Q1 2023 Deutsche Bank AG Earnings Call

April 27, 2023

Speaker 1: The.

Speaker 1: Vol.

Operator: Ladies and gentlemen, thank you for standing by. I'm Natalie, your Chorus Call operator. Welcome, and thank you for joining the Deutsche Bank Q1 2023 analyst conference call. Throughout today's recorded presentation, all participants will be in a listen-only mode. The presentation will be followed by a question-and-answer session. If you would like to ask a question, you may press star followed by one on your touchtone telephone. Please press the star key followed by zero for operator assistance. I would now like to turn the conference over to Silke Scheiba, deputy head of investor relations. Please go ahead.

Speaker 2: Ladies and gentlemen, thank you for standing by. I'm Natalie, your Chorus Call operator.

Speaker 2: Welcome and thank you for joining the Deutsche Bank Q1 2023 analyst conference call.

Speaker 2: Throughout today's recorded presentation, all participants will be in a listen-only mode. The presentation will be followed by a question and answer session. If you would like to ask a question, you may press star followed by 1 on your touch-tone telephone. Please press the star key followed by 0 for operator assistance. I would now like to turn the conference over to Silke Schuyper.

Silke Schubert: Thank you for joining us for our Q1 2023 results call. As usual, our Chief Executive Officer, Christian Sewing, will speak first, followed by our Chief Financial Officer, James von Moltke. The presentation, as always, is available to download in the investor relations section of our website, db.com. Before we get started, let me just remind you that the presentation contains forward-looking statements which may not develop as we currently expect. We therefore ask you to take notice of the precautionary warning at the end of our material. With that, let me hand over to Christian.

Silke Nicole Szypa: Thank you for joining us for our Q1 2023 results call. As usual, our Chief Executive Officer, Christian Sewing, will speak first, followed by our Chief Financial Officer, James von Moltke. The presentation, as always, is available to download in the investor relations section of our website, db.com. Before we get started, let me just remind you that the presentation contains forward-looking statements which may not develop as we currently expect. We therefore ask you to take notice of the precautionary warning at the end of our material. With that, let me hand over to Christian.

Speaker 2: for closing comment sorry as deputy head of investor relations please go ahead

Speaker 2: Thank you for joining us for our first quarter 2023 results call. As usual, our Chief Executive Officer Christian Stiehling will speak first, followed by our Chief Financial Officer James von Moltke. The presentation, as always, is available to download in the investor relations section of our website db.com.

Speaker 2: Before we get started, let me just remind you that the presentation contains forward-looking statements which may not develop as we currently expect. We therefore ask you to take notice of the precautionary warning at the end of our material. With that, let me hand over to Christian.

Christian Sewing: Thank you, Silke, and welcome from me too. It's a pleasure to discuss our Q1 2023 results with you today, and we are pleased with the progress we continue to make towards our 2025 goals. Q1 was marked by turbulent conditions in the banking sector, particularly March, in addition to the macroeconomic challenges. However, our transformation has provided us with strong foundations, which enabled us to navigate these challenges successfully. We delivered on four critical dimensions. First, profitability. Pre-tax profits increased by 12% to EUR 1.9 billion and post-tax profit by 8% to EUR 1.3 billion, which on both counts represents our strongest Q1 since 2013. Our cost-income ratio was 71% this quarter, 2 percentage points better than the prior year, driven by positive operating leverage.

Speaker 3: Thank you, Zürke, and welcome from E2. It's a pleasure to discuss our first quarter 2023 results with you today. And we are pleased with the progress we continue to make towards our 2025 goals.

Speaker 3: The first quarter was marked by turbulent conditions in the banking sector, particularly in March, in addition to the macroeconomic challenges.

Speaker 3: However, our transformation has provided us with strong foundations, which enabled us to navigate these challenges successfully.

Speaker 3: We delivered on four critical dimensions.

Speaker 3: First, profitability.

Speaker 3: Pre-tax profits increased by 12% to 1.9 billion euros and post-tax profit by 8% to 1.3 billion euros which on both towns represents our strongest first quarter since 2013.

Speaker 3: Our cost income ratio was 71% this quarter, two percentage points better than the prior year driven by positive operating leverage.

Christian Sewing: We also generated a 8.3% post-tax return on tangible equity this period. As you know, annual bank levies are recognized in the first quarter. Spreading these bank levies equally across the four quarters of the year, our first quarter cost income ratio would be 67% with a post-tax return on tangible equity of 10%, putting us well on track to our 2025 targets. Second, we proved the strengths of our franchise. Our business model is focused on four client-centric businesses which complement each other and provide a well-diversified earnings mix, as this quarter shows. We delivered revenues of EUR 7.7 billion, up 5% over the prior year quarter. Third, we again proved our resilience.

Speaker 3: We also generated an 8.3% post-tax return on tangible equity in this period.

Speaker 3: As you know, annual bank levies are recognized in the first quarter.

Speaker 3: Spreading these bank levies equally across the four quarters of the year

Speaker 3: Our first quarter cost income ratio would be 67% with the post-tax return on tangible equity of 10%, putting us well on track to our 2025 targets.

Speaker 3: Second, we proved the strengths of our franchise. Our business model is focused on four client-centric businesses which complement each other and provide a well-diversified earnings mix as this quarter shows.

Speaker 3: We delivered revenues of 7.7 billion euros, up 5% over the prior year quarter.

Christian Sewing: Our common equity tier one ratio was 13.6%, up from 13.4% in the previous quarter and 12.8% in Q1 of last year. Our liquidity reserves were EUR 241 billion and our liquidity coverage ratio rose to 143%. Finally, sustainability is an important part of our strategy. As you heard at our sustainability deep dive in March, we have updated our business strategies and policies and expanded on our commitments in several ways to fight climate change, namely our thermal coal policy and our ambition is to encourage our corporate clients to commit to net zero. This quarter, we made further progress towards our target of EUR 500 billion of sustainable financing and investments excluding DWS by end 2025.

Speaker 3: Third, we again proved our resilience.

Speaker 3: Our common equity tier 1 ratio was 13.6% up from 13.4% in the previous quarter and 12.8% in the first quarter of last year.

Speaker 3: Our liquidity reserves were 241 billion euros and our liquidity coverage ratio rose to 143%.

Speaker 3: Finally, sustainability is an important part of our strategy.

Speaker 3: As you heard at our sustainability deep dive in March, we have updated our business strategies and policies and expanded on our commitments in several ways to fight climate change.

Speaker 3: to deep dive in March, we have updated our business strategies and policies and expanded on our commitments in several ways to fight climate change namely

Speaker 3: Our thermal coal policy and our ambition is to encourage our corporate clients to commit to net zero.

Speaker 3: This quarter, we made further progress towards our target of 500 billion euros of sustainable financing and investments, excluding DWS.

Christian Sewing: Our cumulative volume since 20 January 2020 has grown to EUR 238 billion. Let me now turn to slide 2 to discuss the strong performance across our divisions this quarter. We saw good momentum across all business and delivered on the strategic steps which support our 2025 targets and strengthen our global house bank model. The Corporate Bank showed financial strength with record revenues and good client activity across our main businesses. I am pleased that we are winning mandates with top clients to support working capital and their global value chain. In the Investment Bank, we added talent to support growth and we are expanding our core franchise. We increased our global market share by more than 40 basis points compared to the previous quarters in Origination and Advisory and achieved year-on-year revenue growth in rates for the fifth consecutive quarter.

Speaker 3: by end 2025. Our cumulative volume since January 2020 has grown.

Speaker 3: to 238 billion euros.

Speaker 3: Let me now turn to slide 2 to discuss the strong performance across our divisions this quarter.

Speaker 3: We saw good momentum across all businesses and delivered on the strategic steps which support our 2025 targets and strengthen our global house bank model.

Speaker 3: The corporate bank showed financial strength with record revenues and good client activity across our main businesses.

Speaker 3: I'm pleased.

Speaker 3: that we are winning mandates with top clients to support working capital and their global value chain.

Speaker 3: In the Investment Bank we added talent to support growth and we are expanding our core franchise.

Speaker 3: We increased our global market share by more than 40 basis points compared to the previous quarters in origination and advisory and achieved year-on-year revenue growth in rates for the 5th consecutive quarter.

Christian Sewing: This reflects our ongoing investments, especially in capital light business areas. The private bank produced its best ever operating revenues, grew assets under management, and captured net inflows. We also successfully completed the next wave of the Postbank IT migration at the beginning of April, transferring over 6.5 million contracts from 5 million Postbank clients. This will unlock EUR 300 million of cost efficiencies, as we previously communicated. Asset Management saw inflows of EUR 6 billion and EUR 9 billion excluding cash, despite turbulent markets. Stefan Holtz is progressing with the strategy by investing into transformation to create a standalone platform while expanding the product offering. Xtrackers launched the largest ETF of all time in the US of approximately $2 billion. This is also the single largest climate investing ETF launch. Turning now to the pre-provision profit on slide three.

