Deutsche Bank's fixed income traders also have excuses, amidst cost cutting

Deutsche Bank's shares are down nearly 1% today. The decline is attributable to a speech given this morning at the Bank of America financials conference by CFO Raja Akram. In it, Akram said September has been a "mixed bag" in fixed income trading and that revenues across Deutsche's investment bank are likely to be "flattish or slightly down" on last year. 

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People with keen memories will recall that Brian Moynihan, the fun-loving CEO of Bank of America, said something similar at the Barclays conference a few weeks ago. Fixed income sales and trading revenues were down and erratic, said Brian. BofA's share price fell 6% at one point after that.

It's an unfortunate time of year for things to lose their vigour, what with bonus decisions being made in the next few months. As we observed earlier this week, though, Bank of America's fixed income traders have some good excuses for their poor performance. These are centered around the fact that the bank as a whole hasn't done much in the way of lending to the ever-expanding AI ecosystem, and that they therefore haven't enjoyed the trading volumes that result from being allied too major issuers in the sector.

Akram's speech today suggests that Deutsche Bank's traders may also have excuses. Like BofA's fixed income traders, they are stronger in credit trading. Unlike BofA's traders, they don't seem to be using the AI underwriting card. Instead, Akram pointed to the fact that Q3 2025 was a record quarter for them, and that even if Q3 2026 is only similarly good, it will still be great. 

This is a good excuse. As the chart below shows, Deutsche Bank's fixed income sales and trading revenues were indeed at a record high last year. However, they also appear due for a fall.

The softening in the fixed income bicep comes as Akram said today that new opportunities for cutting costs are appearing. At Deutsche Bank's Investor Deep Dive (known by the acronym IDD) last year, the bank said it expected to increase costs by 2% by 2028.

Speaking today, Akram explained that new cost-cutting opportunities which were "not fully appreciated" previously are now in play. 

These involve AI. AI can particularly be used for "transaction monitoring and the credit underwriting process," said Akram. And when it's used, entire systems can be redesigned. These include people, "where those people are sitting, high-cost location, low-cost location, what they're doing."

In the circumstances, it sounds helpful to have an excuse for only moderately good performance, even if your area doesn't obviously lend itself to reimagining. 

Akram also said today that Deutsche Bank doesn't let everyone there have access to the best AI models. Only engineers and software engineers get to the use the advanced models, he said. "The majority of our general population has access to tools that are sufficient for their need." 

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