Q2 2020 Deutsche Bank AG Earnings Call

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Ladies and gentlemen, thank you to sound bite I'm Haley your chorus call operator, welcome and thank you joining at Deutsche Bank Q2, Twentytwenty analyst calls.

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Presentation will be funded by a question answer session.

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Please press the star keep <unk> operator assistance.

I would now that could turn the conference I bet to James <unk> Rivets head of Investor Relations. Please go ahead.

Thank you all for joining us today.

Usually well how cool I see a Christian saving will speak first followed by our Chief Financial Officer Janesville Mall.

The presentation as always is available for download in the Investor Relations section of our website TV Dot com.

Before we get started let me just reminds you that the presentation contains forward looking statements, which may not develop as we currently anticipate.

Therefore, we ask you to take notice. This is the precautionary warning at the end of all materials with that let me hand over to Christian.

Thank you James send will come from me.

Looking back on the first year of our transformation.

We are on track ways or even ahead of the objectives that we set ourselves.

Our new strategy is paying off client feedback and momentum as well as internal employees fiebig demonstrates that we have found our Pos and execution is well underway.

The results we present today underpins our confidence that we would reach our 2022 targets.

Last quarter. We told you said, we were determined not to let the cobot 19 pandemic impact the execution of our transformation.

And at this stage I'm happy to say that is the case.

We were profitable in the second quarter and the first half of the yet.

Gross in call Bank earnings more than offset the wind down off the capital release unit.

Elevated provisions for credit losses from the pandemic and transformation impacts.

The results in the second quarter and for the first half year are ahead of our internal plans.

This speaks to our strategy.

And our relentless execution.

We told you last year that we would execute quickly.

And we have done so.

It was over three quarters of our expected transformation costs already behind us.

Capital and liquidity well also stronger than our internal plans at the end of <unk> second quarter.

This validates our view that we can finance our transformation with existing capital resources.

It also positions us well to continue supporting our clients through conditions, which remain challenging.

We also shaped our technology and sustainability strategies in the second quarter.

Next to the announcement of the Google Cloud partnership.

We set ambitious sustainable refinements targets of at least 200 billion euros by 2025 and issued our first green bond.

You will hear more from us on our sustainability strategy in the coming quarters.

Now, let's go through these themes in more details starting with the progress against our strategic transformation agenda on slide two.

In July last year, we laid out our vision for the transformation of Deutsche Bank.

Our aim was to reposition the bank around what it has stood for over 150 years.

The leading German bank with strong European roots and the global network.

Our transformation was built around five key decisions.

First.

To exit businesses, where we did not have a market leading position by setting up a dedicated capital release unit.

We have exited equities trading where in the process of transferring our prime finance operations.

And reduced assets in the capital release unit by over 100 billion euros since 2080.

We also recites our rates business Indian that's something.

Second.

To create for call businesses with market, leading positions that are aligned to the needs of our Cline.

Together these businesses make up our call bank.

We made further progress on reshaping our call businesses this quarter.

System with the plants, we laid out at the Investor deep dive in December 2019.

So it to reduce costs and here, we have made significant progress.

Based on the annual run rate in the second quarter, we have reduced adjusted cost by 3 billion euros since 2018.

In other words.

We have achieved 50% of our cost reduction plans, just 18 months into our full year program.

We remain firmly on track to reach the 19.5 billion Euro adjusted cost target for this year.

On the way to 17 billion euros in 2022.

Force to continue to invest in technology and control despite the reductions in the overall cost base.

Our commitment to spent 13 billion euros on technology between 2018, and 2020 to remain unchanged.

Our technology strategy includes the recently announced intended strategic partnership with Google.

This partnership aims to redefine.

How are we develop and offer financial services and radically improved infrastructure efficiency.

We also continue to invest in our controlled environment and improve our relationships with regulators.

We believe that our investments have been recognized in the positive outcomes of recent regulatory stress test.

Such a cigar and the easy be liquidity stress test.

Finally, we committed to deliver our transformation within existing capital resources and prepare the ground for future distributions to shareholders.

Since 2018, we have reduced risk weighted assets and the capital Rudi's unit by 30 billion euros generating around 110 basis points of core tier one capital.

This capital generation has helped offset regulatory inflation and finance gross in the call Bank.

Execution on all five of these decisions is either in line with or in some cases, even ahead of our internal plan.

This disciplined execution is beginning to become visible in our financial results as you can see on slide three.

Our strategy is focused on improving sustainable profitability.

That means generating positive operating leverage through a reduction of costs and growth in revenues.

Operating leverage has been positive for three quarters, an ROE for both group and call bank driving significant improvements in call bank profitability.

Over the last 12 months call Bank adjusted profit before tax has grown by 18% to 3.1 billion euros.

We are benefiting from discipline that we have instilled in managing our costs.

We have reduced adjusted cost excluding transformation Chargers and bank levies year on year for the 10th consecutive quarter.

Cobank profitability has enabled us to absorb the cost of de risking the C or you.

Where the reduction of risk weighted assets is running as we anticipated.

As we make further progress with the wind down off the C are you the underlying performance of the call Bank.

Will become more visible in our group results.

And you can see that on slide four.

Over the last 12 months, we've been able to largely offset the loss of revenues from the exit of equities trading and the de risking costs with gross and the call Bank.

Call Bank revenues of 23.7 billion euros over this period compared to the plan that we showed you at the Investor Deep dive of 24.5 billion euros of revenues in 2022 as part of our 8% return on tangible equity target.

This implies the revenue growth of 3% in total or an annual growth rate of around 2% from current levels.

This growth is achievable when compared to the 5% growth that we have reported in the call bank in the last 12 months.

And yes, there are pressures, but also opportunities in the revenue environment.

With the Cline momentum that we have created.

And the changes we have made to our businesses. We are confident of achieving these revenue plans for 2022, even when current market dynamics normalize.

Let me turn to the next slide to give you some detail why I remain confident on our revenue plans for 2022.

The corporate bank operates in an attractive return market despite headwinds from both cobot 19, and the interest rate environment.

We have demonstrated that we can largely offset these headwinds with repricing and volume gross.

At the end of the second quarter.

We have charge and agreements in place for approximately 50 billion euros of deposits.

That is already ahead of our full year go and is on track to contribute over 100 million of revenues on an annual basis.

We have grown corporate cash transaction by 9% and loans by 1%.

We have maintained good momentum in volume and fee growth with our platform clients Fintech and E commerce slots.

The corporate bank has been essential to supporting corporates, including in Germany.

Combining all of the German government programs.

We have been the most active bank in the space.

We have already committed loans of 2.6 billion euros and have climbed requests worth more than 5 billion euros and the pipeline.

We also range syndicated KBW sponsored loans off a total volume of more than 8.5 billion euros.

In the investment bank, our strategy is to focus on our core strengths.

The actions that we have taken are paying off.

And faster than we expected helped by stronger market conditions.

Overall revenues in fixed income and currencies grew by 39% year on year.

Our FIC trading business, excluding financing and specific items was up by more than 75% versus Q2 2019.

We achieved this performance.

Was broadly stable levels of out of anyway.

Excluding regulatory inflation.

This demonstrates efficient resource utilization and it's enabled by a combination of prudent risk management and higher quality client flow.

Well the external market conditions positively impacted revenues.

We are confident that the implementation of strategic initiatives across the FICC platform had a material effect.

And should allow us to deliver sustainable gross.

Refocusing the investment bank and exiting certain business has resulted in a much smaller negative halo effect than we had anticipated last year.

Revenues in origination and advisory increased 73% the largest year on year gross relative to peers, who have reported to date.

Driven by greater client engagement to the highest levels, we have seen in recent years.

We continue to regain market share compared to the second half of last year in court German and European markets.

In the private bank, we're focused on offsetting the pressure from negative interest rates was volume gross.

Unsurprisingly, new consumer loans and investment product fees.

Declined during the lockdown.

But with the reopening towards the end of the second quarter, we're now seeing a rebound and volumes in some areas even tracking above last year.

And in the second quarter, the private bank captured 5 billion euros of net inflows investment products and 3 billion euros of net new client loans.

In asset management.

We are building on the momentum that BW Aes has generated.

Inflows were 9 billion euros in the quarter.

Assets under management up by 45 billion in the quarter and 25 24 billion over the last 12 months.

Asset management also implemented further decisive cost measures in direct response to the covert 19 environment.

As we focus on improving profitability, we continue to manage our balance sheet conservatively.

As we announced last week, we ended the quarter.

With this easy one ratio of 13.3% as shown on slide six.

This reflects lower loan balances driven by higher than expected repayments of credit facilities by clients initially drawn in reaction to cope with 19.

In top these facilities have been refinanced through debt capital markets instruments.

Liquidity reserves of 232 billion euros, roughly 25% of our net balance sheet.

Comfortably above for regulatory requirements.

The solid capital and liquidity position.

Gives us scope to continue to deploy resources to support clients in these challenging conditions.

And our funding position has really been stronger than today.

We fund our balance sheet through stable sauces, predominantly low cost deposits.

We also remain focused on maintaining strong credit quality.

Provisions for credit losses of 761 million euros in the quarter are consistent with our previous guidance and our full year outlook.

This reflects our conservative underwriting standards and the low risk nature of our loan book.

As we have communicated before our exposure to credit cards and other unsecured consumer lending is low relative to our international peers.

Against this background, we couldn't from our guidance for full year provision for credit losses of 35 to 45 basis points of loads.

Let's turn to the broader macroeconomic outlook on slide seven.

We continue to expect a robust recovery in some of the major economies starting in the second half of this year.

Although it will take longer to return to the pre covert GDP levels.

The recently agreed he was stimulus package should further support the economic recovery in Europe, including our whole market, Germany, which accounts for around half of our lives.

We are happy to have a leadership position in Europe strongest economy, which is proving its resilience.

Germany came into the crisis with low levels of that.

Fiscal conservatism has allowed the government to take aggressive and decisive action in response.

Germany benefits from a combination of an effective search social security system.

One of the largest loan and guarantee programs and 130 billion euros and stimulus packages.

Economists, therefore expect Germany to suffer less and to recover quicker than many other countries.

In summary isn't the indicators, including strong retail sales and a more optimistic business sentiment even indicate that the German economy may outperform current forecasts.

This economic stability comes together with low levels of household and corporate debt.

Historically stable housing market as well as good levels of corporate liquidity relative to other leading economies.

Therefore.

Germany companies and consumers I in a better position to whether the current environment.

All of this contributes to resilience of our German loan book and to our expectations for lower provisions for credit losses in the second half of the.