Speaker 3: This reflects

Speaker 3: our ongoing investments, especially in capital light business areas.

Speaker 3: The private bank produced its best-ever operating revenues, grew assets under management and captured net inflows.

Speaker 3: We also successfully completed the next wave of the postbank IT migration at the beginning of April

Speaker 3: transferring over 6.5 million contracts from 5 million post-bank lives.

Speaker 3: This will unlock the 300 million euros of cost efficiencies as we previously communicated.

Speaker 3: Asset management saw inflows of 6 billion euros and 9 billion euros excluding cash, despite turbulent markets.

Speaker 3: Stefan Hobs is progressing with his strategy by investing into transformation to create a standalone platform while expanding the product offering. X-Rackers launched the largest ETF of all time in the US of approximately 2 billion US dollars.

Speaker 3: This is also the single largest climate investing ETF launch.

Christian Sewing: Pre-provision profit for the group was EUR 2.2 billion in Q1, up 14% compared to the prior year period. We again achieved positive operating leverage as we grew our revenues and controlled expenses. This quarter underlined how complementary our businesses are and how our strategic transformation has helped us to rebalance our income streams. I'm particularly pleased with the performance at the Corporate Bank and Private Bank, which benefited from the normalized rate environment. The contribution from the Corporate Bank and the Private Bank to pre-provision profit increased to almost 60% from 33% compared to Q1 of last year. The Investment Bank also produces solid underlying contribution against an exceptionally strong prior year quarter. The rebalancing towards our stable revenue businesses is especially visible when looking at their contribution to the total group's pre-provision profit on a last twelve months basis.

Speaker 3: Turning now to the pre-provision profit on slide three.

Speaker 3: Pre-provision profit for the group was 2.2 billion euros in the first quarter, up 14% compared to the prior year period.

Speaker 3: We again achieved positive operating leverage as we grew our revenues and controlled expenses.

Speaker 3: This quarter underlined how complementary our businesses are and how our strategic transformation has helped us to rebalance our income streams.

Speaker 3: I'm particularly pleased with the performance at the corporate bank and private bank, which benefited from the normalised rate environment. The contribution from the corporate bank and the private bank to pre-provision profit increased to almost 60% from 33% compared to the first quarter of last year.

Christian Sewing: The Corporate Bank and Private Bank alone have contributed 70% over this period. You will recall that our Corporate & Other results were negatively impacted by valuation timing in the prior year quarter. We anticipated that these would reverse over time, and we are benefiting from this effect this quarter. The momentum and balance we see across our four businesses gives us confidence we have the right business model and a strong platform to further improve returns. In addition to our growth focus, we maintained our discipline on cost as we continue to invest in technology and controls, and face inflationary pressures. In February, we said that we were working on additional efficiency measures, which we are now implementing and which are shown on slide 4. The changes we announced to the management board yesterday should support this agenda.

Speaker 3: at their contribution to the total group's pre-provision profit on a last 12-month basis.

Speaker 3: The corporate bank and private bank alone have contributed 70% over this period.

Speaker 3: You will recall that our corporate and other results were negatively impacted by variation timing in the prior year quarter.

Speaker 3: We anticipated that these would reverse over time and we are benefitting from this effect this quarter.

Speaker 3: The momentum and balance we see across our four businesses gives us confidence we have the right business model and a strong platform to further improve returns.

Speaker 3: In addition to our gross focus, we maintained our discipline on cost as we continue to invest in technology and controls and face inflationary pressures. In February , we said that we were working on additional efficiency measures, which we are now implementing and which are shown on slide 4.

Christian Sewing: The creation of a group chief operating officer will help us to deliver our strategic transformation agenda and drive inefficiencies out of the bank. We also focus on rightsizing our non-client facing functions. During Q2, we will begin to reduce our senior non-client facing workforce by 5% and will limit new hiring without compromising our controls. We continue to align our German private bank to the current trends and market environment, including actions to streamline our mortgage platform. In addition, we are working on a series of productivity measures, including sophisticated capacity planning in several areas, including anti-financial crime. Our target is to increase returns over time, and we continue to look for more opportunities to deliver on this. I will speak about this later. Let me now turn to our balance sheet strengths and resilient funding profile on slide five.

Speaker 3: The changes we announced to the Management Board yesterday should support this agenda. The creation of a Group Chief Operating Officer will help us to deliver our strategic transformation agenda and drive inefficiencies out of the bank.

Speaker 3: We also focus on right sizing our non-client facing functions.

Speaker 3: During the second quarter, we will begin to reduce our senior non-client facing workforce by 5% and will limit new hiring without compromising our controls.

Speaker 3: We continue to align our German private bank to the current trends and market environment, including actions to streamline our mortgage platform.

Speaker 3: In addition, we are working on a series of productivity measures, including sophisticated capacity planning in several areas, including...

Speaker 3: on a series of productivity measures including sophisticated capacity planning in several areas including anti-financial crime.

Speaker 3: Our target is to increase returns over time and we continue to look for more opportunities to deliver on this. I will speak about this later.

Christian Sewing: Once again, we benefited from disciplined risk management in our strong and stable balance sheet. Our loan book is well diversified across businesses and regions. Around 70% of the book is secured or hedged, and almost 80% of our loan portfolio is in stable and mostly lower risk businesses in the Private Bank and Corporate Bank. Nearly half of our book is based in Germany and 40% is equally distributed across EMEA and North America, with the remainder in APAC. Our deposit base funds about 60% of the net balance sheet and our loan to deposit ratio was 82% at quarter end. Over 80% of our deposits are from most stable client segments such as retail, corporates, small and medium-sized enterprises, or sovereigns, where we have long-standing and deep-rooted client relationships.

Speaker 3: Let me now turn to our balance sheet strength and resilient funding profile on slide 5.

Speaker 3: Once again, we benefited from disciplined risk management and our strong and stable balance sheet.

Speaker 3: Our loan book is well diversified across businesses and regions.

Speaker 3: Around 70% of the book is secured or hedged and almost 80% of our loan portfolio is in stable and mostly lower risk businesses in the private bank and corporate bank.

Speaker 3: Nearly half of our book is based in Germany and 40% is equally distributed across EMEA and North America with the remainder in APEC.

Speaker 3: Our deposit base funds about 60% of the net balance sheet and our loan to deposit ratio was 82% at quarter end.

Speaker 3: Over 80% of our deposits are from most stable client segments such as retail, corporates, small and medium-sized enterprises or sovereigns where we have long-standing and deep-rooted client relationships. 77% of our German retail deposits are from most stable clients.

Christian Sewing: 77% of our German retail deposits are insured via the statutory protection scheme. In the corporate bank, close to three-quarters of all deposits are sticky, operational, and term deposits supporting our clients' daily needs. James will say more on deposits later. Our CET1 ratio strengthened to 13.6%, 250 basis points above the MDA buffer and our highest level for two years. Our leverage ratio was 4.6%. As I said, our liquidity metrics remain sound. The LCR was 143% above our target of around 130% with a buffer of EUR 63 billion above regulatory required levels.

Speaker 3: more on deposits later.

Speaker 3: Our CET1 ratio strengthened to 13.6%, 250 basis points above the MDA buffer and our highest level for two years.

Speaker 3: Our leverage ratio was 4.6%.

Speaker 3: As I said, our liquidity metrics remained sound. The LCR was 143% above our target of around 130% with a buffer of 63 billion euros above regulatory required levels.

Christian Sewing: The net stable funding ratio was 120% at the high end of the group's target range of 115% to 120% and EUR 100 billion above required levels. To summarize, we have solid foundations to navigate through the recent turbulent environment. Importantly, I view the European banking sector as stable, thanks in part to the regulatory efforts of recent years. Moving to slide 6. The current environment underlines the importance of our global house bank model, which positions us well to serve clients in volatile markets. When we set out our strategy in March last year, we outlined the key themes which underpin these goals and ambitions, and these themes have become even more important in light of the geopolitical and macroeconomic upheaval since then.

Speaker 3: The net stable funding ratio was 120%. At the high end of the group's target range of 115-120%

Speaker 3: and 100 billion euros above required levels. To summarize

Speaker 3: We have solid foundations to navigate through the recent turbulent environment. And importantly, I view the European banking sector as stable, thanks in part to the regulatory efforts of recent years. Moving to slide 6. The current environment underlines the importance of our global house...

Christian Sewing: Our Q1 results demonstrate the progress we are making on the path toward our 2025 goals, benefiting from a strategy and business model which are well aligned to market trends. We will leverage the more favorable interest rate environment, deploy our risk management expertise to support clients, and allocate capital to high return growth opportunities. With sustainability being so important, we will deepen our dialogue with and support for clients, expand our product range and broaden our agenda for our own operations. We will also continue to benefit from the investments we are making in technology together with our strategic partners. The investments should accelerate our transition to a digital bank, and the benefits should be seen in our efficiency and controls. These technology investments are also designed to create value for our clients.

