First, the good news: H Deutsche Bank shows profits again in the third quarter of 2024, even exceeding analysts’ forecasts. Specifically, Germany’s largest credit institution records profits of 2.26 billion euros before taxes, an amount increased by 31% compared to the corresponding period of 2023, while in the second half it had presented a loss of 143 million. Today, the net profits distributed to shareholders exceed 1.46 billion, while the CET 1 capital ratio, which is a “barometer” for the bank’s solvency, increases to 13.8%.

“In the last quarter, we made significant progress in our efforts to overcome legal backlogs, while at the same time recording record third quarter profits,” says the head of Deutsche Bank. Christian Sheving. “Consequently, we are extremely pleased with these financial results.” But what are the “legal pendings”? These are legal appeals by former shareholders of Postbank, who claim higher compensation for the absorption of the bank by Deutsche Bank in 2010.

The case has a past and, as everything seems, it may have a future. In 2010 most of its shareholders Postbank they had accepted the “forced compensation” of €0.25 per share initially offered by Deutsche Bank. Some, however, appealed to Justice claiming higher compensation. In August, the Frankfurt bank reached an out-of-court settlement, offering an additional 0.31 euros per share. According to what became known at the time, a total of 80 of the plaintiffs had accepted the settlement. This move alone improved the bank’s financial results for the third quarter by 444 million euros. However, 13 of the old shareholders insisted on continuing the legal battle demanding full compensation, plus interest.

“We must analyze the verdict”

Here comes the bad news for Deutsche Bank: On Wednesday, a few hours after the celebratory announcements of increased profits, the Court of Appeal in Cologne vindicated the 13 plaintiffs of the former Postbank. According to Reuters, however, a few days ago the head of Deutsche Bank had assured the employees in writing that even after an “adverse” decision by the Court of Appeal there would be no problem, as “sufficient funds” have been committed to cover all outstanding claims . Simply put: Since dealing with 70% of the plaintiffs in August’s out-of-court settlement, Deutsche Bank isn’t worried about the remaining “13” lawsuits.

In the same vein, a representative of the bank tells the financial review Handelsblatt that “we have to analyze the court’s verdict”, but the general picture is that the bank “is fully secured financially”, as it has already committed funds that cover whatever appeals remain in pending. “An additional financial burden could only arise if the interest repayment, which currently amounts to two million per month, continues to increase,” adds the representative.

Forecasts for further earnings growth

The “good” and rather realistic scenario for Deutsche Bank is therefore that even if the “13” collect the amounts they claim up to the last minute of the euro, this is not going to further burden the financial results. Already in January 2022, the bank had recorded a decade’s record in its profits, after successive “restructuring measures” imposed (and will continue in the coming years) by Christian Saving.

“It is certain that Deutsche Bank’s profits will increase until 2026,” the financial analyst tells Welt TV Volker Schultz. “By then, the measures to reduce costs, which are launched for 2025, as well as the repurchase of own shares on a large scale, will have paid off.”