But of course, uncertainties will persist for the time be.

We must not be complacent and have to continue to execute on our transformation agenda.

Slide eight shows you why I'm confident that we will continue to deliver.

In the first half of the year, we've achieved all cost savings as planned.

We will also able to absorb and unexpected burden of more than 100 million euros of bank letters.

The progress of our transformation is also demonstrated by delivering on over 70 key milestones during the last quarter.

All of which are closely monitored by the transformation office, which we created in the fourth quarter of last year.

The transformation office, not only ensure successful execution and delivery on our objectives, but also facilitates a regular dialogue across the bank.

The aim is to get even better and more efficient in the execution of our transformation initiatives.

Across the bank, we currently have more than 60, such initiatives and fraud.

We made tangible progress with our transformation initiatives in the second quarter.

We completed the German legal entity merger and announced the creation of our international private bank.

Integrating wealth management and PCB International.

These measures are important steps in reaching our revenue plants and cost reduction targets.

In the corporate banking, Germany, we've completed the merger of Deutsche Bank and Postbank commercial businesses.

This allows us to reduce complexity simplify processes and ultimately better serve our clients.

And asset management Dws has simplified its management structure to make the organization more client centric.

And cost effective.

We've also made significant progress and transforming our infrastructure.

The launch of a new I T platform in Italy, and our plan partnership with Google.

And why we're proud of these achievements.

It is even more important that we are confident about our ability to continue delivering at this space.

And I can tell you we are.

At the Investor deep ties in December I discussed, how we were seeing increased staff Mara.

And our recent people survey supports the strength.

We see the best ratings ever for employee enablement, and the highest commitment rating since 2012.

With these results were in line with or above industry benchmarks for the first time in years.

And this is the most solid foundation to continue delivering our transformation roadmap.

12 months ago, we launched fundamental changes to our bank.

Since then we have delivered on all dimensions of our strategic agenda.

We not only kept the pace despite the unprecedented challenges of covered 90.

We also outperformed our own plant.

This management team is absolutely committed to maintaining this cadence.

Why do we have fully focused on our plan the pandemic will produce fundamental changes in the way, we work and intact with clients.

And we must take advantage of those.

We remain convinced that we can achieve our 2022 financial targets.

We're on track to execute against all our major strategic initiatives.

We have a strong capital position and have proven our cost discipline.

We are making considerable progress.

On the revenue side.

We see positive momentum in all our businesses, which we can build on.

With our capital strength, we have the potential to support clients in all business areas.

Our accelerated digital transition further supports our 2022 financial targets.

Sustainability is also have ever growing importance for us and our clients and this is being factored into our strategic planning.

In short.

We have managed through this crisis well to date.

We're on track with our transformation.

Our increased focus on our strengths is paying off.

If you will support from our clients our staff and other stakeholders.

We are determined to build on this momentum.

With that let me hand over to Jason.

Thank you Christian.

Let me start with a summary of our financial performance in the second quarter on slide 10.

Revenues increased by 1% as growth in the core bank offset the exit from equities trading.

Non interest expenses of 5.4 billion euros included an additional 116 million euros of bank levies compared to the second quarter of last year as well as 445 million euros of restructuring and severance litigation and transformation charges.

Noninterest expenses in the prior year period included 1 billion euros of goodwill impairments and 350 million euros of transformation charges.

Provision for credit losses, with 761 million euros or the equivalent of 69 basis points of loans on an annualized basis.

We generated a pretax profit of 158 million euros or 419 million euros on adjusted basis, excluding items detailed on slide 36 of the appendix.

On this basis, the core bank generated a post tax return on tangible equity of 4.3% in the second quarter and 5.1% in a half year.

Tangible book value per share of 23 euros 31 cents was slightly above the first quarter.

Slide 11 updates a chart. We showed you last quarter with the most material impacts of the covert 19 pandemic.

Results in the second quarter saw a more rapid normalization of some of these impacts than we originally expected.

In particular capital and liquidity reserves.

Incremental provision for loan losses related to covert 19 were approximately 410 million euros, which I will discuss shortly.

There was a positive impact of approximately 12 basis points on RCT, one ratio from covert 19 this quarter.

Increases in market risk ought to be way, reflecting higher market volatility and higher credit risk ought to be way from ratings migrations were more than offset by several impacts.

These included the repayment of credit facilities, lower derivative exposures and the reversal of most of the increase in prudent valuation adjustments recorded in the first quarter.

The repayment of credit facilities increased liquidity reserves by 12 billion euros, and finally level three assets of 25 billion euros decreased by 2 billion in the quarter.

The decline reflected the partial reversal of the first quarter migration of assets into level, three which had resulted from the greater dispersion in market pricing at the end of the first quarter.

As well as reduced balance sheet carrying values.

Looking forward the path of the pandemic remains uncertain, but we see the developments in the quarter as positive.

Slide 12 shows how we have continued to support clients through the cobot 19 parent pandemic.

It also <unk> highlights the number of different government and voluntary schemes in operation.

Consistent with local regulations as well as industrywide programs, we've offered moratoria too a little over 100000 customers with a gross loan balance of 9 billion euros.

These moratoria have principally being in the private bank in Germany, and Italy, and the associated balances are manageable in comparison to the to the 232 billion Euro private bank loan portfolio.

To date. These moratoria have generated losses of approximately 7 million euros based on accounting adjustments to carrying values.

Outside of the government in industrywide programs, we have agreed various voluntary forbearance measures on approximately 7 billion of your of loans with no material revenue impact.

The forbearance measures on these loans do not trigger stage, two or stage three migration as the borrowers are in good standing and the regulatory definition of default has not been men.

We've also provided loans subject to public guarantees schemes to approximately 5000 clients, mostly in the corporate bank with a total drawn loan volume of 1.4 billion euros and a further 1.2 billion euros of Undrawn commitments, both mainly with the KFW.

In addition, we've requested in the pipeline worth over 5 billion euros.

Turning to provision for credit losses on slide 13.

Provisions were 761 million euros in the quarter.

As I, just mentioned a little over half or 410 million euros of the provisions relate to covert 19 impacts.

Approximately half of the Cobot 19 provisions are against stage, one and stage two credits with the remainder again stage three loans.

The stage, one and two provisions reflect the Mac the weaker macroeconomic outlook relative to March 31st.

Management overlay to account for uncertainties in the outlook as well as downgrades decline credit ratings.

Consistent with our guidance stage three provisions increased in the quarter and were mostly in the investment bank.

Including the provisions taken in the second quarter. We ended the period with 4.9 billion euros of allowance for loan losses equivalent to 112 basis points of loans.

Slide 14 updates to slide that Stuart Louis presented at the risk deep dive in June.

It also makes adjustments in certain rating buckets to reflect changes in the probability of default for guarantees.

As we described at the time, we deploy risk mitigant more actively in the lower rated parts of the portfolio.

These mitigants include collateral guarantees hedges and other structural risk managers, which act to reduce loss given default.

In single B and below 75% of gross performing exposure is covered by risk mitigation, including asset collateral and hedges.

The regulatory expected loss across the non defaulted loan portfolio was broadly flat in the quarter at 1.3 billion euros.

This compares to the 1.5 billion euros of allowances that we currently have in place against these exposures.

This modeled analysis is further validated by the bottoms up review of our portfolios.

Loan exposure to the industry's most impacted by the initial impacts of cobot nine team remained broadly stable during the quarter with modest reductions in retail and leisure portfolios through client pay downs.

The outlook for commercial real estate in aviation remains challenging given the economic backdrop and pronounced slowdown and travel.

That said our outlook remains unchanged given the collateral underpinning these portfolios.

We've made substantial progress in on our underwriting pipeline, particularly in leverage debt capital markets.

Strong market demand has allowed us to reduce our LDC M underwriting portfolio by around 65% in the quarter.

While the current environment is unprecedented our historical performance has consistently demonstrated a low loss rate and conservative reserving assumptions.

As a result, we feel well provision against potential losses.

Turning to capital on Slide 15.

Our C.T. one ratio was 13.3% at quarter end 283 basis points above our regulatory requirement of 10.4%.

<unk> tier one ratio increased by 42 basis points in the quarter.

This includes approximately 12 basis points from Cobot 19 effects I discussed earlier.

Approximately 11 basis points of the ratio increase came from regulatory changes associated with the CR, our two quick fix.

These changes included the application of the revised SMB support factor as well as the first time application of the IRS nine transitional approach.

Excluding covered 19 and see our our two quick fix impacts we saw approximately 13 basis points of improvement from continued de risking in the capital release unit.

The core bank generated seven basis points, principally reflecting lower risk weighted assets in the investment bank and corporate bank.

Our leverage ratio was 4.2% at the end of the quarter, an increase of 20 basis points.

Approximately 16 basis points of the improvement came from the change to a net treatment of pending settlement payables and receivables.

This change follows the implementation of the CR, our two quick fix it wasn't acceleration of a previously agreed rule change that would ordinarily have taken effect only from June 2021.

This approach aligns eurozone banks with long established practice at U.S. banks and Swiss peers.

Foreign exchange translation and tier one capital movements contributed approximately five basis points.

Excluding central bank cash from leverage exposure consistent with the flexibility provided by the TCR. Our two quick fix would if implemented further increase our leverage ratio by approximately 20 basis points to 4.4%.

Our strong capital position serves us well to support clients through the coming periods.

The progress, we're making our transformation agenda is increasingly visible in our cost performance as shown on slide 16.

In the second quarter, we reduced adjusted costs by 422 million euros or 8% year on year, excluding the impact of transformation charges detailed in the appendix.

The decline in adjusted cost came despite absorbing an incremental 116 million euros of bank levies, reflecting changes in input assumptions made by the single resolution Board.

We reduced compensation and benefits expenses in line with reductions in internal workforce and also benefited from a change in estimates related to certain deferred compensation awards.

I T cost declined reflecting lower amortization given the impairments taken in 2019, while our IP spend was broadly stable and within our target range as we continue our investment program.

We also reduced professional service fees as we further improve the efficiency of our external spend.

Other costs declined reflecting reductions across a number of areas, including off your currency.

Adjusted costs included 92 million euros of expenses eligible for reimbursement associated with the fine Prime finance platform and are therefore excluded from our target.

With that.

Let's turn to our businesses, starting with a corporate bank on slide 18.

Pre tax profit in the corporate bank was 77 million euros in the quarter or 91 million euros, excluding transformation charges and restructuring and severance, which we detail in the appendix.

This equates to a 1.6% post tax return on tangible equity in the second quarter.

Second quarter revenues of 1.3 billion euros increased by 3% year on year.

