FRANKFURT (dpa-AFX) - Complaints from Postbank customers, costs running into millions and problems at fund subsidiary DWS: the conversion of computer systems is weighing on Deutsche Bank. Finance chief James von Moltke on Wednesday estimated the additional costs related to Postbank at about 30 to 35 million euros in the fourth quarter. In the third quarter, it was less than 10 million euros, von Moltke said at the presentation of the quarterly balance sheet. At the same time, the conversion of IT systems at fund subsidiary DWS is getting out of hand - and is becoming significantly more expensive.

Nevertheless, Group CEO Christian Sewing expressed confidence in a letter to employees that the strategic goals set for 2025 will not only be achieved, but even exceeded.

On the stock exchange, the news was rewarded with a jump in the share price: Deutsche Bank shares rose by 6.6 percent by lunchtime, topping the Dax. However, it still lost around four percent compared with the previous year. The DWS share, on the other hand, was one of the weakest stocks in the SDax on Wednesday, most recently down 2.6 percent.

In recent months, there had been considerable complaints from Postbank customers, particularly in connection with the IT changeover. The system change gradually merged twelve million Postbank customers with seven million Deutsche Bank customers in Germany on one platform. According to consumer advocates, they complained, for example, about blocked accounts and delayed follow-up financing. A special representative commissioned by financial regulator Bafin is now monitoring Deutsche Bank's efforts to get the problems under control.

According to Sewing, two-thirds of the arrears have now been worked off. "This gives us great confidence that we will be able to offer our customers the level of service they rightly expect from us again by the end of the year, as planned," the CEO wrote in a letter to employees. According to the bank, major progress was made above all with garnishment protection accounts, in which indebted people can protect credit balances from seizure, and disbursements of construction financing at DSL Bank.

Deutsche Bank set aside 25 million euros as a risk provision for possible loan defaults in connection with the Postbank problems. A similar amount could be incurred in the fourth quarter, said CFO von Moltke.

There are also difficulties with the conversion of the computer systems of the fund subsidiary DWS. The original plans were too optimistic in terms of time and costs, said DWS CEO Stefan Hoops. "At this point, it is clear that we will have another year of significant IT set-up costs, corresponding to 2023, which will lead to further transformation costs in 2024." We're talking about about 100 million euros each. In addition, the hoped-for savings are not likely to materialize until later, Hoops said.

Unlike the IT transformation at Postbank, however, DWS is not concerned with customer-facing systems. The fund company wants to break away from its parent company for many administrative issues - if it can do it itself and more cheaply.

In the third quarter, Deutsche Bank had to accept a drop in profits due to higher taxes. While pre-tax profit rose by seven percent to 1.7 billion euros, shareholders received a surplus of just over one billion euros, eight percent less than a year earlier. However, analysts had expected a sharper decline. The bank set aside a total of only 245 million euros for possible loan losses, around 100 million less than a year earlier.

Despite the sharp rise in interest rates, the Dax group's total earnings grew by only three percent to 7.1 billion euros. While there was a significant upturn in the corporate bank and a slight increase in the private customer bank, the Group suffered declines in the investment bank and at the fund subsidiary DWS. In both segments, the more difficult market environment slowed down business.

The fact that Germany's largest financial institution earned more before taxes at all than in the previous year was thanks to its in-house corporate bank. The division doubled its pre-tax profit to 805 million euros, while the other divisions posted lower pre-tax profits than in the third quarter of 2022.

For the full year, CEO Sewing now expects higher earnings for the group: they should reach around 29 billion euros, roughly the upper end of the previous target range.

Meanwhile, the Board of Management sees the bank in a position to release a further 3 billion euros in capital by 2025. This would increase the potential to boost distributions to shareholders, Sewing wrote - above and beyond the 8 billion euros the group had already announced. However, the bank will not distribute part of the additional 3 billion, but use it to invest in the business, noted CFO von Moltke. For 2024, however, the Board of Management is already considering buying back further shares./stw/mar/mis