Deutsche Bank gently trimmed 45 people in Q4, while hiking pay

Deutsche Bank's fourth quarter results are out and are not bad for all who work in its investment bank. Profits there were up 20% year-on-year last year. Revenues were up 9%. Headcount was up 3% in the front office and down by 1% in operations, but pay was up 8%. 

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It may therefore be concluded that Deutsche Bank will pay individuals in the investment bank more for 2025 than for 2024. 

The German bank seems to indicate as much in the comments accompanying its results. Rising compensation costs in the fourth quarter were, "driven by higher accruals for performance related compensation", says CFO James Von Moltke.

In the case of Deutsche Bank, higher compensation costs are as much about salaries as bonuses. While US banks like Citi are free of the EU bonus cap which limited bonuses to twice salaries in London (and continues to do so in the EU), as a German bank, Deutsche Bank is stuck with it. 

To the extent that bonuses are higher at Deutsche this year, they may go to its FX and emerging markets traders, who are credited with driving a 7% fixed income trading revenue increase in the final quarter. By comparison, Deutsche's advisory (M&A) bankers saw revenues fall 9% year-on-year in Q4 and rise by only 1% for the year as a whole. This was the worst performance of any bank to report so far, and comes despite years of heavy senior banker hiring.

Deutsche wants to hire some more senior bankers in 2025. Speaking at November's investor day, head of the investment bank Fabrizio Campelli said the bank wants to increase its presence across "industrials, FIG, healthcare and tech," while also increasing its presence in US flow credit trading and US securitized products.

With this in mind, perhaps, Deutsche Bank reduced net front office headcount in its investment bank by 45 people in Q4. Even if bonuses are good this year, those people won't be getting any.

In 2026, Deutsche says it expects fixed income sales and trading revenues to remain steady, although the year is off to a good start. Banking revenues are supposed to grow "in line with strategy."

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