Revenues were positively impacted by just over 100 million euros of episodic items, which we've discussed with you in previous calls.

These items included reimbursement gains from credit protection, which also benefited net interest margin and are part of our regular business as well as portfolio rebalancing actions.

Excluding these episodic items corporate bank revenues declined slightly as deposit repricing and balance sheet management initiatives were more than offset by interest rate headwinds.

The corporate bank made progress executing against its strategic objectives.

At the end of the second quarter, the corporate bank had charging agreements in place for approximately 50 billion euros of deposits.

Non interest expenses were significantly lower year on year, principally reflecting the absence of a goodwill impairment in the prior year period.

The current quarter included 81 million euros of litigation charges.

Adjusted costs, excluding transformation charges were essentially flat as management efforts to reduce non compensation costs were off site set by higher internal service cost allocations that we discussed with you in previous earnings calls.

Provision for credit losses of 145 million euros in the quarter was mainly driven by the worsening macroeconomic outlook and a small number of single names, partly offset by a onetime benefit of a change in accounting for guarantees.

Loans leverage exposure and risk weighted assets declined compared to the first quarter 2020, mainly reflecting client repayments of credit facilities.

Turning to the corporate bank revenue performance by business on Slide 19.

Global transaction banking revenues increased by 4% on a reported basis.

However, excluding the episodic items I just described revenues declined slightly principally reflecting the impact of interest rate cuts in the U.S.

Cash management revenues declined and were impacted by interest rate headwinds, which were partly offset by deposit repricing and balance sheet management initiatives.

Trade finance and lending revenues were slightly higher mainly reflecting credit loss recoveries.

Trade flow and lending continue to perform well, but client activity in structured products was more subdued.

Security services and Trust and agency services revenues declined as a result of interest rate cuts in key markets.

Commercial banking revenues, excluding episodic items declined slightly as interest rate headwinds offset growth in volumes and fee income.

Turning to the investment bank on slide 20.

We're pleased with the performance of the investment Bank, which continues to build on the momentum we've seen since September 2019.

Pre tax profit in the investment Bank was 956 million euros in the second quarter with a cost income ratio of approximately 50%.

This equates to a 12% post tax return on tangible equity in the second quarter and 10% in the first half.

The investment bank made significant progress on its strategic objectives, as we work to reduce cost and technology and infrastructure support as well as grow revenues.

The investment bank is on track to decommission, the 30% of I.T. applications by the end of 2022 as communicated at the Investor Deep dive in December as part of the ongoing technology investments.

Revenues of 2.6 billion euros in the second quarter increased by 52% year on year, excluding specific items driven by strong client flows and market conditions.

Non interest expenses of 1.3 billion euros declined by 14% year on year in part, reflecting the absence of litigation charges recorded in the prior year per quarter.

Adjusted costs, excluding transformation charges declined by 7%, reflecting benefits of the head count reductions in 2019, and lower internal service cost allocations.

Provision for credit losses of 363 million euros, or 182 basis points of loans increased in the quarter driven by impairments related to covert 19.

Loans and leverage exposure increased versus last year, driven in part by the higher client drawdowns in the first quarter.

Revenues in fixed income sales and trading increased by 46% year on year, excluding specific items as shown on slide 21.

This is a strong performance across the franchise with all major based businesses growing revenues versus prior year.

Across rates FX and emerging markets revenues benefited from our refocused strategy that we laid out in December.

We saw continued improvements in client engagement and strong growth in our institutional franchises.

Rates revenues doubled from the prior year with strength across the complex specifically in Europe.

Rates revenues have nearly doubled on a year on b or basis in each of the last three quarters.

Foreign exchange revenues were significantly higher reflecting higher market volumes and strengthen derivatives and electronic spot.

Emerging markets revenues were higher in Asia, driven by increased corporate and institutional client photos and the benefits of investments in the franchise.

Revenues from credit trading increased with higher revenues in flow across all regions.

Financing revenues were broadly flat year on year, but have recovered wrote well from the challenging market conditions in the first quarter.

Revenues in origination advisory increased by 73% as we continue to regain market share most notably in our core German and European markets.

Equity origination revenues were significantly higher reflecting higher market volumes, while M&A revenues were down significantly on a lower industry fee pool.

Growth in debt origination reflected higher market volumes as well as market share gains and investment grade.

In leverage debt capital markets, we have successfully de risked a majority of the commitment pipeline from the end of the first quarter.

Slide 22 shows the results of the private bank.

The private bank reported a pretax loss of 241 million euros in the quarter, including transformation charges restructuring and severance and litigation.

Private bank revenues, excluding specific items related to the cell Oppenheim workout activities declined by 5%.

The private bank continues to execute on its strategic objectives, including the completion of the German legal entity merger the alignment of digital venture activities. The creation of the international private bank and the implementation of a new core banking platform in Italy.

Some of these items had a negative impact on revenues in the quarter, but are key parts of our transformation strategy.

Excluding these items revenues declined by around 2% as headwinds from Cobot 19, and ongoing deposit margin compression were partly offset by volume growth.

With the reopening of our key markets, we're beginning to see a normalization of client activity.

The private bank recorded 3 billion euros of net new client loans, and 5 billion of net inflows into investment products in the quarter.

Noninterest expenses declined by 15% year on year as the absence of a 545 million Euro goodwill impairment recorded in the prior year period was only partly offset by higher restructuring and severance as well as litigation charges.

Adjusted costs, excluding transformation charges declined by 4% as the benefits from reorganization measures more than offset the higher internal service cost allocations.

Cost synergies related to the German merger, we're further approximately 75 million euros in the second quarter.

Year to date, we have generated approximately 145 million euros of synergies from the merger and we remain on track to achieve our full year target.

Provision for credit losses was 225 million euros, or 39 basis points of loans, mainly driven by the updated macroeconomic outlook.

Turning to revenues by business area on slide 23.

Revenues in Germany declined by 5% and we are burdened by impacts from a legal entity merger in Germany and evaluation adjustment on the digital venture investment.

Revenues were also impacted by ongoing deposit margin compression and the cobot 19, pandemic impart offset by growth in loan volumes and fee income.

Private bank, Germany grew loans by 2 billion euros with net inflows in investment products also of 2 billion.

Revenues in private and commercial business international declined by 12% and were negatively impacted by covert 19, principally in Italy, and Spain, and a one off re hedging charge in Italy, as well as ongoing deposit margin compression.

Wealth management revenues declined by 1%.

The business continued to benefit from its growth investments, including hiring of relationship managers, which helped mitigate the revenue declined from ongoing interest rate headwinds as well as impacts from covert 19.

Over 19 led to reduce client activity at the beginning of the quarter and lower market values reduced average assets under management.

Net inflows in investment products were 3 billion euros across emerging markets, Germany and the Americas.

Wealth management also grew lending volumes with net new client loans of 1 billion euros in the quarter.

Asset management performed well in the challenging conditions as you can see on slide 24.

To remind you the asset management segment includes certain items that are not part of the dws standalone financials.

Asset management reported a pretax profit of 114 million euros and increase of 27% year on year as management actions to reduce costs more than offset lower revenues.

As a result, the divisional cost income ratio improved by six percentage points to 73%.

Asset management revenues declined by 8% year on year, principally reflecting the absence of periodic performance fees recorded in the prior year.

Management fees declined largely reflecting the industry wide margin compression offset by higher other revenues, which reflected lower funding cost allocations and a favorable change in the fair value of guarantees.

Assets under management of 745 billion euros at quarter end have grown by 45 billion euros in the quarter and by 24 billion euros over the last 12 months.

Net inflows were 9 billion euros in the quarter, an offset the outflows seen at the end of the first quarter.

Net inflows in passives cash and equities were partly offset by outflows in fixed income.

Noninterest expenses declined 15% with adjusted costs, excluding transformations chat transformation charges down 13%.

The reduction in costs was driven by lower carried interest related to performance fees as well as successful implementation of cost initiative efficiency initiatives.

Okay.

As shown on slide 25, corporate and other reported a pretax loss of 152 million euros in the quarter compared with a pretax profit of 101 million euros in the same period last year.

The decline was principally driven by lower revenues from valuation and timing differences, reflecting the benefits in the prior year period of movements in cross currently currency basis.

Funding and liquidity charges also increased compared to the prior year quarter consistent with the changes in funds transfer pricing we've discussed in previous calls.

Let me now turn to the capital release unit on Slide 26.

The capital release unit recorded negative values revenues of 70 million euros, or 47 million euros, excluding debt valuation adjustment in the quarter.

Revenues were driven by de risking in hedging costs, partly offset by the reversal of previously incurred funding valuation adjustments and the prime finance cost recovery.

We made further progress on reducing expenses in the capital release unit.

Noninterest expenses in the second quarter were 50% lower than in the prior year quarter in part, reflecting lower transformation charges.

Excluding transformation charges in bank levies adjusted costs declined by 38% year on year, driven by lower internal service cost allocations lower compensation costs as a result of head count reductions and lower non compensation costs.

Risk weighted assets declined in the quarter as 3 billion euros of de risking was partly offset by approximately 2 billion euros of cobot 19 related increases in market risk out of the way.

In the first half of the year the capital release unit has de risk by around 5 billion euros.

Leverage exposure was lower driven by de risking optimization and market movements.

Over the last 12 months the capital release unit has reduced risk weighted assets by 22 billion euros and leverage exposure by 147 billion euros.

Looking forward, our year end risk weighted asset target of 38 billion euros remains unchanged.

Given the market driven increases seen in the first half this implies a larger underlying reduction in the coming quarters than in our original plans.

As management prioritizes risk weighted asset reductions, we now see a slightly slower reduction in leverage exposure than previously anticipated in 2020.

We expected to route we expect to reduce leverage exposure by between 10, and 15 billion euros a quarter for the remainder of the year subject to market movements.

Our leverage exposure reduction targets for 2020 to remain unchanged.

Let me conclude with a few words on the outlook on slide 27.

As Christian said, we successfully navigated the challenging environment this quarter.

We made progress on the strategic priorities that we laid out at the investor deep dive.

Looking forward, we've updated the outlook statements in the interim report to reflect our current expectations for revenues. This year, both at a group and business line level.

For the group our revenue expectations are now marginally higher than our prior outlook preliminary reflecting primarily reflecting the stronger than expected performance in the first half.

Our current planning assumption is of a normalized investment banking revenue performance in the second half relative to the first which should still deliver year on year growth.

We also expect relatively stable performance in our other core businesses.

We expect revenues in the capital lease unit to revert to the range that we outlined at the Investor deep dive.

