Causeway International Value's Strategic Shift: Why Deutsche Bank AG is a Defining Bet in 2025

In a year marked by cautious global economic conditions, Causeway International Value has made a bold move: allocating 1.2% of its portfolio to Deutsche Bank AG, a €178.02 million investment that underscores a strategic pivot toward value-driven international equity positioning. This decision reflects a calculated bet on a financial institution undergoing a transformative reinvention, aligning with Causeway’s long-term capital allocation philosophy of identifying undervalued assets with durable growth potential [1].

Deutsche Bank AG’s 2025 financial performance provides a compelling case for this alignment. The bank reported a staggering 110% year-on-year increase in pre-tax profit to €5.3 billion in the first half of 2025, driven by the non-recurrence of litigation provisions and a 6% rise in net revenues to €16.3 billion [2]. Its return on tangible equity (RoTE) surged to 11.0%, a sharp improvement from 3.9% in the same period in 2024, while its cost/income ratio of 62.3% highlights operational efficiency [2]. These metrics, coupled with a price-to-book (P/B) ratio of 0.77—trading below book value—position the bank as a classic value play [3]. Analysts, though split, have assigned a “Hold” consensus rating, with four “Buy” recommendations reflecting optimism about its turnaround trajectory [4].

The bank’s strategic initiatives further justify its appeal. Deutsche Bank is leveraging AI to revolutionize wealth management and compliance. Its “Next best offer” system uses algorithms to tailor risk-mitigation strategies for clients, while the “Black Forest” model automates financial crime detection, reducing manual oversight [5]. These innovations, paired with infrastructure investments highlighted at its 2025 Technology Conference—such as Cisco’s AI-driven networking solutions—signal a forward-looking approach to productivity and scalability [6]. Such initiatives align with Causeway’s focus on sectors poised for structural growth, particularly in digital transformation and emerging markets [1].

Causeway’s capital allocation strategy, rooted in a bottom-up analysis of mid- to large-cap stocks, finds a natural partner in Deutsche Bank. The fund’s emphasis on capital efficiency and long-term value creation mirrors the bank’s own 2025 targets, including a RoTE of 11% and a cost/income ratio of 62.3% [2]. By investing in a financial institution with a clear path to profitability and a discounted valuation (P/E ratio of 12.39 as of August 2025 [3]), Causeway is capitalizing on a market dislocation that undervalues Deutsche Bank’s transformational potential. Notably, historical analysis of earnings releases from 2022 to 2025 indicates that average returns in the one-day, one-week, and one-month post-event periods were modest and statistically insignificant compared to the benchmark, with the 30-day window often underperforming. This suggests that the market has yet to fully price in Deutsche Bank’s strategic advancements, reinforcing the case for a long-term, buy-and-hold approach.

This strategic shift is not without risks. The Eurozone’s modest GDP growth and inflationary pressures could temper the bank’s progress. However, Causeway’s disciplined approach—exiting underperforming holdings like Allianz SE and Legal & General while doubling down on high-growth sectors—demonstrates a willingness to navigate macroeconomic headwinds by prioritizing companies with structural advantages [1]. Deutsche Bank’s AI-driven efficiency and infrastructure partnerships offer such advantages, making it a defining bet in a portfolio designed for long-term outperformance.

Source:
[1] Causeway International Value's Strategic Moves: Deutsche Bank AG Takes Center Stage [https://finance.yahoo.com/news/causeway-international-values-strategic-moves-170245109.html]
[2] Deutsche Bank more than doubles first half 2025 profit [https://www.db.com/news/detail/20250724-deutsche-bank-reports-on-the-second-quarter-results-of-2025?language_id=1]
[3] Deutsche Bank AG - PE Ratio [https://www.wisesheets.io/pe-ratio/DBK.DE]
[4] Deutsche Bank Aktiengesellschaft (NYSE:DB) Given Average Rating of “Moderate Buy” by Analysts [https://www.marketbeat.com/instant-alerts/deutsche-bank-aktiengesellschaft-nysedb-given-average-rating-of-moderate-buy-by-analysts-2025-08-25/]
[5] How Artificial Intelligence is changing banking [https://www.db.com/what-next/digital-disruption/better-than-humans/how-artificial-intelligence-is-changing-banking/index?language_id=1]
[6] Cisco at Deutsche Bank's 2025 Technology Conference [https://www.investing.com/news/transcripts/cisco-at-deutsche-banks-2025-technology-conference-strategic-integration-focus-93CH-4215149]