Speaker 3: in light of the geopolitical and macroeconomic upheaval since then.

Speaker 3: Our first quarter results demonstrate the progress we are making on the path toward our 2025 goals, benefiting from a strategy and business model which are well aligned to market trends.

Speaker 3: We will leverage the more favorable interest rate environment

Speaker 3: deploy our risk management expertise to support clients and allocate capital to high return growth opportunities.

Speaker 3: With sustainability being so important, we will deepen our dialogue with and support for clients, expand our product range and broaden our agenda for our own operations.

Speaker 3: We will also continue to benefit from the investments we are making in technology together with our strategic partners.

Speaker 3: The investments should accelerate our transition to a digital bank and the benefits should be seen in our efficiency and controls.

Christian Sewing: We believe we have the right strategy and the right focus on clients, which allow us to accelerate execution of our strategy, enhance our franchise and drive returns. We see these opportunities on 3 dimensions, which we detail on slide 7. We have committed to self-fund our investments and increase operating leverage through efficiencies, and we now see additional scope to do that. We already indicated that we aim to deliver incremental operational efficiencies greater than the EUR 2 billion identified at the 2022 investor deep dive. As discussed, we are in the process of identifying and executing on a further EUR 500 million of benefits, which we will work to extract. The incremental benefits will come from a strategic review of our entire workforce, further optimizing the distribution networks in the private bank.

These technology investments are also designed to create value for our clients.

We believe we have the right strategy and the right focus on clients which allow us to accelerate execution of our strategy, enhance our franchise and drive returns.

We see these opportunities on three dimensions which we detail on slide 7.

We have committed to self-fund our investments and increase operating leverage through efficiencies and we now see additional scope to do that.

We already indicated that we aim to deliver incremental operational efficiencies greater than the 2 billion euros identified at the 2022 investor deep dive.

As discussed, we are in the process of identifying and executing on a further 500 million euros of benefits which we will work to extract.

The incremental benefits will come from a strategic review of our entire workforce.

Christian Sewing: We also expect to see benefits in operations and process automation, and we are excited about the opportunities that should emerge from artificial intelligence and machine learning. Second, we are focusing on capital efficiency. Deploying capital to increase shareholder value has always been our priority, and we see opportunities to reallocate capital. We aim to free up EUR 15 to 20 billion of risk-weighted assets from reduction in certain subhurdle lending and mortgage portfolios, greater utilization of securitization and hedging optimization. These actions are expected to have a minimal impact on revenues, but will enable us to increase returns and reallocate resources to more capital accretive businesses. We believe that the combination of cost and capital efficiency, together with additional opportunities across markets should position us to outperform our existing growth objectives.

further optimizing the distribution networks in the private bank. We also expect to see benefits in operations and process automation.

And we are excited about the opportunities that should emerge from artificial intelligence and machine learning.

Second, we are focusing on capital efficiency.

Deploying capital to increase shareholder value has always been our priority and we see opportunities to reallocate capital.

We aim to free up 15 to 20 billion euros of risk-weighted assets from reduction in certain sub-hurdle lending and mortgage portfolios.

greater utilization of securitization and hedging optimization. These actions are expected to have a minimal impact on revenues.

but will enable us to increase returns and reallocate resources to more capital-accretive businesses.

We believe that the combination of cost and capital efficiency, together with additional opportunities across markets, should position us to outperform our existing growth objectives.

Christian Sewing: To support this, we continue to invest into our platforms and to take opportunities created by current market conditions to attract talent, to strengthen advisory capabilities in various business and regions, including Asia. We expect these actions to accelerate the execution of our strategy and more importantly, increase returns to shareholders over time. Before I hand over to James, let me summarize our progress on slide 8. Our performance in Q1 demonstrates the strengths of Deutsche Bank's franchise, earnings power, and balance sheet. Our transformation has given us a strong platform for growth with a diversified business model providing well-balanced earnings. This provides a strong step up to accelerate our global house bank ambition through additional actions on the three dimensions we just discussed. We remain fully committed to our capital distribution plan.

To support this, we continue to invest into our platforms and to take opportunities created by current market conditions to attract talent to strengthen advisory capabilities in various business and regions, including Asia. We expect these actions to accelerate the execution of our strategy and meet the needs of our customers.

earnings power and balance sheet.

Our transformation has given us a strong platform for growth.

with a diversified business model providing well-balanced earnings.

This provides a strong step-off to accelerate our global housebank ambition through additional actions on the three dimensions we just discussed.

Christian Sewing: With a successful Q1 behind us and strong capital, we have now initiated the dialogue with the supervisors about share buybacks, which are expected to take place in the H2 of this year. This is in line with the promise we made last quarter that we initiate this step once we have greater clarity on a number of issues, including the macro environment. Everything we have seen this quarter supports our view that we are on the right path. The group is well positioned to capitalize on current trends to drive returns above the cost of equity. With that, let me hand over to James.

We remain fully committed to our capital distribution plan.

With a successful first quarter behind us and strong capital, we have now initiated the dialogue with the supervisors.

about share buybacks which are expected to take place in the second half of this year. This is in line with the promise we made last quarter that we initiate this step once we have greater clarity on a number of issues, including the macro environment. Everything we have seen this quarter has been changed.

supports our view that we are on the right path.

The group is well positioned to capitalize on current trends to drive returns above the cost of equity. With that, let me hand over to James.

James von Moltke: Thank you, Christian. Let me start with a few key performance indicators in Q1 on slide 10 and put them in the context of our 2025 targets. We have strong revenue momentum. A balanced business mix enables us to benefit from higher interest rates despite challenging financial markets, delivering revenue growth above our 2025 targeted compound annual growth rate on a last twelve months basis. Our post-tax return on tangible equity was 8.3% in Q1, or 10% prorating bank levies through the year, already in line with our 2025 target. We've made steady progress on our cost income ratio, which was 71% in the quarter, a 4 percentage point improvement on full year 2022. If the bank levies were prorated across the year, the cost income ratio would be 67%.

Thank you, Christian. Let me start with a few key performance indicators in the first quarter on slide 10 and put them in the context of our 2025 targets.

We have strong revenue momentum.

A balanced business mix enables us to benefit from higher interest rates despite challenging financial markets, delivering revenue growth above our 2025 targeted compound annual growth rate on a last 12 month basis.

Our post-tax return on tangible equity was 8.3% in the first quarter, or 10% prorating bank levies through the year, already in line with our 2025 target.

We've made steady progress on our cost income ratio, which was 71% in the quarter, a 4 percentage point improvement on full year 2022.

James von Moltke: The Q1 performance shows clear progress toward our 2025 target of less than 62.5%. We demonstrated the strength of our capital and balance sheet and the quality of our loan book in challenging conditions. Our capital ratio was 13.6% in Q1, in line with our 2025 target of around 13%. With that, let me turn to the Q1 highlights on slide 11. Group revenues were EUR 7.7 billion, up 5% on Q1 2022, and with a better balance across our businesses. Non-interest expenses were EUR 5.5 billion, and adjusted costs of EUR 5.4 billion were essentially flat year on year.

If the bank levies were prorated across the year, the cost income ratio would be 67%.

The first quarter performance shows clear progress toward our 2025 target of less than 62.5%. And we demonstrated the strength of our capital and balance sheet and the quality of our loan book in challenging conditions.

Our capital ratio was 13.6% in the first quarter, in line with our 2025 target of around 13%.

With that, let me turn to the first quarter highlights on slide 11.

Group revenues were 7.7 billion euros, up 5% on the first quarter of 2022, and with a better balance across our businesses.

Non-interest expenses were 5.5 billion euros and adjusted costs of 5.4 billion euros were essentially flat year on year.

James von Moltke: We booked bank levies of EUR 473 million this quarter, down 35% year on year as a result of a reduction in the sector-wide Single Resolution Fund assessment, as well as our improved relative sector contribution, and an increased use of irrevocable commitments. Our provision for credit losses was EUR 372 million, or 30 basis points of average loans. Overall, credit losses remained well contained despite a small number of idiosyncratic events. We generated a profit before tax of EUR 1.9 billion, up 12%, and net profit of EUR 1.3 billion, up 8% compared to the prior year quarter. Our cost income ratio came in at 71%, down 2 percentage points versus the prior year period. Diluted earnings per share was €0.61 in Q1, with an effective tax rate of 29%.

We booked bank levies of 473 million euros this quarter, down 35% year on year, as a result of a reduction in the sector-wide single resolution fund assessment, as well as our improved relative sector contribution and an increased use of irrevocable commitments. Our provision for credit losses was 372 million euros.

of 8% compared to the prior year quarter.

