Germany’s largest private bank once again made billions in profit. But it seems that this is not enough. To further maximize profits, Deutsche Bank wants to cut costs even further, including job cuts.

Deutsche Bank’s net profit in the first quarter amounted to 1.158 billion euros, which is 9% more than in the same period last year. This clearly exceeded the expectations of analysts, who estimated only about 977 million euros. This is the eleventh consecutive quarter with a positive balance sheet for the DAX-listed group.

Deutsche Bank also posted pre-tax growth of €1.85bn, up 12% from the first three months of last year. According to the bank, this is the highest recorded pre-tax profit since 2013.

First-quarter results show Deutsche Bank is on track to “meet or exceed the targets set by the Board of Directors for 2025,” CEO Christian Schewing said.

Plus, but also savings

To boost earnings, the board of directors wants to cut costs even more than previously planned, Germany’s biggest financial institution said in Frankfurt on Thursday. Additional cost savings should now amount to €2.5 billion. So far, the goal is 2 billion euros.

Deutsche Bank is looking to make savings by streamlining its construction finance sector and further shrinking its Russian technology hub, as well as cutting jobs, particularly in its private client and infrastructure businesses.

In the second quarter, the bank will begin cutting 5 percent of high-paying non-customer jobs and limit new hires, it said in a statement. How big the staff cuts would be was not initially mentioned.

But the purpose of the savings is clear: “We want to cut more operating costs than previously planned and use our capital more efficiently to increase dividends to our shareholders and the bank’s profitability,” CEO Sewing explained.

Deutsche Bank in Russia, exponential growth

Deutsche Bank is the latest example of a foreign lender making big profits in the Russian market. Foreign organizations infiltrated the business of Russian creditors, which have come under broad Western sanctions because of Russia’s war in Ukraine.

The Russian branch of Deutsche Bank in 2022 increased its profit almost six times: the profit increased by 480% to 5.4 billion rubles (about 60 million euros). This is stated in an independent audit report published by the financial institution and quoted by Tagesschau.de.

However, the total balance of the Russian branch fell by 36.3% to 81.6 billion rubles. Deutsche Bank declined to comment on the auditors’ findings.

The reason for high profits is also the interest rate level in Russia. After the attack on Ukraine, Russia temporarily raised the key interest rate to 20% – now the interest rate of the Russian central bank is lower and is 7.5%. However, a sharp increase in interest income by more than seven billion rubles increased the profit of the Russian subsidiary.

According to the annual report, Deutsche Bank’s liabilities in Russia at the end of last year amounted to 806 million euros, that is, only 0.2% of the entire loan portfolio. In 2021, the liabilities amounted to 1,397 million euros.

And lending will shrink even more: as of March 2022, the Frankfurt bank has reduced its business in Russia and has already transferred several hundred IT employees from its technology divisions to Germany.

“The majority of credit risks are associated with large Russian companies with significant operations and cash flows outside of Russia,” the bank’s report says. “Such existing loans can be granted on the territory of DB Moscow or on the territory of other organizations of the group outside of Russia.”

Western credit organizations active in Russia

Deutsche Bank is not the only Western credit organization operating in Russia. The Russian arm of Italian bank Intesa Sanpaolo ( ISP.MI ) showed profit growth in 2022, according to Tagesschau.de, while Austria’s Raiffeisen Bank International made more than half of its profits in Russia last year.

Together with the Italian bank UniCredit, the Austrian lender is one of the most important Western banks in Russia. He faces increasing criticism for his involvement in this country. In January, the US sanctioning body began investigating Raiffeisen over its business in Russia.

Supervisory board chairman Erwin Hameseder accused critics at a March general meeting of “black and white moral thinking” projected from a “risk-free comfort zone” and said most Western companies had not left Russia despite the invasion of Ukraine, a war that he called it unjustified. However, Raiffeisenbank chairman Johann Strobl said that the bank plans to sell or separate its Russian business.

Other financial institutions, on the other hand, have already abandoned their business in Russia. For example, last year the French financial institution Société Générale separated from its Russian subsidiary Rosbank. Britain’s HSBC wants to complete the sale of its Russian business, possibly at a loss, in the first half of this year.