Deutsche Bank to reach most new targets by 2018, JPMorgan says

[BERLIN] Deutsche Bank AG will probably reach most of the targets set under its five-year plan by 2018, according to analysts at JPMorgan Chase & Co.

JPMorgan expects Deutsche Bank to reach its return on tangible equity and leverage reduction targets by the end of 2018, analysts led by Kian Abouhossein said in a research note after they met with Deutsche Bank Co-Chief Executive Officer Anshu Jain. The analysts didn't specify when the meeting took place.

Concerning its goal of achieving 3.5 billion euros in annual gross savings, the bank needs to provide further details on its cost-cutting plans to convince the market, the analysts said in the note Tuesday.

"We believe most of the targets will be achieved by year- end 2018 except the five percent leverage ratio," according to the note, which reaffirmed the analysts' overweight rating. "In respect to cost savings, we believe management has a clear roadmap that will be outlined within three months." Co-Chief Executive Officers Juergen Fitschen and Anshu Jain outlined new targets along with a strategic reorientation last week, the biggest revamp at the bank since they took charge three years ago. Deutsche Bank shares have posted the worst performance among global peers during their tenure and by the market's close on Monday had dropped 4.4 per cent since April 27, the day the bank announced details of the strategy.

"The market remains skeptical on cost savings as we see little evidence of net cost decline from the ongoing 4.5 billion-euro cost-savings program," the analysts wrote.

The CEOs aim to achieve a return on tangible equity of at least 10 per cent in the medium term from 3.9 per cent in the first quarter, scrapping the previous profitability goal for at least 12 per cent return on equity in 2016.

The strategy includes efforts to deleverage the investment bank and the sale of the consumer unit Postbank in a stock offer.

BLOOMBERG