Our cost income ratio came in at 71%, down two percentage points versus the prior year period.

James von Moltke: Tangible book value per share was EUR 27.28, up 2% on Q4 2022, and up 8% year-on-year. Now let me turn to some of the drivers of these results, starting with our NIM development on slide 12. We have continued to benefit from the interest rate environment in Q1, as demonstrated by the rise in net interest margin in the Corporate Bank and Private Bank. Group NIM, however, declined due to the accounting treatment of some of our central hedges and balance sheet management activities. This quarter, the accounting effect resulted in a sequential impact on group NIM of around -20 basis points. This effect is held in C&O, where it is fully offset by an increase in non-interest revenue, and there is no economic loss to the firm or overall impact on group P&L.

diluted earnings per share was 61 cents in the first quarter with an effective tax rate of 29%.

Tangible book value per share was 27 euros and 28 cents, up 2% on the fourth quarter of 2022, and up 8% year on year.

Now let me turn to some of the drivers of these results, starting with our NIM development on slide 12.

We have continued to benefit from the interest rate environment in the first quarter as demonstrated by the rise in net interest margin in the corporate bank and a private bank.

Group NIM, however, declined due to the accounting treatment of some of our central hedges and balance sheet management activities.

This quarter, the accounting effect resulted in a sequential impact on group NIM of around negative 20 basis points.

This effect is held in C&O where it is fully offset by an increase in non-interest revenue, and there is no economic loss to the firm or overall impact on group P&L.

James von Moltke: Realized deposit betas remain favorable when compared to our models, but we expect this to partially normalize in the coming quarters as the pace of interest rate rises slow. Average interest earning assets decline modestly, driven mainly by our TLTRO payments. With that, let's turn to costs on Slide 13. Adjusted costs excluding bank levies of EUR 4.9 billion were flat sequentially, but increased by 5% year on year, or EUR 240 million. This reflected cumulative investments over the past 12 months in technology, controls, and people together with higher business activity and inflationary pressures. The monthly average run rate of around EUR 1.63 billion is in line with our prior guidance, and we expect to operate at the run rate of between EUR 1.6 and 1.65 billion per month for the rest of the year.

Realized deposit betas remain favorable when compared to our models, but we expect this to partially normalize in the coming quarters as the pace of interest rate rises slow.

Average interest earning assets decline modestly, driven mainly by our TLTRO payments.

With that, let's turn to costs on slide 13. Adjusted costs excluding bank levies of 4.9 billion euros were flat sequentially but increased by 5% year on year or 240 million euros.

This reflected cumulative investments over the past 12 months in technology, controls, and people, together with higher business activity and inflationary pressures.

The monthly average run rate of around 1.63 billion euros is in line with our prior guidance, and we expect to operate at the run rate of between 1.6 and 1.65 billion euros per month for the rest of the year.

James von Moltke: Looking at the individual components, compensation and benefits costs were essentially flat as increased fixed remuneration was offset by lower variable remuneration. Ongoing workforce optimization limited the impact of higher headcount. IT costs were up EUR 66 million, or 8% year on year, reflecting continued investments in technology and innovation. Professional services increased by EUR 25 million, driven by business consulting and legal fees. The increase of around EUR 100 million in other costs mainly reflects increasing expenses for banking services, and outsourced operations. We also saw a normalization of travel and marketing expenses. Let's now turn to provision for credit losses on Slide 14. Provision for credit losses for Q1 was 30 basis points of average loans, or EUR 372 million.

Looking at the individual components, compensation and benefits costs were essentially flat as increased fixed remuneration was offset by lower variable remuneration.

Ongoing workforce optimization limited the impact of higher headcount. IT costs were up 66 million euros, or 8% year-on-year, reflecting continued investments in technology and innovation.

Professional services increased by 25 million euros, driven by business consulting and legal fees.

And the increase of around 100 million euros in other costs mainly reflects increasing expenses for banking services and outsourced operations.

We also saw a normalization of travel and marketing expenses. Let's now turn to provision for credit losses on slide 14.

Provision for credit losses for the first quarter was 30 basis points of average loans, or 372 million euros.

James von Moltke: Stage three provisions increased to EUR 397 million compared to EUR 114 million in the prior year quarter. The majority of this increase was driven by the Private Bank and included a small number of idiosyncratic events in the international Private Bank. This was partly offset by a release of EUR 26 million in stages one and two provisions, partially driven by a slight improvement in the macroeconomic outlook since Q4 2022, compared to a charge of EUR 178 million in the prior year quarter. We did not see a wider deterioration in the portfolio outside of this small number of specific events, and overall credit quality remains high. For the full year 2023, we reaffirm our previous guidance range of 25 to 30 basis points of average loans.

Stage 3 provisions increased to 397 million euros compared to 114 million euros in the prior year quarter.

The majority of this increase was driven by the private bank and included a small number of idiosyncratic events in the international private bank.

This was partly offset by a release of 26 million euros in stages 1 and 2 provisions, partially driven by a slight improvement in the macroeconomic outlook since the fourth quarter of 2022 compared to a charge of 178 million euros in the prior year quarter.

We did not see a wider deterioration in the portfolio outside of this small number of specific events, and overall credit quality remains high. For the full year 2023, we reaffirm our previous guidance range of 25 to 30 basis points of average loans.

James von Moltke: Let me also cover our commercial real estate portfolio on Slide 15. Our EUR 33 billion commercial real estate focused portfolio represents 7% of our loan book. As you know, it consists of non-recourse lending within the core CRE business units in the Investment Bank and the Corporate Bank. As a reminder, we have provided disclosure on this focus portfolio since the COVID crisis. The portfolio is well diversified across regions and property types. Despite the headwinds facing the sector, we are comfortable with our exposure for several reasons. First, our loan originations are focused on larger institutional quality assets in more liquid primary markets and with strong institutional sponsorship. Second, the moderate weighted average LTVs, or loan to value, of 62% in the Investment Bank and 53% in the Corporate Bank provide material cushion against the expected decline of collateral values.

Let me also cover our Commercial Real Estate portfolio on slide 15. Our 33 billion euro Commercial Real Estate focused portfolio represents 7% of our loan book and as you know it consists of non-recourse lending within the core CRE business units in the investment bank and the corporate bank.

As a reminder, we have provided disclosure on this Focus portfolio since the COVID crisis.

The portfolio is well diversified across regions and property types.

Second, the moderate weighted average LTVs or loan to value of 62% in the investment bank and 53% in the corporate bank provide material cushion against the expected decline of collateral values.

James von Moltke: Our sponsors typically have significant skin in the game in the form of cash equity invested in their properties and have invested more equity where needed to ensure the ongoing performance of their assets. However, we recognize the market is under pressure, especially in the US, where lending markets have tightened with further uncertainty caused by recent turmoil in the regional banking sector. The US office sector is also facing greater pressure as the office vacancy rate is approaching 20% compared to approximately 7% in Europe. Our exposure in the US office sector is manageable at EUR 4.5 billion, less than 1% of our total book. Our office portfolio is high quality with around 80% in class A properties, and we have institutional sponsorship in major markets. The loans are primarily backed by multi-tenant properties in large urban markets and again, with high quality sponsors.

Our sponsors typically have significant skin in the game in the form of cash equity invested in their properties and have invested more equity where needed to ensure the ongoing performance of their assets.

However, we recognize the market is under pressure, especially in the U.S. where lending markets have tightened with further uncertainty caused by recent turmoil in the regional banking sector.

The US office sector is also facing greater pressure as the office vacancy rate is approaching 20% compared to approximately 7% in Europe . Our exposure in the US office sector is manageable at 4.5 billion euros, less than 1% of our total book.

Our office portfolio is high quality with around 80% in Class A properties, and we have institutional sponsorship in major markets.

The loans are primarily backed by multi-tenant properties in large urban markets and, again, with high quality sponsors.

James von Moltke: The portfolio has an average LTV of around 64% with a weighted average lease term of 6.7 years, which provides relative stability of cash flows. At the same time, only approximately EUR 600 million of exposure has final maturities over the course of the year, which limits the refinancing risk in a higher rate environment. In Q1, provisions related to US office were EUR 16 million or just 4% of the Q1 stage three provisions, which shows the relative resiliency and quality of this book. Moving to funding and liquidity on slide 16. We ended the quarter with a liquidity coverage ratio of 143%, equivalent to an excess of EUR 63 billion above our regulatory requirements.

The portfolio has an average LTV of around 64%, with a weighted average lease term of 6.7 years, which provides relative stability of cash flows. At the same time, only approximately 600 million euros of exposure has final maturities over the course of the year.

which limits the refinancing risk in a higher rate environment. In the first quarter, provisions related to U.S. office were 16 million euros, or just 4% of the first quarter stage 3 provisions, which shows the relative resiliency and quality of this book.