We remain on track to reach our 19 and a half billion euro adjusted cost target, excluding transformation charges and the impact of the Prime finance transfer.

Consistent with Christians earlier comments, we do believe that lessons from the covert 19 pandemic may produce additional levers to reduce costs in the medium term.

Neither of these opportunities nor the required costs to achieve are included in our current outlook.

In line with our prior guidance, we expect provisions for credit losses of 35 to 45 basis points of loans and for the full year.

Our guidance implies provisions return to normalized levels in the second half of the year as higher stage three provisions are offset by reductions in stages one into.

We continue to expect 400 million euros of deferred tax asset valuation adjustments in the full year of which only a small portion was reflected in the first half.

On the C E T. One ratio a lot of uncertainty remains regarding the economic environment client behavior and regulatory actions.

That said given where we ended the second quarter. We currently see significant room to continue supporting clients, while maintaining the ratio above our 2022 target of 12.5%.

In summary, we will continue the disciplined execution that you've seen from this management over the last two years and our short term outlook is consistent with our longer term goals principally a post tax return on tangible equity of 8% in 2022.

With that let me hand back to James and we look forward to your questions.

Thank you James Hey, let's now go to questions if possible.

Ladies and gentlemen at this time will begin the question on fashion.

Anyone who wish to ask the question May please stop by warning letter to turn television.

If you wish to maybe you'll sell from the question can you you May proceed thoughtful up by two.

If you buy using speaker equipment today, please the handset before making your selection anyone who has a question they print style Philip I bought at this time.

And the fact question kind of in light of Kristof Glycemic. Both connect bank. Please go ahead.

Good afternoon, one or two questions from ISI. Please.

First question is on the corporate thing when you talk to you a gentleman corporate client base. After the economy had three ultimate what do you hear anatomical short and long term investment appetite Este Lauder Qimonda in general.

And second tier I know, it's early days, but any indications about loan loss provision and withheld from 21.

Yeah, I do want to come thank you.

Okay.

Thanks, Chris if.

I take the first question.

Obviously, a and we are in close contact with in particular, our German corporate line and actually Ive to say that the sentiment to its a much better one in particular over the last four to six weeks. Then obviously, we have seen a to in April and May.

I would even say that to most of the duck Ceos, but a lot of false of the German family owned to a company.

Our actually had a signal a cautious optimism we also see sign for a robust recovery in major economies in the second half of this year all that we all admit that it obviously it takes some time that we return to the pre cobot to GDP levels in.

Thank you for Germany and to your questions divestment and loan demand.

There are a lot of indicators that to retail sales, but also the overall business sentiment indicates that the German economy may even outperformed the current forecast and it's a recovering even faster than we initially thought I think all the a support programs which have been.

Set up by the government, but also the most recent to European stimulus program helps in this regard.

I personally and that is also narrowed by the German corporate a heads up.

If we always think into one third one third one third category one third of the German corporates are having the whole market and the euro market in there in their mind in terms of gross in terms of a demand.

And that is actually as I said requires a career covering quite well.

Then we do see actually a strong recovery in China, and Asia actually we believe that China is growing and twentytwenty. Despite the pandemic by 2% and we can see that that a lot of demand is actually coming now to the German culprits from China. The biggest question is actually at this point in time, the U.S. again.

Pending for one third of the production when you take an average for for Germany.

And enhance overall you can see that for two third there is quite optimism in the game and that then also actually makes us confident that the sentiment fall at balance investment and therefore also demand for loans and credit facilities is there and that actually we see in our business because over.

All in the first half year, we grew the corporate loans, we grew the calc commercial loans.

Yes, we have seen summary paid length of the initial drawdown from end of March, but overall I would say compared to eight weeks ago quieter quite a far more positive picture, though obviously most of my call ex the obviously managing the company quite tactically. These days because there is uncertainty left.

With this I hand over to James with regard to illness version outlook sure. Thank you Christian.

Look there's a highly uncertain outlook out there as you've heard from us and other banks in our guidance for this year.

Implicit as a normalization of of CLP levels or somewhat normalization in the second half and at least at the moment given the economic outlook that we're working with.

We would expect that environment more or less to carry over a 21, so not be.

Extremely favorable credit environment that we came out of in 18 and 19, but also not the the very elevated environment that we found ourselves in the first half of Twentytwenty.

Obviously, a lot depends on the path of the recovery from here another dip in and expectations would clearly presents some additional pressure and 21, but by and large our central case would be a continuation of of of moderate normalization into 21.

Excellent Thanks, a lot.

The next question is through Tonight Omahen at Goldman Sachs. Please go ahead.

Good afternoon from my side.

As well I'd like to questions. Please so the first one.

On the second quarter results.

I don't want to take away from.

From the very successful cost management and reviewed in revenues in this quarter, but.

The revenues for the industry this quarter were pretty much a record.

And even with those record revenue with Deutsche aloft money this quarter.

And I was just wondering I mean, as we go into the second half of the year.

And the usual seasonality if nothing else kicks in.

What what do you how do you assess your ability to sustain.

Oh profitability improved the third and end to end the fourth quarter.

And just as an aside so I mean yesterday, a supervisor issue of the results of the vulnerability analysis.

Okay for their conclusion that the outlook is so uncertain.

The Dave banks to suspend or capital returns to shareholders for an additional period.

Listening to you.

And your positive outlook I would just wondering whether you think there the supervisor is getting it so extremely are all in a way.

And then the second question I have Christian I would like to go back to your to your AG and input and you're opening speech Richard we try to focus was interesting I think this was.

At the start of May and I believe that you're the first over the large banks field you explicitly talk talk about consolidation.

And I believe you said something along the lines that consolidation in the European banking sector.

Will happen, but this is inevitable and that it must have been.

And I would I was just I was just wondering if you could if you could give us some additional insight as to how you're thinking about timeline for this consolidation could take place and the triggers.

That might start that thank you very much.

Jay Thanks, a lot and to let me start and I'm sure that James to Willette.

First of all on your profitability outlook for the year.

Potentially can put this a little bit into perspective.

You know we started the largest transformation of Deutsche Bank over the last 20 years last year. We always said that we will have one and a half years or six really key quarters, where we do most of the restructuring we have the restructuring costs you have seen that most or 75.

The percent of our transformation costs that have now been a kind of fed done already.

And we also said at the beginning of the pre cobot pre cobot.

That we are that our ambition is not only the 19.5 billion a gold in terms of costs, but that we up pretext breakeven.

Then we are we are kind of effect it and impacted by the hottest recession, we've all seen since the second World War.

With unprecedented issues, which we all did not experience.

And this bank was not only profitable in Q1, but also profitable in Q2.

And if you're now look that this was a very good quarter for the investment bank, yes, I agree, but not only because of cobot because we have shown in January and February but also in June.

At the momentum is also good in July.

Even with normalized markets, we are actually convincing and getting additional flows and underlying client revenues.

In markets, which are not that covert impact it like a like opera, obviously, a end of March April and May.

And that we actually gained market share in those areas, where we want to compete where we think we have a leading market position.

It actually makes us very confident that also in the second half of 2020, we will show revenues also in the investment bank, which are higher than in the second half of 2019th and that the underlying flow is not something which is only down because of covert, but really which is evident thing the strength of Deutsche Bank and if you then look at the.

Underlying business also the volume drivers in the corporate bank and in the private bank, we actually see the loan growth, we see the growth in assets under management in the private bank, but obviously also in dws.

We see that disciplined execution on the cost side and all that shows us that we on the right track and that was our goal of 20 to 22 that we will end up and reside in the sustainable profitability. So in this regard I I've already let's say that everything what we decided last year.

It's actually is actually confirmed in terms of right decision from a strategic point of view and secondly, we even ahead of the plan, which we have given our self despite effected by cobot second question on that the consideration you know my view I have said that bye bye already too.

Two years ago that over medium term I think that consolidation will come in Europe, but there are certain preconditions that it's a banking union that is set the capital markets Union, we need in my view less banks in Europe in order to be competitive globally.

And that comment from the ATM was nothing where I said this will happen short term, but that was my medium term outlook for the European financial sector.

Thanks, a couple of things to add so if I think about the second half urinate James you know we have.

Non repetition of H., one pressures on the piano I'll start with a single resolution fund contribution or assessment, which is 600 million.

And we've we've outlined that we've we've that the co fed related sort of excess credit loss provisions have run sort of six 700 million.

And so as those <unk>, the first of which will not repeat in the second of which we expect to abate. So it gives you room to to have the if the out performance. If you like in the investment bank retrace somewhat while preserving a path to profitability and then as you said at the outset, we will continue to work.

On the expense trajectory that we've sat so as to preserve.

The path towards our targets and goals for 2022.

On the your point about the ACB and the announcement yesterday.

We I think we've said quite consistently we share.

The supervisors objective of ensuring that the banking industry is in a position to support the economy support clients through this crisis period, and that's certainly what we've been endeavoring to do.

And that therefore, we should all be mindful of how we manage capital through through a stress environment.

As we sit here today, the the more extreme stress conditions are not present.

But but we agree with the with the the impetus that we all need to be prepared for that.

And we think we've demonstrated both in terms of portfolio quality risk management.

And the ability as you say to manage through this period, while while remaining profitable and on the pre tax line.

We don't see a reason in the current environment why that should change in the second half.

Thanks, a lot just maybe a short follow up James James If I may.

So.

If I understand you correctly essentially.

Youre budgeting on the assumption.

The public health.

Prices gets better.

And there is no second locdown et cetera.

And.

Sitting as you are in Germany, and I'm sure, maybe things feel that way, but let me just asking humor us.

Let's let's say you're wrong.

Now, let's say we go into Q3 Q4, and there is a second low.

What what do you do that because you've left yourself with roughly 20 basis points.

Of credit loss space for the second half of the year in order to mature.

Well, we've provided guidance on credit loss provisions in Q1, right, where three months later than where we were in April and we are reaffirming the guidance and we're telling you that today, we don't see anything in the outlook that that would would would move off off that guidance, there's always going to be a degree of risk.

And there.

One thing that I would tell you is we did increment the provision in the second quarter as you'll see in our interim report. So we we took the view that consensus might be a little bit too optimistic given what we're seeing particularly in the United States and therefore took the opportunity to increment our provisions.

We think thats prudent and to your point in an environment like the working wherein we need to be prepared for adverse outcomes and that's essentially the message the of the CB be prepared for out adverse outcomes, but but that doesn't mean that it needs to be the central case, and so we manage essentially.

The company with with both cases, a very much in mind.

