(Bloomberg) -- Deutsche Bank AG said it will accelerate payouts to shareholders as Chief Executive Officer Christian Sewing seeks to lift the lender’s stock and close a valuation gap with peers.

The German lender’s shares jumped the most in a year Wednesday, after saying it sees scope to release an additional €3 billion in capital, some of which may be used for buybacks. Pretax profit in the third quarter beat analysts’ estimates as higher income from its corporate bank and deposit inflows offset weaker trading results.

Chief Executive Officer Christian Sewing has vowed to return at least €8 billion to shareholders over five years, as he seeks to lift a share price that remains among the lowest among peers when compared with its book value. While his efforts have gotten a boost from rising interest rates, a slowdown in trading, high inflation, investments to fix flawed controls and a bumpy IT project at its retail unit are complicating the challenge.

“We’ve significantly outperformed our expectations on capital, and that puts us into a completely different place,” Chief Financial Officer James von Moltke said in an interview on Bloomberg TV. “We think we can both accelerate and expand on that capital distribution path” the bank has previously laid out.

Deutsche Bank reported a CET1 ratio, a key measure of capital strength, of 13.9%, well above its 2025 target. The lender said improvements in how it allocates assets inside the bank and regulatory effects that had turned out to be less severe than expected had created scope to free up the additional capital. 

Von Moltke said it’s too early to say how much will be paid out to investors and what part will be reinvested in the company. Sewing later told with analysts he expects a substantial amount will be returned to investors in the forms of buybacks.

Management appears “‘more upbeat on capital and capital return prospects,” said KBW analysts Thomas Hallett and Andrew Stimpson in a note. The “shares have been underperforming and the better capital, alongside the potential for greater capital distribution prospects, are positives.”

Deutsche Bank rose as much as 7.5% in Frankfurt trading, the best performer in a Bloomberg index of financial services companies in Europe.

The German lender previously guided that it will return about €1.5 billion to shareholders through dividends and buybacks next year, not including the additional capital it said it could free up. That’s still a fraction of the €6.5 billion UniCredit SpA has pledged to return. The Italian lender, which on Tuesday lifted its full-year revenue target for the third quarter in a row, trades at 0.69 times book value, twice as high as Deutsche Bank’s 0.34 times.

A higher valuation would make it easier for Deutsche Bank to pursue deals, after it closed its acquisition of UK corporate broker Numis this month. The first major takeover under CEO Sewings is a bid to grow the underwriting and deals advisory business and better complement the dominant trading business in the investment bank.

Sewing has been balancing costs cuts with investments in growth since emerging from his four year turnaround of the lender, and is seeking to boost fee income to offset an expected slowdown in interest revenue. Revenue in the three months through September rose about 3% from a year earlier to €7.13 billion, in line with analysts’ estimates. Deutsche Bank said that puts it on track to reach about €29 billion this year, the top end of its forecast range. 

Revenue from advising on deals as well as stock and bond sales rose more than three-fold from a year earlier as clients come to terms with higher rates. Still, the increase wasn’t enough to make up for the trading weakness in the investment bank because the advisory business is relatively small at the lender. 

Deutsche Bank’s former growth engine, the fixed-income trading unit, trailed its US peers in the third quarter as revenue declined 12%, compared with a 1.1% gain at the biggest Wall Street banks. The German firm still beat the 26% decline reported by Barclays Plc on Tuesday.

The corporate bank, which has made up for the slowdown in trading this year, saw 21% higher revenue, with deposits increasing by €15 billion in the quarter. The private bank that houses the retail operations reported 3% higher revenue.

Claudio de Sanctis, who oversees the private bank, is working on a revamp of the vast German retail operations with the goal of lowering expenses, Bloomberg has reported. But a flood of complaints from clients after a migration of two IT systems recently forced the unit allocate more staff to the business. 

Von Moltke said fixing those issues added a little over 30 million euros in provisions in the third quarter and a similar amount may be necessary in the current quarter. To control expenses, he said that the lender plans more job cuts.

Sewing told analysts the new round of job cuts will be bigger than previous one announced in April, and that the bank was “very cautious” when making new hires. Headcount has likely “peaked” after increasing in the third quarter, he said.

--With assistance from Verena Sepp and Dani Burger.

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