DWS Group reported a strong second quarter, with net income rising 11% year over year to €237 million, and a positive tax effect of €25 million. The results, the company said during its earnings call.

Earnings per share reached €1.19 for the quarter and €2.51 for the first half. First-half profit before tax rose 16% and EPS increased 21%, according to CEO Stefan Hoops.

Second-quarter revenue was €773 million, up 4% year over year but down 6% from the first quarter. Management fees rose 13% year over year to €709 million, supported by higher average assets under management. Performance and transaction fees totaled €11 million, substantially lower than €104 million in the prior quarter.

Active equity returned to positive flows of €1.1 billion in the quarter, helped by improved fund performance and demand for global equity products. Flagship products including Top Dividend and Akkumula generated more than €1 billion in combined net inflows, Hoops said. Systematic and quantitative investments (SQI) recorded €1.1 billion in net flows. Fixed income saw €1.6 billion of outflows, mainly from planned client redemptions.

DWS's passive business generated €11.7 billion of net inflows and ended the quarter with €455 billion in assets under management, up 15% from the preceding quarter. UCITS ETFs accounted for €12.6 billion of inflows, largely into S&P 500 and MSCI World strategies. U.S.-domiciled ETFs added €9 billion, supported by fixed-income ETF demand. The company's European exchange-traded product market share increased to 10.2%, according to CFO Markus Kobler.

Alternatives assets under management were €105 billion, down 6% from the first quarter. The unit reported €700 million of net outflows, including €1.3 billion in capital returns following asset realizations in PIF I and PIF II infrastructure products. Infrastructure outflows totaled €400 million, while real estate had €300 million of outflows. Mandates and solutions recorded €1.7 billion of outflows, primarily due to a redemption by a German corporate client.

Total costs were €468 million, up 6% year over year and 5% quarter over quarter, producing a 60.5% cost-income ratio. Kobler said approximately €30 million of costs were related to higher asset volumes and share-price-linked compensation, of which €16 million was hedged. DWS reaffirmed its expectation for flat costs and a 55% to 57% cost-income ratio in 2026. Hoops reiterated the company's goal of bringing the cost-income ratio below 55% by next year.

The company expects performance and transaction fees at the upper end of its 4% to 8% revenue guidance range for 2026, followed by the lower to middle portion in 2027.

Pension Reform Opportunity

Germany's pension reforms, including the planned retirement savings account (Altersvorsorgedepot), are a potential structural growth driver, set to begin on Jan. 1, 2027. The reform will include increased subsidies, tax benefits and eligibility for approximately 4 million self-employed individuals, while allowing products without capital guarantees. DWS manages close to €100 billion in German institutional pension assets and plans to offer retirement-saving products, with Deutsche Bank as a key distribution partner, Hoops said. The company is developing scalable defined-contribution offerings for mid-sized companies and tailored solutions for large corporates in occupational pensions.

For 2026, DWS maintained its target for annual earnings-per-share growth of 10% to 15%.