The one other thing you know that we do want to emphasize as we look to the capital position that we left the second quarter with yeah. If it does give us the ability to support clients as weve as we've highlighted and also.

Managed through and an additional stress period, I guess, one last thing to add Uri.

We would expect Christian gave some perspective about the economic environment I think it's unlikely for a public policy perspective that you'd see as severe a set of measures you know and you're going forward.

There would have the same degree of of damage to the economy.

As authorities deal with the health crisis. So so my guess is even in a in a quote unquote second wave it wouldn't look.

No that wouldn't look like the first wave exactly.

Thank you very much.

The next question isn't done yet put back <unk>. Please go ahead.

Yeah. Thank you good afternoon.

And you talked already quite a bit about the outlook for revenues in the IP, specifically and I guess the key firsts for normalization, but that is still expected increase year over year. What do you will be able we're ready to share with us your.

Key assumptions behind that probably when it comes to market shares for you right you see cadence in key areas, but it's just overall industry revenue was probably the overall.

It could environment and thatll be helpful such as the key assumptions behind that statement and then secondly on capital.

I guess, it's fair to say that you know there is some surprise seem to cold. So that's also why you then gave set update a few days ago now how your base case scenario. How do you think about the sort of the underlying dynamics behind it fully your outlook of the telephone 5% in terms of [noise].

Underlying credit demand.

From clients volatility market, there is probably some regulatory changes.

It would be helpful.

Just last one more if a numbers question Dan I'm always struck in two to four costs, Texas I mean, the tax rate was 65 in the first off and then your data obviously mentioned to 400 million Dk revaluation, mostly in the second half could you just help us a bit in terms of modeling that for the second half.

Often can probably to normalized tax rate going forward.

If you could give us a guide and status will be helpful. Thank you.

Then yeah, let me start to with the investment bank and and as you rightly pointing out to some of that has already been set I think.

Why are we confident that in the second half of Twentytwenty, we beat the revenues to versus the second half of 29 team. It is clearly that we see that the investments and the focus on those business in the investment bank, where we decided to play and to be a.

Leading player that in those areas, we are performing and in those areas were simply see a greater client engagement more demand.

And again this is not only covert related if I am, particularly think about the FX business. If I think about the European rates business. If you look at our market share gain to in the debt business. Then this clearly shows and again also the pipeline transactions I can see now for the third.

Third quarter also looking at the the first half of July shows me that we own a good track actually establishing this momentum long term.

We can see that last year, when we obviously exited the equities business, we had a perceived or we had an expected halo impact on the FICC business that is after a year now in this new strategy far less than we anticipated because slides are coming back and I still kinda back.

And engaging with us.

And to hence looking at those businesses, where we decided to be active in we see in almost all of these business.

Gross rates year over year again also now starting in July which makes us comfortable and confident that we can be to last year said second half.

Okay. Thank you.

Let me, let me just add ones, while item I think James said, something very important with the capital ratio of 13.3%. Obviously, we also have now the capacity to use part of that in order to give it back to the businesses that is in particular in the investment bank, but also in the corporate bank and enhance.

You know, it's it's not only the client demand, but the capacity of the bank to also provides the businesses with the resources is clearly there and that would also help to boost the revenues.

Daniela on the capital guidance, obviously, given the the history, we lift in the second quarter, where we're going to be careful about the guidance, we provide going forward.

You know with with all kinds of caveats, but to Christians point, a moment ago.

The we could certainly see credit risk RW, a increase in that in the second half.

Make up a range five five to 10 billion as we support clients through through the the stress period and frankly it may at some of the pay downs in Q2 may be behavior that simply pushed sort of liquidity demand into the the second half of the year. So we want to be prepared for that.

Yeah that would represent a drawdown of of a.

Broad range, perhaps 30 basis points.

Which is good and deliberate on our part.

The other buckets that we talked about in the and the risk deep dive obviously, there's been a lot of movement. At this point you know, we would see the regulatory pressures as being broadly neutral.

And then for the balance of the year, you'll recall there are some things we still have to get through the end P. backstop as an example, and then there is some.

I'm positive benefits that were expecting such as the the change in treatment of of capitalized software. So you know all of that stuff, probably neutral maybe up a little bit negative.

And that depends frankly on on how quickly the easy be sort of resumes.

It's exams letter writing for example, and things like trim.

And then finally, you know what is the coated impact from here and there is it's obviously the.

One of at least able to see we've as you can tell we've recovered much more quickly than we had thought.

In terms of the covert impacts going from net negative in the in the first quarter to net positive in the second quarter.

Yeah, we still see a wide range about that around that but could could certainly see that being negative in the second half in terms of use for the balance sheet.

And hence that all of that informs the guidance that.

That we've provided I've said before we tend to be err on the conservative side in some of our of our capital forecasting we didn't intend for it to be quite this much in the quarter, but as Christian says obviously it puts us in a very good starting position to two to look towards the challenges of the second half.

Yeah.

Thank you very useful yep. Thanks, any other quickly on taxes, absolutely right, 65% in the first half.

You know at a continued level of profitability around about where we've been in the first half you'd probably see that continue.

And what it reflects is is profits in relatively high tax jurisdictions and the absence of of tax benefits.

Associated with losses in low tax jurisdictions, or and you know, where we where we can no longer avail ourselves of.

Of tax shields on losses.

Ah you pointed out the DTA guidance that we've provided yeah. So that would clearly you know change the effective tax rate to something almost meaningless. So I think you've got to add that on top of the 65.

And then the last piece is the forward guidance. We'd say is is unchanged to you know as we.

You know continue to improve our pretax profitability and these effects that are much more visible and also the permanent differences much more visible at very low level of pretax we should try we should start to converge towards the low end of the Thirtys I think in the past we've provided a range of sort of third.

I'd to 32 as a normalized rates.

That we are working to achieve in the coming years.

Thank you for Medicare Thanks.

The next question isn't Tom Cullen KPTV. Please go ahead.

And if the highlight your line is open Keith and meet your telephone.

Sorry.

Hi, guys, sorry, just a couple of questions for me. Thanks for any additional color on the capital outlet, but can you provide an outlook on the credit risk migration and its impact place.

And secondly on provision or keep that the this quarter occasions, where any stage three wells pega generally pointing towards the majority of provisions are coming through stage, one and tape. So is this just reflecting a view that not much will go wrong and twentytwenty beyond or is this just can you just think about it as a mix.

My friend.

And now it's no need for is up Elk and fell 20. Thank you.

Thanks, Tom look again with with all the caveat to that I'm cautious approach providing guidance. Because you know then then we can be wrong.

In in our estimation their ratings migration could be something between 10, and 20 basis points in the in the balance of the year and that would be within what I described is that the sort of cobot impact will obviously provide you updates and hopefully that bucketing that we've we've been talking about is helpful to you.

And in.

Sort of conveying how we think about managing capital through this period.

In terms of the staging actually we think it's it's pretty much in line with our expectation. So it's essentially two third stage three one third stages, one into and we would expect that now in the second half to become more sort of dominated by stage three so.

In the and the ordinary course of things, we would expect additional stage three events to drive.

The provisions in stage, three and those provisions would be offset by releases out of stage two as as the as credits migrate a as well as the release of what we call forward looking or a reserves built on the basis as a forward looking into quite indicators.

So it's the this migration is what we expected to see and and we'd again expect subject to all the the caveats that to continue into the second half.

Okay. Thank you.

The next question isn't Magdalena Stoklosa of Morgan Stanley. Please go ahead.

Thanks, Thanks, very much but I've got two questions one on what's going on provision level I'm actually okay. I'm on the private banking global I'll start with a with a private bank.

Colin.

Just kind of in mind that Youre end goal for that.

For a kind of so 2021, Oh protocol it too because lots of things are going on just kind of thing you'd have a fully based on this slide I'm kind of 20 and 22 at the it's like a of getting go entities, It's 80 or digital then.

Sure it quicker.

The bank all today, it kinda, Neil and I keep Blackhawk totally off the moving parts.

Down and of course, those moving parts are going to have an impact both on the revenue side or on the cobalt.

And then I'm, not particularly and also kind of within that's question 'cause it but could you give us your youre, saying, they Oh walk you want to clean way with the international private portal, how to you who your so called Patrick if any bearing now underway and the way you want to public debt.

[laughter] because this is the eight division, where I can think but if that's the only thing I'm, calling all that this would be great. Okay. That's kinda slightly longer term ankle outlook from you and my second question, maybe they don't forget them sorry about that open.

Let's talk about the context of what you see the two principal propane protocols. So.

Oh, we discussed the fact that they within your outlook the provisioning in the second half, it's coming down quite a quite significantly and then you kind of difficult. The provision may normalize even said that kind of 2021, you know there.

For a moment that Oh additional kind of local change at.

On the corporate as well.

How do you think about 20 currently working really hard we are likely to see some of those how long that's the court program the fellow probably I'm sure.

Okay I'm sure it kind of program actually rolling off and also sell up there you know how long they have got paid to eight could fluctuate corporate site as well does that does that worries that that learning you that incremental 21, we are likely to actually well, what's the real damage of what we've got to go through.

It's actually looking like.

Thank you.

Sure I'm actually have James I'll start with the the provision discussion and then and then Christian will talk to the PV question.

Look we have a path to walk on on provisions all of US the industry do I mean, the starting point is the end of the Moratoria and the possibility that that creates a cliff a cliff at this point.

We don't see that cliff, but it's certainly a possibility.

We do see the positive effects of fiscal and monetary supports.

And and as that wanes, obviously, the hope and expectation is that underlying economic performance picks up but there's a trajectory of of a GDP growth that means that households, and corporates, essentially where bridged through a very sharp recession by government action.

And again, that's I think at reasonable Central case, as we sit here today.

Now one thing to remember about the about fiscal support is that it will me.

Is ramping up now I'm, sorry monetary support is ramping up on a if you like a monthly basis in Europe. So is is it still coming online.

And the fiscal support by and large as you know while it's happening in the market by end markets nationally some of the E. U measures only come on line next year. So there is still support we think for the economy into 2021. So of course all of that will play out into our provisions.

In part through the stage three events that you know I referred to a moment ago in response to Tom's question.

And then of course, there will be ups and downs, reflecting.

Forward looking indicators as that path changes overtime.

Again all of it is as we see it today is consistent with our our core outlook.

I would expect you know some of these.

For the stage three events corporate default absolutely to continue into into 21.

Because some of the stress you know for example in the portfolios that we outlined as being the focus portfolios.

There's no question that there were some of that stressful, resulting in additional fault I guess one other thing just to note for you Yeah, We're where we talk a lot about 2022, and our path to the to the 8% arty.

