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12 December 2019

Deutsche Bank expects lower revenue growth at DWS

The German bank, which owns nearly 80 per cent of DWS, now expects annual revenue growth of one per cent from asset management through 2022, down from an estimated two per cent in July 2019.

Bloomberg/Alex Kraus

Deutsche Bank says it expects lower revenue growth at DWS Group amid increasing headwinds in the European asset management industry, reported Bloomberg.

Claire Peel, DWS’ Chief Financial Officer, said, “As we move into 2020, we do acknowledge there will certainly be some headwinds and the revenue environment will become increasingly challenging.”

“We anticipate that 2020 revenues overall will remain stable compared to 2019,” said Peel.

The weaker outlook poses a growing challenge for DWS Chief Executive Officer Asoka Woehrmann after revenue fell in the third quarter. It also means the asset manager will contribute less to the growth targets its main backer Deutsche Bank is trying to achieve.

Christian Sewing, the CEO of Deutsche Bank, said that the bank’s 2022 profitability target has become more ambitious because some divisions will grow less than previously expected.

Asset managers throughout Europe are being hurt by a low-interest rate environment and fee compression, as the increasing popularity of cheaper passive products shrinks companies’ margins. DWS has so far maintained net inflows throughout 2019 as other peers have struggled, with much of that cash going to passive strategies.

“We are focusing on how we sustain revenue stability through net inflows, where we can have a direct influence,” added Peel.

According to Peel, the asset manager will hit its cost-income-ratio target of less than 65 per cent by 2021 thanks to cost cuts and reach its savings goal of EUR 150 million ($166 million) this year.

“Tight cost management will be fundamental to ensuring that we can deliver maximum shareholder value creation, regardless of the environment we are operating in,” said Peel.







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