Deutsche Bank’s investment bank has come a long way. Speaking at last November’s investor day, Fabrizio Campelli, declared that the investment bank was both transformed and positioned for growth. Back in 2021, the investment bank generated a return on tangible equity of 8%, said Campelli. In 2025, he forecast it would generate a more handsome return of 13%.
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In fact, Deutsche’s investment bank ended 2025 with a full year return on tangible equity of just 11.2%. While this was an improvement on four years before, it was not sufficient. The chart below, taken from a note out this week from Morgan Stanley’s European banking analysts puts Deutsche Bank’s cost of equity at 13.4% by 2028.
Deutsche declined to comment for this article. Last month, the bank said that 40% of its businesses didn’t generate their cost of capital last year. Deutsche’s investment bank was likely among them.
This doesn’t bode well for traders at the bank who are hoping to be allocated more capital. The good news is that Deutsche’s investment bank did, in fact, do better in the first quarter of 2026, when it generated a return of 15.1%. This will be comfortably above the bank’s cost of equity in 2028, if maintained.
Rival banks may want to benchmark themselves against Morgan Stanley’s projected baseline too. Others appear more comfortably positioned than DB.
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