Two of Europe's largest financial institutions, Spain's BBVA and Deutsche Bank, released their annual reports on Thursday. While the overall trend is positive, certain challenges remain.

Spain’s BBVA significantly increased its net profit in the fourth quarter, surpassing the 10 billion euro mark for the first time. The bank, which has a strong presence in Mexico, benefited from higher commission income, a robust trading business, and rising interest rates.

In the fourth quarter alone, net profit reached 2.43 billion euros, reflecting an 18 percent increase. Additionally, the bank announced a final dividend of 0.41 euros per share and a share buyback program worth approximately 1 billion euros.

BBVA plans to distribute 40 to 50 percent of its profit to shareholders. The stock market reacted positively to these results, with the share price reaching its highest level in 15 years.

A Transition Year with Special Charges

For Deutsche Bank, a long-running legal dispute ultimately impacted its annual results. The bank was required to compensate shareholders of the acquired Postbank with an additional payment.

The DAX-listed group reported a pre-tax profit of just under 5.3 billion euros, a decline of approximately 7 percent compared to the previous year and below market expectations. The return on tangible equity stood at 4.7 percent.

Excluding special charges, revenue increased by 1.2 billion euros to 30.1 billion euros. However, this was offset by higher provisions. The Investment Bank, private customer business – including Postbank – and the fund subsidiary DWS all recorded growth. Only the Business Customers Bank reported losses.

Targeting a 10 Percent Return on Equity

CEO Christian Sewing remains committed to achieving a 10 percent return on equity in 2025. Revenue is expected to continue growing, reaching around 32 billion euros. The bank’s cost-income ratio forecast remains slightly ambitious.

Sewing emphasized that 2024 was a crucial transition year in executing the bank’s strategy. «We have always said that 2025 will be decisive for us. By the end of this year, we will be judged on whether our transformation and growth strategy has been successful.»

Despite the positive outlook, Deutsche Bank shares declined significantly on Thursday morning.