Moving to funding and liquidity on slide 16. We ended the quarter with a liquidity coverage ratio of 143%, equivalent to an excess of 63 billion euros above our regulatory requirements.

James von Moltke: Over time, as market conditions improve, we would look to prudently steer our LCR down towards our 130% target. As Christian outlined, we have a well-diversified deposit base across client segments and regions. Our deposit base of EUR 592 billion declined by 5% sequentially or 4% on an FX adjusted basis, and 2% year on year. The decline in part reflected a normalization from the elevated levels seen in the H2 of last year and was broadly in line with the market. About a third of the reduction in balances came at the end of the quarter as certain clients repositioned parts of their exposures. This constitutes about 1% of our overall deposit portfolio and speaks to the underlying quality of our book.

Over time, as market conditions improve, we would look to prudently steer our LCR down towards our 130% target.

As Christian outlined, we have a well-diversified deposit base across client segments and regions.

Our deposit base of 592 billion euros declined by 5% sequentially, or 4% on an FX-adjusted basis, and 2% year-on-year.

The decline in part reflected a normalization from the elevated levels seen in the second half of last year and was broadly in line with the market. About a third of the reduction in balances came at the end of the quarter as certain clients repositioned parts of their exposures.

This constitutes about 1% of our overall deposit portfolio and speaks to the underlying quality of our book.

James von Moltke: Deposits in the Corporate Bank declined by 7% sequentially or 6% if adjusted for FX, mostly due to normalizations from elevated levels in the last two quarters, as well as increased pricing competition. Private Bank deposits declined by 2% in the quarter. Approximately 30% of flows migrated into higher yielding investment products in the Private Bank, while the remainder reflected the ongoing inflationary pressures and increasing price competition. Before we move to performance in our businesses, let me turn to capital on slide 17. Our common equity tier one ratio came in at 13.6%, up by 25 basis points compared to the pre-previous quarter. Net capital build was 30 basis points, reflecting our strong organic capital generation from net income, partially offset by higher equity compensation awards. Risk weighted assets grew modestly, reducing the CET1 ratio by only 6 basis points.

Private bank deposits declined by 2% in the quarter. Approximately 30% of flows migrated into higher yielding investment products in the private bank, while the remainder reflected the ongoing inflationary pressures and increasing price competition.

Before we move to performance in our businesses, let me turn to capital on slide 17. Our common equity tier 1 ratio came in at 13.6%, up by 25 basis points compared to the previous quarter.

Net capital build was 30 basis points, reflecting our strong organic capital generation from net income, partially offset by higher equity compensation awards. Risk weighted assets grew modestly, reducing the CET1 ratio by only 6 basis points.

James von Moltke: Credit risk weighted assets increased primarily to seasonal loan growth in the Investment Bank and Corporate Bank. Market risk RWA declined slightly following an ECB approved reduction in our qualitative multiplier add-on. The leverage ratio was 4.6% at quarter-end, up 6 basis points on the previous quarter, mainly due to higher retained earnings. Finally, we continue to operate with loss absorbing capacity well above our requirements. Our MREL surplus, as our most binding constraint, has increased by EUR 1 billion to EUR 19 billion over the quarter. Moving to the Corporate Bank on slide 19. Corporate Bank revenues in Q1 of EUR 2 billion were 35% higher year on year, driven by increased interest rates and continued pricing discipline.

Credit risk weighted assets increased primarily to seasonal loan growth in the investment bank and corporate bank. Market risk RWA declined slightly following ECB approved reduction in our qualitative multiplier add-on.

The leverage ratio was 4.6% at quarter end, up six basis points on the previous quarter, mainly due to higher retained earnings.

And finally, we continue to operate with loss absorbing capacity well above our requirements.

Our MREL surplus, as our most binding constraint, has increased by 1 billion euros to 19 billion euros over the quarter.

Moving to the corporate bank on slide 19. Corporate bank revenues in the first quarter of 2 billion euros were 35% higher year on year driven by increased interest rates and continued pricing discipline. This was the highest quarterly revenue performance since the formation of the corporate bank Authority.

James von Moltke: This was the highest quarterly revenue performance since the formation of the Corporate Bank, driven by revenue growth across all regions and business units. However, as we highlighted at our Q4 results, we expect a normalization of our interest revenues in H2 of the year. Our Q1 results were supported by still very benign passthrough rates, which we believe marks the peak revenue impact of this pricing dynamic. Momentum was particularly strong in cash management with corporate, institutional, and business banking clients, as well as in corporate trust. Loan volume in the Corporate Bank was EUR 121 billion, down by EUR 4 billion compared to the prior year quarter and flat sequentially. Deposits were EUR 269 billion, essentially flat compared to the prior year quarter, but down 7% from elevated prior quarter levels, as I have just outlined.

driven by revenue growth across all regions and business units. However, as we highlighted at our fourth quarter results, we expect a normalization of our interest revenues in the second half of the year.

Our first quarter results were supported by still very benign pass-through rates, which we believe marks the peak revenue impact of this pricing dynamic.

Momentum was particularly strong in cash management with corporate, institutional, and business banking clients, as well as in corporate trust.

Loan volume in the corporate bank was 121 billion euros, down by 4 billion euros compared to the prior year quarter and flat sequentially.

Deposits were 269 billion euros, essentially flat compared to the prior year quarter, but down 7% from elevated prior quarter levels, as I have just outlined.

James von Moltke: Credit loss provisions remained contained despite a more challenging macroeconomic environment, and were primarily driven by one larger stage three event, which was offset in revenues by insurance recoveries. Credit loss provisions remained well below the prior year quarter, which was impacted by the start of the war in Ukraine. Non-interest expenses were EUR 1.1 billion, an increase of 2% year on year, driven by higher internal service cost allocations, partly offset by a lower bank levy contribution. Profit before tax was EUR 822 million in the quarter, more than triple the prior year quarter. The cost income ratio improved to 55% and post-tax return on tangible equity was 18.3% despite the recognition of bank levies. I'll now turn to the Investment Bank on slide 20. Revenues for Q1 were 19% lower year on year.

Credit loss provisions remained contained despite a more challenging macroeconomic environment and were primarily driven by one larger stage three event which was offset in revenues by insurance recoveries. Credit loss provisions remained well below the prior year quarter which was impacted by the start of the war in Ukraine.

Non-interest expenses were 1.1 billion euros, an increase of 2% year-on-year, driven by higher internal service cost allocations.

partly offset by a lower bank levy contribution.

Profit before tax was 822 million euros in the quarter, more than triple the prior year quarter.

The cost-income ratio improved to 55 percent, and post-tax return on tangible equity was 18.3 percent, despite the recognition of bank levies. I'll now turn to the investment bank on slide 20. The revenues for the first quarter were 19 percent lower year-on-year.

James von Moltke: Revenues in fixed sales and trading decreased by 17% in Q1 compared to a prior year, which included approximately EUR 500 million of episodic items. Client flows were robust, with institutional activity broadly flat year on year and underlying business performance strong despite the extreme market volatility in March. Rates revenues were higher compared to a very strong prior year quarter, reflecting improvements across the platform and effective risk management. Credit trading, financing, and emerging markets revenues were lower, principally reflecting the absence of episodic items in the prior year periods while underlying performance improved. Foreign exchange revenues were significantly lower compared to a strong prior year period, driven by the impact of extreme interest rate volatility and market dislocation during March. Moving to origination and advisory, revenues were down 31% in a market which remained challenging.

Revenues in fixed sales and trading decreased by 17% in the first quarter compared to a prior year, which included approximately 500 million euros of episodic items.

Client flows were robust, with institutional activity broadly flat year-on-year and underlying business performance strong, despite the extreme market volatility in March.

Rates revenues were higher compared to a very strong prior year quarter, reflecting improvements across the platform and effective risk management. Credit trading, financing, and emerging markets revenues were lower, principally reflecting the absence of episodic items in the prior year period while underlying performance improved.

Foreign exchange revenues were significantly lower compared to a strong prior year period driven by the impact of extreme interest rate volatility and market dislocation during March.

James von Moltke: Our performance was in line with the industry fee pool and reflected a market share recovery and a shift in the underlying product mix compared to Q4 2022. Debt origination revenues were significantly lower. Volumes remained low in leveraged loans, although the market did start to see a partial recovery in high yield. Investment-grade debt revenues also declined, as did the industry fee pool. Equity origination revenues were down in a challenging market with limited issuance. Revenues and advisory were significantly lower, though by less than the industry fee pool decline. Turning to costs, both non-interest expenses and adjusted costs were essentially flat versus the prior year, as reduced bank levies were largely offset by investments in technology and our control functions. Loan balances increased year on year, driven by higher originations, primarily in the financing businesses.

Moving to origination and advisory, revenues were down 31% in a market which remained challenging.

