Decline in profits at DWS despite billions in inflows - financial experts worried

Decline in profits at DWS despite billions in inflows - financial experts worried

Another search at Deutsche Bank subsidiary DWS

The Deutsche Bank fund subsidiary DWS recorded a decline in profits in 2023 despite billions in cash inflows. Due to lower income and the expensive conversion of the computer systems, the surplus fell by five percent to 567 million euros. CEO Stefan Hoops expects an increased inflow of customer money for the new year. However, profit before taxes adjusted for special items is expected to stagnate at around the same level as the previous year. Last year, investors put a total of 28.3 billion euros in fresh money into the DWS funds, which, however, led to lower adjusted returns.

The costs for the IT conversion are not included in this quota. In the fall, DWS boss Hoops admitted that the IT project would take longer and be significantly more expensive than originally planned. After the project was expected to cost around 100 million euros last year, he expected further costs of this amount in 2024. The hoped-for savings would therefore not be achieved in full until later.

According to a report by www.finanzen.net, the DWS share temporarily lost 4.95 percent to 36.10 euros in XETRA trading.

These developments show that DWS faces challenges despite high inflows and increased investor confidence. The costs of the IT conversion are putting a strain on earnings and clouding profit development. The decline in adjusted pre-tax profit and disappointing expectations for 2024 have led to UBS leaving the rating for DWS at “neutral”.

These developments could affect investor confidence in Deutsche Bank's fund subsidiary and have a negative impact on the price of DWS shares. The ongoing investigations into greenwashing allegations increase uncertainty and could tarnish the company's image.

Overall, it is important to closely monitor further developments at DWS and the reaction of investors and the market in order to better assess the long-term impact on the industry and investors.