorded a year earlier. The 2025 fiscal year also marked the conclusion of Deutsche Bank's three-year financial plan, during which the bank met its commitment to achieve a key profitability target of over 10% return on tangible equity.

Credit rating agency S&P stated in a report last week that profitability in the German banking sector is expected to continue improving beyond 2025, partly due to increased lending fueled by government infrastructure and defense spending plans. In December, S&P revised its outlook on Deutsche Bank to positive.