Our performance was in line with the industry fee pool and reflected a market share recovery and a shift in the underlying product mix compared to the fourth quarter of 2022.

Debt origination revenues were significantly lower.

Volumes remained low in leveraged loans, although the market did start to see a partial recovery in high yield.

Investment grade debt revenues also declined, as did the industry fee pool. Equity origination revenues were down in a challenging market with limited issuance.

Revenues in advisory were significantly lower, though by less than the industry fee pool decline.

Turning to costs, both non-interest expenses and adjusted costs were essentially flat versus the prior year, as reduced bank levies were largely offset by investments in technology and our control functions. Loan balances increased year on year, driven by higher originations, primarily in the financing businesses. Year on quarter balances were essentially flat.

James von Moltke: Quarter-on-quarter balances were essentially flat, with lower origination reflecting our selective risk deployment. Provision for credit losses was EUR 41 million or 16 basis points of average loans, a slight increase on the prior year. Profit before tax was EUR 861 million in the quarter. Turning to the Private Bank on slide 21. Private Bank revenues were EUR 2.4 billion in Q1, up 10% year-on-year, and marked the highest quarterly revenues since the beginning of our transformation of the Private Bank, excluding specific revenue items. Revenues in the Private Bank Germany increased by 14% to EUR 1.6 billion. Higher net interest income from deposits more than compensated for a decline in fee income, which reflected changes in contractual and regulatory conditions, market uncertainty, and to a lesser extent, lower client activity.

with lower origination reflecting our selective risk deployment. Provision for credit losses was €41 million, or 16 basis points of average loans, a slight increase on the prior year.

Profit before tax was 861 million euros in the quarter. Turning to the private bank on slide 21. Private bank revenues were 2.4 billion euros in the first quarter, up 10% year on year, and marked the highest quarterly revenues since the beginning of our transformation of the private bank.

excluding specific revenue items. Revenues in the private bank Germany increased by 14% to 1.6 billion euros. Higher net interest income from deposits more than compensated for a decline in fee income, which reflected changes in contractual and regulatory conditions.

James von Moltke: In the International Private Bank, revenues were up 3%. Revenues in Wealth Management and Bank for Entrepreneurs were up 4% or 7% if adjusted for the impact of the sale of our Financial Advisors business in Italy. Revenues in Premium Banking declined by 1%. Non-interest expenses were up 10%, partly due to the non-recurrence of releases of restructuring provisions which benefited the prior year quarter. Adjusted costs increased by 5% year on year due to higher internal service cost allocations, higher investment spending, including costs related to the Postbank IT migration, and inflation impacts, partly offset by lower bank levies and savings from transformation initiatives. Net inflows were EUR 6 billion in the quarter, driven by growth in investment products in both Germany and the International Private Bank.

market uncertainty, and to a lesser extent, lower client activity. In the International Private Bank, revenues were up 3%. Revenues in wealth management and bank for entrepreneurs were up 4% or 7% if adjusted for the impact of the sale of our financial advisors business in Italy. Revenues in premium banking declined by 1%.

Non-interest expenses were up 10%, partly due to the non-recurrence of releases of restructuring provisions which benefited the prior year quarter.

Adjusted costs increased by 5% year-on-year due to higher internal service cost allocations.

higher investment spending, including costs related to the post-bank IT migration, and inflation impacts, partly offset by lower bank levies and savings from transformation initiatives. Net inflows were 6 billion euros in the quarter, driven by growth in investment products in both Germany and the international private bank. Provision for credit losses was 267 million euros.

James von Moltke: Provision for credit losses was EUR 267 million, up from EUR 101 million in the prior year quarter. The increase was driven mainly by a small number of single name losses in the international private bank. Excluding these items, the development of the portfolio continued to reflect the high quality of the loan book and continued risk discipline. Profit before tax was EUR 280 million in the quarter, including the full year impact of bank levy charges. Cost income ratio was 78% in the quarter, with a post-tax return on tangible equity of 5%. Let me continue with asset management on slide 22. My usual reminder, the asset management segment includes certain items that are not part of the DWS standalone financials.

up from 101 million euros in the prior year quarter. The increase was driven mainly by a small number of single name losses in the International Private Bank.

Excluding these items, the development of the portfolio continued to reflect the high quality of the loan book and continued risk discipline.

Profit before tax was 280 million euros in the quarter, including the full year impact of bank levy charges. Cost income ratio was 78% in the quarter, with a post-tax return on tangible equity of 5%. Let me continue with asset management on slide 22.

James von Moltke: As you will have seen in their materials, DWS reported a decline in performance compared to the prior year, reflecting lower market levels. Sequentially, assets under management increased to EUR 841 billion, reflecting EUR 19 billion of market appreciation and net inflows. Inflows excluding cash were nearly EUR 9 billion, primarily in passive and multi-asset. Flows in cash products were very volatile throughout the quarter, ending with net outflows of EUR 3 billion. Revenues declined by 14% versus the prior year quarter. This was predominantly driven by an 8% decline in management fees to EUR 571 million, which reflected financial market performance during 2022. Performance and transaction fees were also lower year on year from performance fee recognition and lower real estate transaction fees. Other revenues declined on lower gains from co-investments and a smaller benefit from fair value guarantees.

Sequentially, assets under management increased to 841 billion euros, reflecting 19 billion euros of market appreciation and net inflows.

Revenues declined by 14% versus the prior year quarter. This was predominantly driven by an 8% decline in management fees to 571 million euros, which reflected financial market performance during 2022.

Performance and transaction fees were also lower year-on-year from performance fee recognition and lower real estate transaction fees.

James von Moltke: Non-interest expenses and adjusted costs increased by 3% and 1% respectively. Profit before tax of EUR 115 million in the quarter was down 44% compared to the prior year. The cost income ratio for the quarter was 74% and return on tangible equity was 14%. Moving to Corporate and Other on slide 23. A reminder that Corporate and Other now includes the impact of our legacy portfolios previously reported as the Capital Release Unit. Corporate and Other reported a pre-tax loss of EUR 226 million this quarter, a significant improvement from the pre-tax loss of EUR 677 million in Q1 2022.

Other revenues declined on lower gains from co-investments and a smaller benefit from fair value of guarantees.

Non-interest expenses and adjusted costs increased by 3% and 1% respectively.

Profit before tax of 115 million euros in the quarter was down 44% compared to the prior year.

The cost income ratio for the quarter was 74% and return on tangible equity was 14%.

Moving to corporate another on slide 23.

A reminder that Corporate & Other now includes the impact of our legacy portfolios, previously reported as the cap of a release unit.

Corporate & Other reported a pre-tax loss of 226 million euros this quarter, a significant improvement from the pre-tax loss of 677 million euros in the first quarter of 2022.

James von Moltke: The year on year improvement was principally driven by valuation and timing differences, which were EUR +239 million in this quarter compared to EUR -184 million in the prior year quarter. The pre-tax loss associated with our legacy portfolios was EUR 130 million, an improvement of EUR 166 million year on year, primarily driven by lower expenses. Excluding bank levies, adjusted costs associated with these portfolios approximately halved to EUR 66 million. Funding and liquidity impacts were EUR -106 million in the current quarter versus EUR -127 million in the prior year quarter. Expenses associated with shareholder activities not allocated to the business divisions as defined in the OECD transfer pricing guidelines were EUR 124 million in this quarter, essentially flat year on year.

The year-on-year improvement was principally driven by valuation and timing differences, which were positive €239 million in this quarter, compared to negative €184 million in the prior year quarter.

The pre-tax loss associated with our legacy portfolios was 130 million euros, an improvement of 166 million euros year on year, primarily driven by lower expenses.

Excluding bank levies, adjusted costs associated with these portfolios approximately halved to 66 million euros. Funding and liquidity impacts were negative 106 million euros in the current quarter versus negative 127 million euros in the prior year quarter.

Expenses associated with shareholder activities not allocated to the business divisions as defined in the OECD Transfer Pricing Guidelines were $124 million in this quarter, essentially flat year on year.

James von Moltke: The reversal of non-controlling interests in the operating businesses, primarily from DWS, was EUR +37 million, down from EUR 56 million in the prior year quarter. Other impacts reported in the segment aggregated to EUR -142 billion. Risk-weighted assets stood at EUR 43 billion at the end of Q1, including EUR 19 billion of operational risk RWA, representing a EUR 3 billion reduction since Q4 2022. Turning to the group outlook for 2023 on slide 24. We remain focused on delivering positive operating leverage. We expect 2023 revenues around the midpoint of a range between EUR 28 and 29 billion. We expect to keep our non-interest expenses broadly flat to 2022.

The reversal of non-controlling interests in the operating businesses, primarily from DWS, was positive 37 million euros, down from 56 million euros in the prior year quarter.