You know if you like a silver lining lining of the very dark cloud that we've lived through is that I think the general expectation is that we'll be in an upswing essentially a post recession environment. There you know our portfolios will be in pressure tested that so we can begin to look to 2020.

II with more confidence that will be in a lower CLP sort of economic growth environment, even if there is.

Another sort of wave that we have to live through.

Okay, now and the private bank and the action, which you are referring to in Q2, let me that circle back to the Investor Day in December we said that to our gold and target is to.

To have a private bank at the end of 20 to 22 with a return on equity of between 10% to 11% and and the real drivers to get there were twofold. The revenue drivers obviously on this way to 10% to 11% approximately 2% to 3% to increase of made to put a two to three.

The percent of this journey, but the real issue to get there is a cost game and and the preparation of work is in particular that what we have to do in 2020, and 21 2021 and a lot of that you have seen and we actually happy with the progress a in the second quarter, it's not only the merger.

The P.S.K. with the Deutsche Bank AG, which obviously bring synergies are in in headcount to but in central costs.

But also the merger off the private banking international business with the wealth management business is a from a cost point of view very efficient one but also actually gives us chances to further grow and to also offer to our private banking clients more broadly for instance, seeing the wealth management.

So it is all the preparatory preparation for a work for our 2020 gold remember we want to take out a billion of costs than private bank, Germany that comes from the distribution channels that comes from the merger I was just talking about that comes from the retail I T, where we made good progress and we actually.

Pre Poland that to get that ready by the end of a 21. So within the next 12 months a lot of work or would be down there in order to have one platform or for the Postbank and Deutsche Bank retail business.

And then we have approximately 200 to 300 million of cost reduction in the international business, where this merger now help so we're completely on track to get the bottleneck off that drive us up to the 10% to 11% from the cost side and and a lot of work has been down in Q2.

Great. Thank you very much.

The next question isn't paint brand at HSBC. Please go ahead.

Yeah. Good afternoon, thank for taking my question.

A couple if I may have a first of all just going back to the revenue <unk> I'm sorry.

So the labor the point again, but I mean in press are the ones that you're sitting here today 2020 care goal.

And we talked a lot about it expectations for the investment bank are definitely look outside of the investment like.

We've obviously got a declining revenue picture still.

And the three other divisions, but I'll just want to make sure a couple right take away from coal and <unk> estimate of what you're.

Basically, saying it took a lot of stuff under the although which maybe we need to look out in terms of loan growth finds interaction.

Stops try and ancillary service starts metrics, which which aren't yet.

Evident in the revenue performance for the questions. This is not the right way to be thinking about youre sort of indication that'll play, where we're going to say to prove that probably.

Declining in short we're currently seeing an artificial.

On the second question was on actually deposit charger, so you're up to about 60 billion <unk> balances now mature charger.

For deposit hold out just sort of interest that you talked about and I should say, Ontario, Florida client balances.

How far do you think we can run on this in terms of ultimate revenue impact on how much aggregate balance may actually ultimately the its subject charger thanks very much.

Well, let me start I.

I think you you said it already right. There there is a lot of underlying good volume growth, So which is exactly what we expected from the business. This outside the IB.

And if it already think about for instance, the private bank in the second quarter and you'll see a 5% reduction of of revenues. If you take out the certain valuation adjustments, which which we did and really look at the underlying growth. Yes. It was minus a one to minus 2% which is completely covert related.

End to end, if if you take that out if you look at the volume drivers now after the reopening off the economy in Germany, and I think.

A we talk to that also in the prepared remarks, we can see actually that the volume is above 2019 level be it on the investment side, albeit on the credit gross and lending growth side, which is a good indicator that actually the underlying business is working well same actually accounts for fall the corporate bank.

And and on top of that we're doing that what you much Im just saying I mean, we have already now.

Achieved on the deposit repricing in the corporate bank level, which we wanted to achieve by year end, but we achieved it after six months or so in total for the bank. We have reprice now 60 billion offer deposits a 50 billion in the corporate bank.

And we continue to do so and I can give you an exact number but to of course, it is something which is not only done by Deutsche Bank, but which we see more and more in the market and that means that we will continue to do so because it's a much needed to mitigate to the headwinds off the a negative in.

For us right so.

You won't see us stopping here with all the track record, which we have gained over the last seven or eight month by doing this in such a disciplined way I'm confident that we can reach a even higher amounts, which obviously then supports a the a the topline.

The next question, it's Nicolas paying attack as Safra. Please go ahead.

Yes, good doesn't have to Cushing elastic would you. Please the first one is regarding loan under Colombian rents and Moratoria a worry of assumption regarding create critically kills influence and wants to more Oh pardon is over I mean in which a stage buckets or do you think when do you assume they will fall and.

Second the one is regarding your pitch treated on coverage ratio. It does decrease is quite significant he flips from 39% to 30% or what should we expect going for what we're going to trade show and Kim.

Sure Nicola Hi, it's James the M. I guess quickly on both you know where we looked very carefully and we provided some details on the extent of loans subject to moratoria voluntary or or if you like statutory in our materials.

And we're watching carefully to see whether those roll over into into default right. Now, we're not seeing sort of behavior in clients that would suggest to us that.

The clients, who were who were solvent in whose businesses with strong pre crisis. You know after moratoria would would be you know, notably different in terms of credit quality, but it's something to watch carefully.

I think secondly, with respect to the coverage ratios you know we have seen as well that those are moving around and it's it's based on the flows into the buckets of staging and when you see.

You've seen one or two buckets, where there are our declines what that's telling you is that that loans with have moved into a bucket with a very low sort of sort of loss given default are very high collateralization or other protections in the bucket.

And so is consistent with all the other kind of information we've given you and we discussed in the real risk deep dive. So the characteristics. If you like of the migration will have an impact on the coverage ratios.

The next question. If you can have a sign of JP Morgan. Please go ahead, yes. Thank you very much for taking my question.

Got to question.

First one is coming back to revenues clearly you roughly 2.4 billion higher then what consensus is expecting on your target.

In Twentytwenty too and you talked about repricing question, but I just wanted to maybe get a bit more of a top down picture. How we should think about two revenue movement in the different division can you believe for example, the investment.

The bank can continue at that level of revenues that that illustrating over the last four quarters as a run rate to get an additional 2% from the other divisions or is it more coming from the IB or is it the IB declining and and are there certain things that you're doing to offset that I'm, just trying to get a little bit.

More of an understanding over two two and a half a billion almost a shortfall the gains consensus.

And then the close second question, it's a bit more tricky I have to admit but.

If I look at M&A and consolidation and I look at in market M&A in Germany, and I see a player that you have tried to merge with before.

Well it doesn't have a management some shareholders, which seem to be based on press unhappy about the situation and the transaction that you can actually do.

In terms of numbers or why is now a good point or timing to revisit that.

So it's James I'll jump in briefly on revenues Christian May want to add and then he'll speak to the to the second question look we wanted to indicate with the LTM number. The 23.7, you know that the bridge to you know 24, and a half two and a half years from now is not as wide as I think.

The perception.

Externally.

I completely agree is I think Christian said in his comments you know one can't expects you know the outperformance that we saw in the first half admittedly, though if we do achieve better performance in the investment bank in the second half you'd actually see that LTM number increase a little bit and and and.

Further narrow the gap to the 24 and a half.

Where that number will be into in 2022 of course is highly uncertain.

But if as we believe we're seeing the signs of franchise improvement and hopefully overtime you know some market share recovery I don't think we would we would believe that everything with relative to our earlier assumptions would be retraced.

In PB NCB, obviously, the environment has been has been more difficult than we might have thought 12 or 14 months ago that said each of those businesses are making tremendous progress executing against their strategies as we described.

And so while the path is perhaps a little steeper the mix on a group level, perhaps a little different we I think we've illustrated that we from what we can see now it's it's an achievable gap and finally asset management I think Tom in an earlier question.

Looked at the at their revenue a year on your revenue picture. There you know last year had and.

Sort of periodic.

Performance fee in it the underlying performance and frankly drivers across all three of those businesses loans deposits a U M.

Investment assets in there in the private bank have all been moving into right direction. So we do see underlying.

Driver for growth that can support the revenues in those businesses.

Okay, and and to just potentially on the investment bank revenues again.

Even if I repeat myself, but don't underestimate the underlying growth switches now bigger what we have seen over the last 12 months and take cobot out of the real day to day business in the FICC business, but also in the on a business because the halo impact from exiting the equity saying is far less than.

We have anticipated last year and that Cynthia brings us to a different level or different foundation to plan off so I really do think that a good part of the revenue outperformance in the investment bank is something very sustainable.

On comments Bank you know my comment and that is Oh, we have all hands full with our restructuring and with our transformation, we completely belief in our Standalone plan and whatever we are looking for and looking at must always be value enhancing must be.

We are incremental value, adding to our centered on plan and as we are even outperforming our own plan for the time being that is quite a high hurdle. So nothing to say more on that one.

Thank you very much.

The next question, it's an I don't have a lack of media Banca. Please go ahead.

Yeah, good offering had one on the loan book and then a follow up on regulatory headwind next year.

On the loan book it looks like a London IB corporate bank hurt down beyond just about all the pay downs on interest and I want bodies and what the outlook is very clearly said you've got balance sheets, playing with going forwards, but also the revenue impact would look like corporate bank on the law.

<unk> revenues are down year over year.

Spiked deposit repricing you can go live old was paid down late in the quarter I'm just thinking about the run rate revenue like into Q3 on how you feel about but in terms of corporate bank revenue sustainability. It feels like the pressures there actually slightly higher when you start Justin meat items.

And then on capital on regulation, you flags, but it might be net neutral in the back end to begin with.

Well I keep coming sleep incented shred it needs to be a quite clearly said that's going to start again could you size back in terms of what you're expecting for T.H. out at the 30 billion new title.

2020 to 2021, and how much that you're expecting to spill over into next year in terms of regulatory ought to be re pressures. Thank you.

Sure. Thanks, Adam and so look the loan book is something that where we're watching as well I think it's a very good observation you know.

There was paying down beyond the the revolver draws.

I think as an example trade you know was you know had come off.

Over the course of the quarter.

And of course in the IB book, You know there has been a slowdown in new originations and of course, there Paydowns and there's also some distribution my hope and expectation is that June thirtyth is sort of a low point and hence the you know the the statements you've heard from us about room on the balance.

She from a capital perspective.

