* New CEO Sewing says will pull back from less profitable areas
* Says must set bar high on revenue and hit cost targets
* Shares indicated 5.5 percent higher (Adds analyst, share price, further details)
FRANKFURT, April 9 (Reuters) - Deutsche Bank's leadership must take tough decisions to avoid further setbacks and will review the structure of its investment bank, new CEO Christian Sewing told staff on Monday.
Retail banking specialist Sewing was named as chief executive late on Sunday, signalling a possible retreat from decades of investment banking expansion at Germany's largest lender as the group battles to restore profitability after three years of losses.
"The time pressure is on and the expectations are high from all sides our clients, our investors, the regulators, politicians and the media," Sewing said in a letter to employees published on the bank's website.
Shares in Deutsche Bank were indicated to open with a 5.5 percent gain on Germany's blue-chip DAX index, according to pre-market data from brokerage Lang & Schwarz.
Sewing said in his letter that he would thoroughly analyse how Deutsche Bank wants to position its investment bank in a difficult market environment but left open what structural measures he could take.
"The priority is to leverage our strengths and to allocate our investments accordingly. And at the same time we will look to free up capacity for growth by pulling back from those areas where we are not sufficiently profitable," he said.
JP Morgan analyst Kian Abouhossein said the appointment of Sewing did not change his view of Deutsche Bank's stock, citing a lack of clear strategy.
"Deutsche Bank's problem is not the CEO, as speculated by the press, but different stakeholders with different interests, with little evidence of commitment to changing the organisation in the interests of the owners: shareholders and creditors," he said, sticking with a "neutral" rating on the stock.
Sewing, 47, had been deputy CEO with a background in retail banking, auditing and risk. His promotion comes as the bank and its key shareholders debate the path forward for an investment banking business that has been grappling with slowing revenue and key staff defections.
He said the bank needs to set the bar for revenues higher in all businesses and stick with its 2018 target for adjusted costs of no more than 23 billion euros ($28 billion).
Sewing, a German national, replaces John Cryan, a Briton.
Cryan had been in charge since 2015 and his mandate would have expired in 2020, but investors had lost faith that he could return the bank to profitability. ($1 = 0.8145 euros) (Reporting by Maria Sheahan Editing by David Goodman)