Deutsche Bank AG’s asset-management arm pulled in a net €5.7 billion ($6.3 billion) in the first quarter, signaling a recovery as the firm seeks to regain investor confidence after suffering its biggest outflows last year.
(Bloomberg) — Deutsche Bank AG’s asset-management arm pulled in a net €5.7 billion ($6.3 billion) in the first quarter, signaling a recovery as the firm seeks to regain investor confidence after suffering its biggest outflows last year.
The inflows came from both institutional and retail investors, Frankfurt-based DWS Group said in a statement Thursday, beating the €4.6 billion forecast by analysts tracked by Bloomberg. Assets under management rose to €841 billion, up €19 billion from the prior quarter.
However, lower performance and transaction fees weighed on revenue and profit. Adjusted pretax profit fell 26% to €206 million from a year earlier, while adjusted revenue declined about 12% to €610 million.
The return of fund flows is a welcome respite for DWS, which reported outflows of almost €20 billion in 2022 amid a challenging market environment. Chief Executive Officer Stefan Hoops, who got the job a little less than a year ago, has vowed to revive growth, cut headcount and trim management layers. He was also brought in to fix a crisis triggered by allegations that the company overstated its green credentials.
Hoops plans to channel more investment into DWS’s alternatives business — which houses real estate investments and private credit — and the exchange-traded funds business known as Xtrackers. He has called fixed income a “mature” business where growth is harder to achieve and has made substantial reductions in senior staff at the unit.
“We have taken active action to reduce costs and optimize our business,” Hoops said in the statement.
Read more: Deutsche Bank’s DWS Cuts US Fixed-Income Jobs as CEO Revamps
Alternatives, a sector facing scrutiny as rising borrowing costs hammer property valuations, recorded net outflows of €1.4 billion in the first quarter, down from €2.9 billion in the previous three months, DWS said.
“Even though the real estate sector has been slower, we actually see a lot of opportunity there,” Chief Financial Officer Claire Peel said in a telephone interview. “We have dry powder to put to work and with real estate valuations coming down, we think it will be a good time in the second part of the year to make investments.”
Cash products were volatile and the segment saw outflows of €3.1 billion in the quarter.
Hoops’s new focus is already yielding results. Net inflows were attributed to active and passive investment, including Xtrackers and ESG products.
The asset manager is still being investigated by German regulator BaFin as well as the US Securities and Exchange Commission and the Department of Justice for allegedly misrepresenting its ESG work. DWS has rejected allegations of greenwashing, and management has previously said the firm is working to help conclude the investigations swiftly.
(Updates with CFO comment in eighth paragraph. An earlier version corrected the inflows to include cash products.)
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