Transaction banking will likely continue to be influenced by several critical factors, as it was in 2014. The relatively low interest rate levels, including negative interest rates in some key markets, are expected to remain with a potential recovery in certain markets, especially in the U.S., in the second half of the year. Global growth may accelerate in 2015 with the U.S. economy expected to return to its healthy recovery path. The eurozone should continue its modest recovery, while growth rates among emerging markets are expected to be diverging. Revenue pools in transaction banking are expected to see moderate growth with different dynamics among products. Volume growth is likely to be offset by continued pressure on margins as well as the before-mentioned ongoing low interest rate environment. Significantly more expansive and rigorous regulation, including potential structural changes, cost pressure as well as litigation will pose challenges to the overall banking industry.
The trends described above will continue to impact our Global Transaction Banking (GTB) business. The sustained momentum of profitable growth and client acquisition in the underlying business in recent years, together with high quality and innovative products, should leave us well-placed to cope with these challenges and grow our client base. Trade Finance should benefit from the global economic growth and the related foreign trade demand. Furthermore, the contraction in lending business is likely to end and the recently observed stabilization of margins may continue. Revenue pools in Securities Services are expected to grow steadily in 2015 and could, together with the trend to concentrate investment banking services, provide growth opportunities. For Cash Management, the increased level of global activities is a potential positive factor, while the expected continued low interest rate environment will limit growth. The business continues to focus on deepening its client relationships with complex Corporates and Institutional Clients as well as pushing further growth in certain emerging markets. The co-operation with other areas of the bank (including a strong relationship with CB&S sales) is being continually expanded to ensure a wider range of clients will benefit from our products and services. This also includes the aligned and integrated commercial banking coverage for small and mid-sized corporate clients in Germany established in September 2013 to strengthen the market position in the home market.
In the updated Strategy 2015+ we had planned to grow income before income taxes to a range from € 1.6 billion to € 1.8 billion by 2015. In 2014, GTB reported income before income taxes of € 1.2 billion. Overall, the strategy to expand the business remains a priority for Deutsche Bank and the related initiatives are expected to remain on track. The successful completion of the turn-around of the commercial banking activities in the Netherlands should contribute to GTB’s target. However, we expect the highly competitive business environment to remain challenging and low interest rate levels to persist, which even turned negative in the second half of last year. Furthermore, the cost pressures will continue to pose a challenge for GTB including increased regulatory requirements, and charges related to the potential settlement of litigation-related cases. While the business will continue to work diligently towards the Strategy 2015+ aspiration, the targeted growth may prove to be challenging in the current business environment.