German lender Deutsche Bank AG (DE:DBK) has come under union pressure for a wage hike at its Postbank arm. The Verdi union’s banking union members are seeking a 15.5% increase at Postbank to compensate for the real wage loss stemming from the inflationary conditions over the last two years.
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Deutsche Bank is a multinational investment bank and financial services company. The DAX 40-listed bank operates across Europe, the U.S., and Asia. DBK shares have a dual listing on the Frankfurt Stock Exchange and the New York Stock Exchange. Year-to-date, DBK shares have gained 19.7%. Meanwhile, Postbank is DBK’s retail arm, offering services including current accounts, savings accounts, loans, mortgages, credit cards, and investment solutions.
Here’s Why Verdi is Seeking a Wage Hike
The union’s demand covers roughly 12,000 employees at Postbank. Verdi noted that these employees are not from high-bracket salary roles and have been severely impacted by the macro conditions. In October, Deutsche Bank announced its intent to reduce the number of Postbank branches to 300 from 550 by mid-2026, a move that was also criticized by the Verdi union back then.
Financial institutions are facing difficulties as loan portfolios turn bad due to macro headwinds and impact their balance sheets. Also, high inflation and high interest rate scenario have impacted consumers’ saving patterns and loan-taking capacity. Germany’s inflation skyrocketed owing to its heavy dependence on Russia for gas supplies. Even so, the nation has seen its inflation rate slow down towards the end of this year.
In its third quarter Fiscal 2023 results, Deutsche Bank posted better-than-expected earnings per share while revenues came in line with expectations. Importantly, DBK promised to initiate more share buybacks next year and return higher capital to shareholders through dividends. The bank seeks to reach a 50% payout ratio from 2025 onwards, including dividends and buybacks. The higher wages could shoot up costs for the lender and impact its profits.
Is Deutsche Bank Stock a Buy?
On December 20, RBC Capital analyst Anke Reingen increased the price target on DBK stock to €16.00 (30.3% upside) from €15.00 while maintaining a Buy rating.
Overall, DBK stock has a Moderate Buy consensus rating based on nine Buys, two Holds, and one Sell rating. On TipRanks, the Deutsche Bank share price forecast of €15.17 implies 23.5% upside potential from current levels.
