A major cost target was also dropped by Deutsche Bank, but they still announced plans to repurchase 750 million euros (USD 780.90 million) worth of shares. Christian Sewing, the CEO, set several ambitious profit and cost targets for the once-troubled bank, and the results set the stage for a pivotal year. A few analysts have expressed doubt that Deutsche will accomplish all of its objectives.

“We have always said that 2025 will be decisive for us. At the end of this year, we will be judged by whether we have been successful with our transformation and growth strategy,” Sewing wrote in a memo to employees.

According to the CEO, the bank has started to consider modifying its plan for 2026 and beyond. Some businesses may close, and specifics will be revealed later in 2025.

Deutsche Bank has changed its target for this year’s cost-to-income ratio from less than 62% to less than 65% to make investments. When questioned about whether he would consider staying for another term, Sewing, who has been the bank’s leader since 2018, said he was still focused on this year’s goals.

The fourth-quarter net profit attributable to shareholders was 106 million euros, down from 1.2 billion euros a year earlier and below analyst expectations of roughly 380 million euros. Profit for the full year missed forecasts of almost 3 billion euros, dropping from 4.21 billion in 2023 to 2.70 billion.

However, revenue from buying and selling fixed-income securities and currencies rose 26%, beating analysts’ estimates for a 17% increase. Income in Deutsche Bank’s unit advising on deals and stock and bond sales rose 71% as investments in the business paid off.

Pretax profit fell short of estimates amid a 14% jump in costs, with Deutsche Bank also raising its guidance for expenses as a share of income in 2025. Sewing wants to balance cost controls with investments in growth as he eyes fulfilling the pledge to return more than 8 billion euro to shareholders over the medium term. Under his watch, the German lender has now refocused its strengths in fixed-income trading and corporate banking, while building up the advisory business to boost fee income.

Deutsche Bank is also planning 2.1 billion euro in capital distributions in 2025, including 1.3 billion euro in dividends for 2024 and 750 million euro in share buybacks for which it has already received regulatory approval.

Deutsche Bank’s trading unit’s performance has been driven partly by a recovery of the venture’s US rates business, the trading in government bonds and derivatives, as well as a strong financing business, which supplies credit to multinational companies.

Revenue declined in the corporate and private banks, where falling interest rates and a weak economy weighed on income. Provisions for souring loans, at 420 million euro in the quarter, were roughly in line with estimates. The lender now expects such provisions to moderate in 2025, after it had to raise its guidance twice in 2024 in a sign that Germany’s economic troubles were spilling over into its loan book.

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CEO Giuseppe Castagna stated that the UniCredit bid would result in the loss of over 6,000 jobs at Banco BPM, despite UniCredit’s plans to reduce expenses by more than a third.

“We are a big autonomous bank, an Italian bank with a strong vocation of being close to our regions and to the small and medium-sized companies that make up the backbone of our country,” Giuseppe Castagna said.

Banco BPM has rejected UniCredit’s 10-billion-euro (USD 101.5 billion) offer, claiming it undervalued the bank, bound it to strategic agreements, and increased shareholder risk.

The second-biggest bank in Italy, UniCredit, has a stake in Commerzbank in Germany, which was considered its top acquisition target. Investors were taken aback by its sudden shift from Germany to Italy with the latest acquisition attempt directed at Banco BPM, which seemed to catch the Italian government off guard.

The Italian government, which had advanced plans for a merger of BPM with rival Monte dei Paschi di Siena to create a third force in Italian banking behind UniCredit and Intesa Sanpaolo, is also thrown for a loop by UniCredit’s move.

UniCredit CEO Andrea Orcel is now planning to meet with Credit Agricole management to discuss the future of the lenders’ partnerships after the Italian bank offered to buy rival Banco BPM, Reuters reported.

“Credit Agricole is crucial to the success of Orcel’s bid for his smaller peer because it owns 9% of Banco BPM and because UniCredit has an agreement to sell funds distributed by Amundi, which Credit Agricole owns, to its clients in Italy,” the media house stated.

UniCredit’s bid for Banco BPM has also managed to catch the attention of the Italian banking sector’s main union, as it raised concerns about the potential impact of the deal on jobs.

“There is great concern about the employment fallout that could result from the deal. The numbers circulated so far are worrying and call for deep thought,” FABI union said in a statement, while adding that the offer was a “market transaction, in a phase of radical changes in the banking sector, both at a national and European level”.

Despite UniCredit’s surprise bid for Banco BPM’s acquisition is creating some sort of discomfort in the Italian banking circle, as per Reuters, the venture was always on the wish list of UniCredit CEO Andrea Orcel (a veteran dealmaker himself).

Even though many are terming UniCredit’s 10 billion euro (USD 11 billion) all-share offer for Banco BPM as an “Unsolicited One,” Orcel justified the move to the investors, by stating that he had to act because of an acceleration in Italy’s financial sector consolidation, where the government in November 2024 offloaded a 15% stake in Monte dei Paschi di Siena (MPS), potentially paving the way for an eventual tie-up between MPS and Banco BPM.

Buying Banco BPM will help Orcel reduce the gap with Intesa Sanpaolo, which in 2020 leapfrogged UniCredit to become Italy’s biggest bank by assets by buying northern mid-tier bank UBI and securing more than a fifth of the domestic market. At the end of September 2024, Intesa had 949 billion euros in assets, followed by UniCredit (for which Italy is the main market among the 13 where it operates) at 800 billion euros and Banco BPM at 195 billion euros.

“Banco BPM has three-quarters of its more than 1,400 branches in Italy’s richer north. It accounts for 13% of all bank branches in Lombardy, where UniCredit is weak despite having its headquarters in Italy’s financial and fashion capital Milan. Additionally, Banco BPM has an 8% market share in Veneto, another wealthy region in the northeast, and 10% in Turin’s Piedmont’s region,” Reuters reported.

