Company: ADZCF
Filing Date: 2025-03-13
Form Type: 20-F
Source: 0001159508-25-000020
Chunk: 13

Company: DEUTSCHE BANK AKTIENGESELLSCHAFT
Filing Date: 2025-03-13
Form: 20-F
Chunk 13
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 by the U.S. economy which has outperformed expectations. By contrast, economic performance in most of Europe remained challenging, especially in Germany. In 2025, the U.S. economy expects to head for slightly slower but solid growth driven by hopes of tax cuts and deregulation under the new U.S. administration. Growth in the eurozone area is set to pick up moderately, but Germany is expected to lag behind with selected sectors such as automotives seeing weak demand growth and elevated structural risks over the medium-term. Political uncertainty in the eurozone remains elevated with German elections held in February 2025 with coalition talks in progress, potentially leading to disappointment on structural reforms. Additionally, the new minority government in France has yet to develop a credible fiscal consolidation strategy to stabilize the elevated public debt ratio against strong political resistance. In addition, European economies face external downside risks from potential U.S. trade tariffs and from China where domestic activity lacks momentum and the highly indebted real estate sector is yet to show signs of a turnaround. With headline and core inflation approaching central bank targets, the ECB and Federal Reserve lowered their key policy rates by 100 basis points each in the second half of 2024. However, inflationary pressure remains elevated especially in the U.S. against the backdrop of a firm labor market. Moreover, if the new U.S. administration cuts taxes, imposes higher tariffs and lowers migration, this would likely increase the risk of inflation and higher interest rates. Additionally, global supply chain pressures from ongoing geopolitical tensions could also fuel inflation. The outlook for interest rates has become more uncertain and markets price fewer rate cuts in the U.S. compared to a few months ago. Should inflation exceed current expectations, the Federal Reserve and other central banks could be forced to resume policy tightening and increase the risk of a cyclical economic recession including higher unemployment and defaults. Inflationary pressures and the possibility of rising interest rates could dampen consumer spending and private client investments. This may consequently result in a reduction in new business for the bank’s consumer finance and/or private mortgage lending businesses. Additionally rising inflation could lead to payment difficulties for private clients due to reduced inflation-adjusted income and could lead to increasing delinquent exposure with corresponding impact on provisions for credit losses. Higher interest rates may lead to refinancing risks and potential credit rating downgrades for corporates, small and medium-sized enterprises, commercial clients and private clients. In addition, inflation, interest rates and market volatility could lead to an asset price reduction of collaterals with risks related to recovery values in