Deutsche Bank Luxembourg disclosed a substantial rise in net income for the fiscal year 2023 on Tuesday 7 May 2024, surging by 56% from €186m in 2022 to €291m in 2023. This substantial growth in profitability was primarily attributed to the expansion in lending and deposit activities, bolstered by favourable market conditions, which pushed net interest income to €533m, marking an impressive 81% increase over the previous year.
Revenue and expenses
However, the bank noted a slight decrease in commission income, down by €17.6m year-on-year to €108m, attributed to reduced revenues in the origination and advisory business segment. Correspondingly, commission expenses also decreased by €9.3m to €131m due to lower transfer pricing costs in both the origination and advisory business and the corporate bank’s risk hedging activities.
Frank Rückbrodt, chief executive officer of Deutsche Bank Luxembourg, expressed satisfaction with the bank’s performance despite the challenging geopolitical and economic landscape. Rückbrodt attributed the bank’s success to its robust capital and liquidity position, coupled with the extensive experience of its workforce across economic cycles.
Additionally, the bank declared a dividend payout of €292m for the fiscal year 2023, an increase from €188m in the previous year.
Loan portfolio
Driven by increased demand from corporate and private banking clients, the bank expanded its loans and advances to clients by €2.0bn to €17.9bn during the year. Additionally, undrawn commitments grew by €2.3bn over the same period.
While specific provisions for credit losses rose to €125m from €116m, the net increase in specific provisions amounted to €47m, compared to €78m in the previous year, ensuring adequate coverage for individual risks. Moreover, the bank fortified its reserves by setting aside €70m to address continued economic uncertainties, noted the press release.
Balance sheet
The bank’s total assets swelled to approximately €32.3bn by the end of 2023, compared to €29.5bn in the preceding year, driven by increased business volumes. Correspondingly, risk weighted assets rose to €44.5bn from €40.3bn in 2022.
Despite the expansion, Deutsche Bank Luxembourg maintained a solid capital and liquidity position, with a total capital ratio of 14.1% and CET1 ratio of 10.9% at the end of 2023, exceeding regulatory requirements and internal targets, stated the bank. Regulatory own funds increased to €6.3bn from €5.4bn in the previous year, bolstered by the issuance of €900m Tier 2 capital.
Rückbrodt expressed optimism about the bank’s prospects for 2024, highlighting the sustained momentum in business development and the bank’s commitment to delivering superior services to its clients.
The bank’s workforce grew by 9% to 348 employees, with 65% being cross-border commuters from Germany, Belgium and France, noted the press release.
Relocation
In a strategic move, Deutsche Bank Luxembourg announced plans to relocate to the new Skypark Business Center near Luxembourg airport when its current lease in Kirchberg expires in 2026.
Rückbrodt reasoned, “The new location offers state of the art and flexible office space plus ideal transport connections for our Luxembourg clients and employees including public transportation means via the tram, sufficient parking space for our cross-border commuters with provisions for electric vehicles and also for our international visitors with direct access to the airport terminal.”