And there may have been feature is just in the in the the point in time, frankly that that resulted in lower loan ball balances on the optimistic side of the coin at just as you point out you know, we think that that a resumption of loan growth lending you know at at attractive spreads can be.

Growth driver so the utilization of the balance sheet that we can afford to can help us on the revenue side going forward.

But but as we've said you know they the the general sort of de leveraging if you like of corporate balance sheets has been gone well well beyond our expectations.

In terms of the Reg inflation stuff trim was something that we did expect this year, but did not come in and of the 15 of inflation that moved into next year that you're referring to and I think you asked about on the on the risk deep dive call that would be about six of that.

Again, very uncertain, because we don't know the final answer until we receive it but if there was an estimate that would be it and that is not in the outlook that I provided of neutral. So when I said that there as a potential downside, it's it's basically that in our.

In our modeling.

Okay. So the fact, the say though.

Some of the other benefits in the quarter, but the a and quarter capital ratio as but actually benefited more than the the revenues would suggest.

I you know, it's hard to say the net of of the of the inflows and outflows. We don't think it was a a major sort of.

Downward pressure in other words, but you know the book rolls over slowly enough that that on the asset side I don't think that de leveraging you know how to significant impact on revenue in CB in the quarter hands to your point I think the importance of of continuing to work with clients and seeing frankly the.

The demand for loans start to recover and in particular trade recover and in fact, if I. If I go all the way back to the question earlier about what might be the difference between what the E. C. D is seeing as they think about addressing the stress environment versus what we're seeing is.

It is in fact loan demand, we don't feel like capital has been a constraint.

To to supporting clients, it's been more in the second quarter, it's been more on the demand side and if anything there for the demand has been below what our expectations might have been and there could be a catch up in in Q in the second half, which would be supportive of revenues.

Great. Thank you Hey.

Haley everyone else on the call I think with bumping up against the time.

So apologies for the tend to view left in the question Q the Investor Relations team.

We'll reach out to you and trying to answer your questions.

Thank you very much Oh speech you soon.

Yeah.

Ladies and gentlemen, the conference has now concluded and you may disconnect. Your television. Thank you could go you didn't have a pleasant day goodbye.

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Thank you all for joining us today.

As usual not cool, let's see a Christian saving will speak first followed by our Chief Financial Officer Janesville Mall.

The presentation as always is available for download in the Investor Relations section of our website TV Dot com.

But before we get started let me just remind you that the presentation contains forward looking statements, which may not develop as we currently anticipate.

Therefore, we ask you to take notice of the precautionary warning at the end of raw materials with that let me hand over to Christian.

Yes.

Thank you James send will come from me.

Looking back on the first year of our transformation, we are on track with or even ahead of the objectives that we set ourselves.

Our new strategy is paying off client feedback and momentum as well as internal employee feedback demonstrates that we have found our Pos and execution is well underway.

The results we present today underpins our confidence that we would reach our 2022 targets.

Last quarter, we told you that we were determined not to let the cobot 19 pandemic in pick the execution of our transformation.

And at this stage I'm happy to say that is the case.

We were profitable in the second quarter and the first half of the year.

Gross in call Bank earnings more than offset the wind down off the capital release unit.

Elevated provisions for credit losses from the pandemic and transformation impacts.

The results in the second quarter and for the first half year are ahead of our internal plans.

This speaks to our strategy.

And our relentless execution.

We told you last year that we would execute quickly.

And we have done so.

It was over three quarters of our we expect to transformation costs already behind us.

Capital and liquidity will also stronger than our internal plans at the end of second quarter.

This validates our view that we can finance our transformation with existing capital resources.

It also positions us well to continue supporting our clients through conditions, which remain challenging.

We also shaped our technology and sustainability strategies in the second quarter.

Next to the announcement of the Google Cloud partnership.

We set ambitious sustainable refinements targets of at least 200 billion euros by 2025 and issued our first green bond.

You will hear more from us on our sustainability strategy in the coming quarters.

Now, let's go through these themes in more details starting with the progress against our strategic transformation agenda on slide two.

In July last year, we laid out our vision for the transformation of Deutsche Bank.

Our aim was to reposition the bank.

Around what it has stood for over 150 years.

Leading German bank with strong European roots and global network.

Our transformation was built around five key decisions.

First.

To exit businesses.

We did not have a market leading position by setting up a dedicated capital release unit.

We have exited equities trading we are in the process of transferring our prime finance operations.

And reduced assets in the capital release unit by over 100 billion euros since 2080.

We also recites our rates business in the investment bank.

Second.

To create fall called businesses with market, leading positions that are aligned to the needs of our Cline.

Together these businesses make up our call bank.

We made further progress on reshaping our call businesses this quarter.

Consistent with the plants, we laid out at the Investor deep dive in December 2019.

So it to reduce costs and here, we have made significant progress.

Based on the annual run rate in the second quarter, we have reduced adjusted cost by 3 billion euros since 2018.

In other words.

We have achieved 50% of our cost reduction plans, just 18 months into our full year program.

We remain firmly on track to reach the 19.5 billion Euro adjusted cost target for this year on the weight to 17 billion euros in 2022.

Force to continue to invest in technology and control despite the reductions in the overall cost base.

Our commitment to spent 13 billion euros on technology between 2018, and 2022 remains unchanged.

Our technology strategy includes the recently announced intended strategic partnership with Google.

This partnership aims to redefine.

Oh, we develop and offer financial services and radically improved infrastructure deficiency.

We also continue to invest in our controlled environment and improve our relationships with regulators.

We believe that our investments have been recognized into positive outcomes of recent regulatory stressed at.

Such a seca NDC be liquidity stress test.

Finally, we committed to deliver our transformation within existing capital resources and prepare the ground for future distributions to shareholders.

Since 2018, we have reduced risk weighted assets in the capital release unit by 30 billion euros generating around 110 basis points of quantum on capital.

This capital generation has helped offset regulatory inflation and finance gross in the call Bank.

Execution on all five of these decisions is either in line with or in some cases, even ahead of our into in the plan.

This disciplined execution is beginning to become visible in our financial results as you can see on slide three.

Our strategy is focused on improving sustainable profitability.

That means generating positive operating leverage through a reduction of costs and growth in revenues.

Operating leverage has been positive for three quarters in ROE for both group and call bank driving significant improvements in call bank profitability.

Over the last 12 months call Bank adjusted profit before tax has grown by 18% to 3.1 billion euros.

We are benefiting from discipline that we've instilled in managing our costs.

We have reduced adjusted cost excluding transformation Chargers and bank levies year on year for the 10th consecutive quarter.

Call Bank profitability has enabled us to absorb the cost of de risking the Cu.

The reduction of risk weighted assets is running as we anticipated.

As we make further progress with the wind down of the C are you the underlying performance of the call Bank.

Will become more visible in our group results.

And you can see that on slide four.

Over the last 12 months, we've been able to largely offset the loss of revenues from the exit of equities trading and the de risking costs was gross and the call bank.

Call Bank revenues of 23.7 billion euros over this period compared to the plan that we showed you at the Investor Deep dive of 24.5 billion euros of revenues in Twentytwenty too as part of our 8% return on tangible equity targets.

This implies the revenue growth of 3% in total or an annual growth rate of around 2% from current levels.

This growth is achievable when compared to the 5% growth that we have reported in the call bank in the last 12 months.

And yes, there are pressures, but also opportunities in the revenue environment.

With that line momentum that we have created and the changes we've made to our businesses. We are confident of achieving these revenue plants, what 2022, even when current market dynamics normalize.

Let me turn to the next slide to give you some detail why I remain confident on our revenue plans for 2022.

The corporate bank operates in an attractive return markets despite headwinds from both scope with 19 and the interest rate environment.

We have demonstrated that we can largely offset these headwinds with repricing and volume gross.

At the end of the second quarter.

We have charging agreements in place for approximately 50 billion euros of deposits.

That is already ahead of our full year ago and is on track to contribute over 100 million of revenues on an annual basis.

We have grown corporate cash transactions by 9% and loans by 1%.

We have maintained good momentum in volume and fee gross was our platform clients Fintech and E commerce slots.

Corporate bank has been essential to supporting corporates, including in Germany.

Combining all of the German government programs.

We have feed the most active bank in the space.

We have already committed loans of 2.6 billion euros and have climbed requests worth more than 5 billion euros and the pipeline.

We also range syndicated KBW sponsored loans off a total volume of more than 8.5 billion euros.

In the investment bank, our strategy is to focus on all cost strengths.

The actions that we have taken are paying off.

And faster than we expected.

Helped by stronger market conditions.

Overall.

Revenues in fixed income and currencies grew by 39% year on year.

Our FIC trading business, excluding financing and specific items was up by more than 75% versus Q2 2019.

We achieved this performance.

Was broadly stable levels of out of anyway.

Excluding regulatory inflation.

This demonstrates efficient resource utilization and it's enabled by a combination of prudent risk management and higher quality Klein flow.

Why the external market conditions positively impacted revenues.

We are confident that the implementation of strategic initiatives across the fixed platform had a material effect.

And should allow us to deliver sustainable gross.

Refocusing the investment bank and exiting certain business has resulted in a much smaller negative halo effect than we had anticipated last year.

Revenues in origination and advisory increased 73% the largest year on year gross relative to peers, who if reported to date.

Driven by greater client engagement to the highest levels, we have seen in recent years.

We continue to regain market share compared to the second half of last year in call German and European markets.

In the private bank, we are focused on offsetting the pressure from negative interest rates was volume gross.

Unsurprisingly, new consumer loans and investment products.

Client during the locked down.

But with the reopening towards the end of the second quarter, we're now seeing a rebound in volumes in some areas even tracking above last year.

And in the second quarter, the private bank kept at 5 billion euros of net inflows in investment products and 3 billion euros of net you to nine loans.

In asset management.

We are building on the momentum that Vws has generated.

Inflows were 9 billion euros in the quarter.

Assets under management up by 45 billion in the quarter and 25 24 billion over the last 12 months.

Asset management also implemented further decisive cost measures in direct response to the cobot 19 environment.

As we focus on improving profitability, we continue to manage our balance sheet conservatively.

As we announced last week, we ended the quarter.

This is TG one ratio of 13.3% as shown on slide six.

This reflects lower loan balances driven by higher than expected repayments of credit facilities, but lines initially drawn in reaction to cope with 19.

In top these facilities have been refinanced through debt capital markets instruments.

Liquidity reserve of 232 billion euros, roughly 25% of our net balance sheet.

Comfortably above for regulatory requirements.

The solid capital and liquidity position.

Gives us scope to continue to deploy resources to support clients in these challenging conditions.

And our funding position is really being stronger than today.

