Jamie Spencer
Deutsche Bank warned on Thursday that the auto sector poses a growing risk to its portfolio, citing potential U.S. tariffs, economic challenges, slow EV adoption, and competition from China.
Auto Sector Under Pressure
Germany’s largest lender highlighted concerns in its annual report, stating that the auto industry’s difficulties are being “monitored closely.” The sector accounts for about 1.5% of Deutsche Bank’s overall loans.
Germany is home to major carmakers such as Volkswagen and Mercedes-Benz. Volkswagen recently forecast another tough year, reflecting broader industry struggles.
Spending Plan Lifts Bank Shares
Despite concerns, Deutsche Bank shares have surged as Germany’s government prepares to boost spending on defense and infrastructure. CEO Christian Sewing called defense investments a “positive impulse for the economy.”
Revenue Outlook for 2025
Deutsche Bank expects revenue growth across its investment banking and other core units in 2025, even as Germany’s economy lags behind the eurozone.
Last year, revenue gains were offset by rising banker pay and bonuses, leading to a drop in profit. This year is critical for Sewing, who faces pressure to meet ambitious profit and cost targets.
Commercial Real Estate Risks Persist
Deutsche Bank also cited ongoing risks in the commercial real estate market, though it expects the sector to stabilize.
Limited Auto Impact—For Now
While Deutsche Bank acknowledged auto sector risks, it noted that the impact on its portfolio remains limited for now. However, prolonged industry struggles could pose further challenges.