Other impacts reported in the segment aggregated to negative 142 billion euros. Risk weighted assets stood at 43 billion euros at the end of the first quarter, including 19 billion euros of operational risk RWA, representing a 3 billion euro reduction since the fourth quarter of 2022.

Turning to the group outlook for 2023 on slide 24, we remain focused on delivering positive operating leverage. We expect 2023 revenues around the midpoint of a range between 28 and 29 billion euros.

James von Moltke: As confirmed earlier, we expect the monthly run rate of adjusted costs excluding bank levies to be about EUR 1.6 to 1.65 billion for the rest of the year. To deliver on the cost reduction measures which Christian outlined, we now expect to record restructuring and severance provisions of approximately EUR 500 million in 2023. In line with our previous guidance, provision for credit losses is expected in the range of 25 to 30 basis points of average loans. Christian mentioned our commitment to capital distributions. Consistent with our path laid out at the investor deep dive last year, we have proposed a cash dividend of EUR 0.30 per share for approval at the AGM in May, and the dialogue with supervisors about share buybacks in H2 of the year has been initiated.

We expect to keep our non-interest expenses broadly flat to 2022. As confirmed earlier, we expect the monthly run rate of adjusted costs, excluding bank levies, to be about 1.6 to 1.65 billion euros for the rest of the year.

To deliver on the cost reduction measures which Christian outlined, we now expect to record restructuring and severance provisions of approximately 500 million euros in 2023.

In line with our previous guidance, provision for credit losses is expected in the range of 25 to 30 basis points of average loans.

Christy mentioned our commitment to capital distributions. Consistent with our path laid out at the investor deep dive last year, we have proposed a cash dividend of 30 euro cents per share for approval at the AGM in May, and the dialogue with supervisors about share buybacks in the second half of the year has been initiated.

James von Moltke: We are also committed to maintaining a strong capital position and a solid liquidity and funding base, all of which we demonstrated during turbulent conditions in Q1. With that, let me hand back to Silke, and we look forward to your questions.

We are also committed to maintaining a strong capital position and a solid liquidity and funding base, all of which we demonstrated during turbulent conditions in the first quarter. With that, let me hand back to Silke and we look forward to your questions.

Silke Schubert: Thank you, operator. We would be ready to take the first question, please.

Silke Nicole Szypa: Thank you, operator. We would be ready to take the first question, please.

Operator: Ladies and gentlemen, at this time we will begin the question and answer session. Anyone who wishes to ask a question may press star followed by one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star followed by two. If you're using speaker equipment today, please lift the handset before making your selections. Anyone who has a question may press star followed by one at this time. Our first question is from the line of Chris Hallum from Goldman Sachs. Please go ahead.

Thank you, operator. We would be ready to take the first question, please.

Ladies and gentlemen, at this time we will begin the question and answer session. Anyone who wishes to ask a question may press star followed by one on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star followed by two.

If you are using speaker equipment today, please lift the handset before making your selections. So anyone who has a question may press star, followed by one at this time.

Chris Hallum: Good morning, everybody. My first question relates to capital return. Clearly, profitability and capital formation was better than expected in Q1. Previously, you've commented that the timing and size of potential share buybacks this year would be dependent on getting clarity on the size of regulatory model headwinds and the macro outlook. Today you've said that you've initiated dialogue with the ECB. What updates do you have on those headwinds? How comfortable do you feel on the macro backdrop? How far are you with those ECB discussions? What does that all mean for the potential timing and size of share buybacks this year? That's the first question. Then secondly, perhaps for Christian, coming back to slide seven.

Chris Hallam: Good morning, everybody. My first question relates to capital return. Clearly, profitability and capital formation was better than expected in Q1. Previously, you've commented that the timing and size of potential share buybacks this year would be dependent on getting clarity on the size of regulatory model headwinds and the macro outlook. Today you've said that you've initiated dialogue with the ECB. What updates do you have on those headwinds? How comfortable do you feel on the macro backdrop? How far are you with those ECB discussions? What does that all mean for the potential timing and size of share buybacks this year? That's the first question. Then secondly, perhaps for Christian, coming back to slide seven.

Our first question is from the line of Chris Holland from Goldman Sachs. Please go ahead. Good morning everybody. So my first question relates to capital return. Clearly profitability and capital formation was better than expected in the first quarter. Previously you've commented that the timing and size of potential share buybacks this year.

would be dependent on getting clarity on the size of regulatory model headwinds and the macro outlook. And today you've said that you've initiated dialogue with the ECB. So what updates do you have on those headwinds? How comfortable do you feel on the macro backdrop? And how far are you with those ECB discussions? And what does that all mean for the potential timing?

Chris Hallum: If we look across those three pillars, cost, capital, and revenues, could you talk a little bit about what these measures really mean incrementally to the 2025 strategy and targets? What are the key timing points regarding progress in those areas? Are you in a position to upgrade any of those targets at this point?

Chris Hallam: If we look across those three pillars, cost, capital, and revenues, could you talk a little bit about what these measures really mean incrementally to the 2025 strategy and targets? What are the key timing points regarding progress in those areas? Are you in a position to upgrade any of those targets at this point?

and size of share buybacks this year? That's the first question. And then secondly, perhaps for Christian, going back to slide seven, if we look across those three pillars, cost, capital and revenues, could you talk a little bit about what these measures really mean incrementally to the 2025 strategy and targets? What are the key timing points regarding progress in those areas and are you in a position to upgrade any of those targets at this point? Hey, Chris, it's Christian and good morning. Thank you very much for your question.

James von Moltke: Hey, Chris, it's Christian, and good morning. Thank you very much for your question. I'm sure James will jump in. I'm going after both questions, and again, James will contribute. Look, on your first question, I think it was very important for us, for the management board, and for James and myself that we wanted to see the Q1 development. Indeed, this development is not only important, but gives us all the confidence and all the tailwind we need, when it comes to the further trajectory of our results. If you really look at the composition of our results, that what makes me so positive and confident, that is the stable business development in the Private Bank and in the Corporate Bank.

Christian Sewing: Hey, Chris, it's Christian, and good morning. Thank you very much for your question. I'm sure James will jump in. I'm going after both questions, and again, James will contribute. Look, on your first question, I think it was very important for us, for the management board, and for James and myself that we wanted to see the Q1 development. Indeed, this development is not only important, but gives us all the confidence and all the tailwind we need, when it comes to the further trajectory of our results. If you really look at the composition of our results, that what makes me so positive and confident, that is the stable business development in the Private Bank and in the Corporate Bank.

to the further trajectory of our results. And if you really look at the composition of our results, that what makes me so positive and confident, that is the stable business development in the private bank and in the corporate bank. And if you then think about that, what James already outlined in the previous calls.

James von Moltke: If you then think about that, what James already outlined in the previous calls and what we always refer to, that kind of the real tailwind in the interest rates is coming in the Private Bank only in the outer years in 2024 and 2025. With the momentum we see right now already in the stable business, that was obviously the right starting point now to change gears and to initiate the discussions on the share buybacks with the ECB.

Christian Sewing: If you then think about that, what James already outlined in the previous calls and what we always refer to, that kind of the real tailwind in the interest rates is coming in the Private Bank only in the outer years in 2024 and 2025. With the momentum we see right now already in the stable business, that was obviously the right starting point now to change gears and to initiate the discussions on the share buybacks with the ECB.

and what we always refer to that kind of the real tailwind in the interest rates is coming in the private bank only in the outer years in 24 and 25. With the momentum we see right now already in the stable business that was obviously the right starting point now to change gears and to initiate the discussions on the share buybacks with with the ECB.

Christian Sewing: Secondly, to take a step back, I think also in the aftermath, it was right actually not to do this end of January because we said on purpose we would like to have a better view on the economic development, on the volatility in the market, the turbulences we see. Look, we did not know what happened in March, but you could see that also the way we handled that situation. Again, the stability now with a step up of 13.6%, not even talking about the strong liquidity number of 143%, all gives us now the confidence to say this is the right moment to start.

Secondly, to take a step back, I think also in the aftermath it was right actually not to do this end of January because we said on purpose we would like to have a better view on the economic development, on the volatility in the market, the turbulence as we see. And look, we did not know what happened in March, but you could see that also the way we handled that situation.

Christian Sewing: Thirdly, I do believe that the environment, the economic outlook for Europe, particular for Germany, you may have seen the guidance of the German economic minister yesterday, that, and we agree to that. We don't see a recession in Germany coming in 2023. It's a slow growth, a minimal growth, but actually far better than that what we thought could happen at the end of 2022 for the year 2023. Also there, clearly better visibility when it comes to the economic outlook. James will give you more details when it comes to the model changes, but also there we did a lot of progress and have far better visibility what it means.

the economic outlook for Europe , particularly for Germany. You may have seen the guidance of the German economic minister yesterday and we agree to that. We don't see a recession in Germany coming in 23. It's a slow growth, a minimal growth, but actually far better than that, what we thought could happen at the end of 2022.

for the year 23. Also there clearly better visibility when it comes to the economic outlook. And James will give you more details when it comes to the model changes but also there we did a lot of progress and have far better visibility what it means. And in this regard we concluded based on this.