We fund our balance sheet through stable sauces, predominantly low cost deposits.

We also remain focused on maintaining strong credit quality.

Provisions for credit losses of 761 million euros in the quarter are consistent with our previous guidance and our full year outlook.

This reflects our conservative underwriting standards and the low risk nature of our loan book.

As we have communicated before.

Our exposure to credit cards, and other unsecured consumer lending is low relative to our international peers.

Against this background weakened from our guidance for full year provision for credit losses of 35 to 45 basis points overloads.

Now, let's turn to the broader macro economic outlook on slide seven.

We continue to expect a robust recovery in some of the major economies starting in the second half of this year.

Although it will take longer to return to the pre cobot GDP levels.

The recently agreed EU stimulus package should further support the economic recovery in Europe, including a hallmark of Germany, which accounts for around half of our loads.

We are happy to have a leadership position in Europe strong this economy, which is proving its resilience.

70 came into the crisis with low levels of debt.

Fiscal conservatism has allowed the government to take aggressive and decisive action in response.

Germany benefits from a combination often effective social security system.

One of the largest loan and guarantee programs and 130 billion euros and stimulus packages.

Economists, therefore expect Germany to suffer less and to recover quicker than many other countries.

Summaries and indicators, including strong retail sales in a more optimistic business sentiment even indicate the German economy may outperformed current focus.

This economic stability comes together with low levels of household and corporate debt.

Historically stable housing market as well as good levels of corporate liquidity relative to other leading economies.

Therefore.

German companies and consumers I in a better position to whether the current environment.

All of this contributes to resilience of our German loan book and to our expectations for lower provisions for credit losses in the second half of the.

Of course, uncertainties will persist for the time be.

We must not be complacent and have to continue to execute on our transformation agenda.

Slide eight shows you why I'm confident that we will continue to deliver.

The first half of the year, we've achieved all cost savings as plant.

We will also able to absorb and unexpected burden of more than 100 million euros of bank letters.

The progress of our transformation is also demonstrated by delivering on over 70 key milestones during the last quarter.

All of which closely monitored by the transformation office, which we created in the fourth quarter of last year.

The transformation office, not only ensure a successful execution and delivery on our objectives.

I'd also facilitates a regular dialogue across the bank.

The aim is to get even better and more efficient in the execution of our transformation initiatives.

Across the bank, we currently have more than 60, such initiatives and FID.

We made tangible progress with our transformation initiatives in the second quarter.

We completed the German legal entity merger and announced the creation of our international private bank.

Integrating wealth management and PCB International.

These measures are important steps in reaching our revenue events and cost reduction targets.

In the corporate bank in Germany, we have completed the merger of Deutsche Bank and Postbank commercial businesses.

This allows us to reduce complexity simplify processes and ultimately better so if our clients.

And asset management Dws has simplified its management structure to make the organization more client centric.

And cost effective.

We've also made significant progress and transforming our infrastructure.

The launch of a new I T platform, we need to the and our plan partnership with Google.

And why we are proud of these achievements.

It is even more important that we are confident about our ability to continue delivering at this space.

And I can tell you we are.

At the Investor Deep dives in December I discussed, how we were seeing increased staff Mara.

And our recent people survey supports the strength.

We see the best ratings ever for employee enablement, and the highest commitment rating since 2012.

With these results were in line with or above industry benchmarks for the first time in years.

And this is the most solid foundation to continue delivering our transformation roadmap.

12 months ago, we launched fundamental changes to our bank.

Since then we have delivered on all dimensions of our strategic agenda.

We not only kept the pace despite the unprecedented challenges of cobot 19.

We also outperformed our own plan.

This management team is absolutely committed to maintaining this cadence.

Why did we are fully focused on our plan. The pandemic, we produce fundamental changes in the way, we work and intact with slides.

And we must take advantage of those.

We remain convinced that we can achieve our 2022 financial targets.

We are on track to execute against all our major strategic initiatives.

We have a strong capital position and have proven our cost discipline.

We are making considerable progress on the revenue side.

We see positive momentum in all our businesses, which we can build on.

With our capital strength, we have the potential to support clients in all business areas.

Oh accelerated digital transition further supports our 2022 financial targets.

Sustainability is also have ever growing importance for us in our clients and this is being factored into our strategic planning.

In short.

We have managed through this crisis well to date.

We're on track with our transformation.

Our increased focus on our strengths is paying off.

We feel support from our clients I want to staff and other stakeholders.

We are determined to build on this momentum.

With that let me hand over to change.

Thank you Christian let.

Let me start with a summary of our financial performance in the second quarter on slide 10.

Revenues increased by 1% as growth in the core bank offset the exit from equities trading.

Noninterest expenses of 5.4 billion euros included an additional 116 million euros of bank levies compared to the second quarter of last year as well as 445 million euros of restructuring and severance litigation and transformation charges.

Non interest expenses in the prior year period included 1 billion euros of goodwill impairments and 350 million euros of transformation charges.

Provision for credit losses, with 761 million euros or the equivalent of 69 basis points of loans on an annualized basis.

We generated a pretax profit of 158 million euros or 419 million euros on adjusted basis, excluding items detailed on slide 36 of the appendix.

On this basis, the core bank generated a post tax return on tangible equity a 4.3% in the second quarter and 5.1% in a half year.

Tangible book value per share of 23 euros 31 cents was slightly above the first quarter.

Slide 11 updates a chart. We showed you last quarter with the most material impacts of the could 19 pandemic.

Results in the second quarter saw a more rapid normalization of some of these impacts than we originally expected.

In particular capital and liquidity reserves.

Incremental provision for loan losses related to cope with 19 were approximately 410 million euros, which I will discuss shortly.

There was a positive impact of approximately 12 basis points on RCT, one ratio from covert 19 this quarter.

Increases in market risk ought to be way, reflecting higher market volatility and higher credit risk ought to be way from ratings migrations were more than offset by several impacts.

These included the repayment of credit facilities, lower derivative exposures and the reversal of most of the increase in prudent valuation adjustments recorded in the first quarter.

The repayment of credit facilities increased liquidity reserves by 12 billion euros, and finally level three assets of 25 billion euros decreased by 2 billion in the quarter.

The decline reflected the partial reversal of the first quarter migration of assets into level, three which had resulted from the greater dispersion in market pricing at the end of the first quarter.

As well as reduced balance sheet carrying values.

Looking forward the path of the pandemic remains uncertain, but we see the developments in the quarter as positive.

Slide 12 shows how we have continued to support clients through the cobot, 19th and pandemic.

It also <unk> highlights the number of different government and voluntary schemes in operation.

Consistent with local regulations as well as industry wide programs, we've offered moratoria too a little over 100000 customers with a gross loan balance of 9 billion euros.

These moratoria have principally being in the private bank in Germany, and Italy, and the associated balances are manageable in comparison to the to the 232 billion Euro private bank loan portfolio.

To date. These moratoria have generated losses of approximately 7 million euros based on accounting adjustments to carrying values.

Outside of the government in industry wide programs. We've agreed various voluntary forbearance measures on approximately 7 billion of euro of loans with no material revenue impact.

The forbearance measures on these loans do not trigger stage, two or stage three migration as the borrowers are in good standing in the regulatory definition of default has not been men.

We've also provided loans subject to public guarantees schemes to approximately 5000 clients, mostly in the corporate bank with a total drawn loan volume of 1.4 billion euros and a further 1.2 billion euros undrawn commitments, both mainly with the Caf W.

In addition, we've requested in the pipeline worth over 5 billion euros.

Turning to provision for credit losses on slide 13.

Provisions were 761 million euros in the quarter.

As I, just mentioned a little over half or 410 million euros of the provisions relate to cope with 19 impacts.

Approximately half of the Cobot 19 provisions are against stage, one and stage two credits with the remainder against stage three loans.

Stage, one and two provisions reflect the Mac the weaker macroeconomic outlook relative to March 31st.

Management overlay to account for uncertainties in the outlook as well as downgrades decline credit ratings.

Consistent with our guidance stage three provisions increased in the quarter and were mostly in the investment bank.

Including the provisions taken in the second quarter. We ended the period with 4.9 billion euros of allowance for loan losses equivalent to 112 basis points of loans.

Slide 14 updates to slide that Stuart Louis presented at the risk deep dive in June.

It also makes adjustments in certain rating buckets to reflect changes in the probability of default for guarantees.

As we described at the time, we deploy risk mitigant more actively in the lower rated parts of the portfolio.

These mitigants include collateral guarantees hedges and other structural risk managers, which act to reduce loss given default.

In single B and below 75% of gross performing exposure is covered by risk mitigation, including asset collateral and hedges.

The regulatory expected loss across the non defaulted loan portfolio was broadly flat in the quarter at 1.3 billion euros.

This compares to the 1.5 billion euros of allowances that we currently have in place against these exposures.

This modeled analysis is further validated by the bottoms up review of our portfolios.

Loan exposure to the industry's most impacted by the initial impacts of Cobot 19 remained broadly stable during the quarter with modest reductions in retail and leisure portfolios through client pay downs.

The outlook for commercial real estate in aviation remains challenging given the economic backdrop and pronounced slowdown in travel.

That said our outlook remains unchanged given the collateral underpinning these portfolios.

We've made substantial progress on our underwriting pipeline, particularly in leverage debt capital markets.

Strong market demand has allowed us to reduce our LDC M underwriting portfolio by around 65% in the quarter.

While the current environment is unprecedented our historical performance has consistently demonstrated a low loss rate and conservative reserving assumptions.

As a result, we feel well provisions against potential losses.

Turning to capital on Slide 15.

Our C.T. one ratio was 13.3% at quarter end 283 basis points above our regulatory requirement of 10.4%.

C E T. One ratio increased by 42 basis points in the corner.

This includes approximately 12 basis points from Cobot 19 effects I discussed earlier.

Approximately 11 basis points of the ratio increase came from regulatory changes associated with the CR, our two quick fix.

These changes included the application of the revised SMB support factor as well as the first time application of the IRS nine transitional approach.

Excluding covered 19 and see our two quick fix impacts we saw approximately 13 basis points of improvement from continued de risking in the capital release unit.

The core bank generated seven basis points, principally reflecting lower risk weighted assets in the investment bank and corporate bank.

Our leverage ratio was 4.2% at the end of the quarter, an increase of 20 basis points.

Approximately 16 basis points of the improvement came from the change to a net treatment of pending settlement payables and receivables.

This changed follows the implementation of the CR, our two quick fix it wasn't acceleration of a previously agreed rule change that would ordinarily have taken effect only from June 2020.