After a merger, the combined entity’s market share will reach 20% in several economically crucial regions, such as Lombardy (24%), Veneto (21%), and Emilia-Romagna (21%), without creating dominance in any specific province, calculations by Italian broker Intermonte showed.

Both UniCredit and Banco BPM want to grow net fees and be more like Intesa, where fees exceed 40% of overall revenues thanks to its in-house insurance and asset management. UniCredit is bringing in-house its life insurance operations, something which Banco BPM has already done.

As per Orcel, cost savings from a deal with BPM could reach 900 million euros a year before taxes and 800 million after taxes, and would only minimally affect the branch network. Additional revenues are estimated at 300 million euros a year. The return on investment for UniCredit from a deal is expected to surpass 15%, with earnings per share increasing by a “high single-digit” percentage within a couple of years.

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While mass-market competitors are slashing prices on electric vehicles (EV) amid faltering demand, the Italian brand, known for its thunderous petrol engines, has stated it will launch an electric car late in 2025. The planned price demonstrates the brand’s confidence that ultra-wealthy drivers are ready for it.

The price tag, which excludes features and customisations that add an additional 15–25% to the final cost, is significantly higher than the average sale price of a Ferrari in the first quarter of 2024, which was about 350,000 euros including extras, as well as many competing luxury EVs.

Porsche’s electric Taycan, is priced starting at about 100,000 euros, in a less exclusive class.

The price of Ferrari’s first electric vehicle (EV) and the new plant, which is scheduled to open in its hometown of Maranello, northern Italy, were not addressed by the company.

With the ability to eventually increase production capacity to about 20,000 cars, the factory, also known as the “e-building,” is a bold move for the company, which in 2023 delivered fewer than 14,000 cars, according to the US News.

Risks accompany any increase in output because the brand’s exclusivity is what drives both its cachet and high prices.

Ferrari has demonstrated that it can succeed in markets outside of the two-seat sports cars and grand tourers that it has traditionally produced, with the 2022 launch of the Purosangue SUV.

“There is an increasing demand out there for Ferraris, and they have room to meet part of it without compromising exclusivity,” Fabio Caldato, a portfolio manager at AcomeA SGR, which holds Ferrari shares, said.

Another Big Change From Ferrari

The automaker will stop offering its own satellite navigation system on its future models, as per the reports. Upcoming Ferrari models, including the new Purosangue & 12Cilindri, will not feature an in-car navigation system. Customers can instead use the feature on their smartphones, with Emanuele Carando, Head of Product Marketing, Ferrari, stating that such devices offer the ‘most user-friendly” system, which is also regularly updated, making the in-car dedicated system mostly redundant. Carando further stated that since Ferrari owners don’t use their cars every day, it doesn’t make sense to keep a system they rarely use.

Carando commented, “We did this because we think the phone, and the fantastic mirroring of the phone, is the most user-friendly possibility, and [the] most updated system. Our cars are not used on an everyday basis, and we don’t want our clients to learn every time [they drive their Ferrari] what kind of system they have to use. They have [their] phone, they have their Apple and Google Maps [or] whatever. So [they are] the most useful things they can use on every car.”

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The British finance ministry recorded a loss of 91 million pounds ($118 million) in its annual report last month due to currency fluctuations associated with payments to the EU made during the fiscal year 2022–2023 in accordance with the conditions of the Brexit settlement.

The “reportable losses” for the Treasury in recent years have varied from 0 to a few million pounds.

A payment to the EU on September 30, 2022—one week after the release of Liz Truss’ tax-cutting “Growth Plan”—was the source of about half of the 91 million-pound loss, according to a Reuters investigation.

When 1 pound could only buy 1.12 euros, this 855 million-euro payment cost Britain 764 million pounds.

When the EU revised Britain’s payment schedule for June through September back in April 2022, it made the assumption that the exchange rate would be approximately 1.18 euros to 1 pound, which would result in monthly payments of 719 million pounds rather than 764 million pounds.

The biggest set of tax cuts in decades was included in Liz Truss’ Growth Plan, which was released on September 23 and is popularly known as the “mini-budget.” This move resulted in a collapse of the British financial markets that was made worse by the design of pension funds.

Sterling had an instant decline, reaching its lowest level since late 2020 on September 26 at 1.08 per euro, before somewhat recovering in the days leading up to the EU divorce payment on September 30.

Although the tens of millions of pounds in losses from currency fluctuations surrounding the EU payments are negligible economically, they nonetheless represent a real cost associated with market volatility around the time of the mini-budget.

A Treasury spokeswoman stated that “foreign exchange fluctuations are foreseen over the duration of the Withdrawal Agreement” and that Britain had made a total net gain of 0.1 million pounds during the period covered by the payments in 2021/22 and 2022/23.

Even yet, the payment on September 30 was a glaring loss-maker, and the little net gain reflects a significant decline from March 2022 when it stood at 91.2 million pounds.

According to James Murray, a spokesman for the opposition Labour Party, “This is yet more proof of the devastating harm done to the UK’s public finances by this Tory government, handing over millions more to the EU than should have been paid, after their irresponsible policies plunged the pound into freefall.”

According to economists, the overall costs of the mini-budget crisis, which result from a decline in investor confidence and an increase in market interest rates, are in the billions of pounds.

Documents from the independent Office for Budget Responsibility showed that former finance minister Kwasi Kwarteng ignored official warnings that borrowing was on track to soar, even before he attempted his disastrous Growth Plan, according to Reuters, which broke the story last week.

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