Deutsche Bank CEO Warns of Q2 Transaction Matching Shortfall Due to Tariff Uncertainty

Deutsche Bank's CEO, Christian Sewing, recently cautioned that the bank's transaction matching business for the second quarter would fall short of initial expectations set by executives at the beginning of the year. This underperformance is due to companies delaying decisions in response to uncertainty surrounding U.S. tariff policies. Sewing made these remarks during a financial conference, highlighting the challenges faced by the banking sector in navigating global trade policies.

Despite the setback in the transaction matching business, Sewing expressed confidence that the bank's overall trading business would be sufficient to compensate for the shortfall. He noted that while the financing and consulting business may not perform as strongly as initially anticipated, the transactions have not been canceled but rather postponed. This optimism is based on the bank's ability to leverage its Fixed Income and Currencies (FIC) division to offset losses in other areas.

Sewing's comments come at a time when market volatility, driven by U.S. President Donald Trump's tariff policies, has raised concerns about economic growth. Other major banks, including those in the United States, have also issued warnings about slowing business. However, Sewing remains optimistic about Deutsche Bank's other business lines, such as corporate banking and retail banking, and reiterated the bank's commitment to its targets.

The bank's fixed income and currency traders have shown resilience, overcoming the volatility at the start of the second quarter and are expected to perform better than the same period last year. Sewing indicated that the trading division's revenue is expected to grow by a "low single-digit" percentage compared to the second quarter of last year, which is slightly below the expected growth rate of over 8% predicted by analysts.

Sewing acknowledged the challenging start to April but emphasized that the bank had managed to overcome these difficulties by the end of the month. He stated that the trading business's performance would be sufficient to compensate for the underperformance in the transaction and securities issuance consulting business. This underscores the impact of the Trump administration's tariff announcements, which have shaken the market and prompted companies to delay stock and bond issuances.

This year is crucial for Deutsche Bank as it faces the deadline to achieve its ambitious cost and profit targets. The bank's investment banking division generated 2.6 billion euros (approximately 2.99 billion USD) in revenue during the second quarter of last year, with nearly 80% coming from the FIC division. Sewing indicated that the broader investment banking business would operate at a level comparable to the second quarter of last year.