Christian Sewing: In this regard, we concluded, based on this, in our view, really good Q1 numbers, that it's now time to approach the discussions, initiate the discussions with regard to timing. In line with that, what I said on 2 February, we believe that the share buybacks will happen in H2 2023. There I used the word optimistic. Now I use the word that I'm very confident that this will happen in H2 2023. With regard to the amount, look, I think, we need to have the discussions with the ECB, but James and I are both believing in consistency.

in our view really good number, quarter numbers, that it's now time to approach the discussions, initiate the discussions. With regard to timing, in line with that what I said on February 2nd, we believe that the share buybacks will happen in the second half of 2023. There I used the word optimistic, now I...

Christian Sewing: If you think about the increase in the dividends which we propose for the year 2022 versus the previous year, I think for consistent reasons, we should also think about such an increase when it comes to share buybacks. James, potentially you step in on the model before I take the second question.

dividends which we propose for the year 22 versus the previous year, I think for consistent reasons we should also think about such an increase when it comes to share buybacks. James, potentially you step in on the model before I take the second question. Sure, happy to do that. So Chris, remember in the February call we were...

James von Moltke: Sure. Happy to do that. Chris, remember in the February call, we were talking about the model impacts. There are a number of different items, one big one, which is what we call the wholesale model review, but then many other items, some of which are netting. There is a range of outcomes. At this point, with better visibility into the discussions, we probably say that range is between 40 and 60 basis points of capital. If you take the midpoint of that, which is a pretty good place to be for modeling purposes, that 50 basis points actually represents about the capital, the organic capital generation that consensus would suggest we earn in the balance of the year.

talking about the model impacts, there are a number of different items, one big one which is what we call the wholesale model review, but then many other items some of which are netting. And so there is a range of outcomes, but at this point with better visibility into the discussions we probably say that range is between 40 and 60 basis points of capital.

If you take the midpoint of that, which is a pretty good place to be for modeling purposes, that 50 basis points actually represents about the capital, the organic capital generation that consensus would suggest we earn in the balance of the year.

James von Moltke: Now, obviously, we'd like to do better than that, but if you use that, essentially earnings for the rest of the year would offset the model impact. That leaves us sort of the gap to EUR 13.2 to fund growth, you know, a buyback and any other events during the year. Uncertainties in the first two numbers, which we feel pretty good about. To give you a sense that therefore the range of outcomes that Christian refers to, we think at this point is affordable based on the information we have.

Now obviously we'd like to do better than that, but if you use that, essentially, earnings for the rest of the year would offset the model impact.

And that leaves us sort of the gap to 13.2 to fund growth, you know, a buyback and any other events during the year, uncertainties in the first two numbers, which we feel pretty good about. And to give you a sense that therefore the range of outcomes that the Christian, you know, refers to, we think at this point is affordable based on the information we have.

Christian Sewing: To your second question and page seven, look, again, first of all, I really would like to say it is nothing else, Chris, than a continuous development of our strategy and a confirmation of the strategy and the trajectory which we have taken over the last years. Of course, when you are in the middle of that, you see the client reaction, you see the momentum I was just talking about, before. In the stable business, the foundation and the resilience which we have found in the Investment Bank, then obviously you always reconsider what else can we do. Let me start on the business side, so on the right-hand side of the slide.

To your second question and page 7, look again, first of all I really would like to say it is nothing else, Chris, than a continuous development of our strategy and a confirmation of the strategy and trajectory which we have taken over the last years.

But of course, when you are in the middle of that, you see the client reaction, you see the momentum I was just talking about before, so in the stable business, the foundation and the resilience which we have found in the investment bank, then obviously you always reconsider what else can we do. Let me start on the business side, on the right hand side of the slide.

Christian Sewing: Number one, yes, momentum in the business is so important because it goes back to something which I always try to outline in this call, and which I think sometimes gets still underestimated, but that is all about our people. If they see these results, when you think about the momentum, the passion, the spirit in this bank, you can see that in particular now in the Corporate Bank and the Private Bank; it goes only into one direction, and that's what we want to build on. We see growth rates which are higher than what we initially planned. There are market opportunities also as a result of the events, which we have seen in our competitive environment also here in Europe, which obviously we would like to bank on.

Number one, yes, momentum in the business is so important because it goes back to something which I always try to outline in this call. And which I think sometimes gets still underestimated. But that is all about our people. If they see these results, when you think about the...

Christian Sewing: You have seen the one or the other announcement over the last weeks that we will start to do some selective hiring, very important, either in the Corporate Bank platform or in capital-light businesses like the advisory piece. You also see that we are actually focusing on additional markets. We have hired a team for Latin America in the O&A and financing business, which is important for us 'cause a lot of German clients, corporate clients are actually there who want to have our help. Market opportunities are there.

of the events which we have seen in our competitive environment also here in Europe which obviously we would like to bank on and you have seen the one or the other announcement over the last weeks that we were start to do some selective hiring very important either in the corporate bank platform or in capital like businesses like the advisory piece

Christian Sewing: All that gives us actually the opportunity, again, with the momentum we see also when I look forward, and obviously with the tailwind of the interest rates, that we think the revenue growth numbers which we put forward are not only achievable, but we have a real chance to outperform that. Now secondly, obviously on the cost management side. If you work on those EUR 2 billion, which we always laid out and where we gave details in last year's IDD, and we always reconfirmed the numbers. You then go deeper, you see there is more room and therefore we also changed the governance in the management board. We have a clear allocation of cost management now in the management board, front to back, which will create further opportunities.

who want to have our help. So market opportunities are there. And all that gives us actually the opportunity again with the momentum we see also when I look forward and obviously with the tailwind of the interest rates that we think the revenue growth numbers which we put forward are not only achievable but we have a real chance to outperform that.

Now, secondly, obviously on the cost management side, if you work on those 2 billion euros, which we always laid out and where we gave details in last year's IDD and we always reconfirmed the numbers.

you then go deeper, you see there is more room. And therefore we also changed the governance in the management board. We have a clear allocation of cost management now in the management board front to back, which will create further opportunities. And I think we also...

Christian Sewing: I think we also don't only think about long-term or more long-term cost changes, but the reduction in force exercise, which we kicked off in March, which will be actually then fully implemented in Q2, is something which shows you that we see now with all that, what has happened with the sharpening of our businesses, but also implementation of front to end processes that we have more potential than we saw before. Hence, we believe that the additional EUR 500 million is a target and a goal which we should achieve. Thirdly, capital efficiency. To be honest, to criticize ourselves, I think we have done a very good capital management, but when it comes to capital efficiency in each and every sub-businesses, we can further step up.

don't only think about long-term or more long-term cost changes, but the reduction in force exercise, which we kicked off in March, which will be actually then fully implemented in Q2, is something which shows you that we see now with all that what has happened, the sharpening of our businesses, but also...

implementation of front-to-end processes that we have more potential than we saw before. And hence, we believe that the additional 500 million is a target and a goal which we should achieve.

And thirdly, capital efficiency. And to be honest, to criticize ourselves, I think we have done a very good capital management. But when it comes to capital efficiency in each and every subbusinesses, we can further step up. And what I like about this exercise, which will in our view bring approximately 15 to 20 billion of risk-weighted assets over the next couple of years in risk-weighted assets reductions.

Christian Sewing: What I like about this exercise, which will in our view bring approximately EUR 15 to 20 billion of risk-weighted assets over the next couple of years in risk-weighted assets reductions while not losing revenues over that, is actually a more disciplined capital allocation. That is on two or three items. Number one, yes, we will act on items which we see, for instance, in the German mortgage business. If the counter-cyclical capital buffer has been increased like it was, we obviously will act and will move capital out of this business and either shift it to higher rewarding businesses, or we give it back to the shareholders. Secondly, we have found ways to increase hedging securitizations. Thirdly, discipline is not only on the cost side, it's in particular on the review of each and every individual reward when it comes to lending.

and will move capital out of this business and either shift it to higher rewarding businesses or we give it back to the shareholders. Secondly, we have found ways to increase hedging, securitization and thirdly discipline is not only on the cost side it's in particular on the review of each and every individual.

Christian Sewing: There we need to step up. I think that there are areas in our banks, also in the corporate bank, where we can do better when it comes to risk reward. That will be implemented, James will be all over about it. Those three items on top of that, what we have seen in Q1, and I really would like to focus on that again. It's an 8.3% return on equity. But if you quarterize, so to say, the SRF, we are at 10%. We know exactly what happens with the SRF payments. It will go down, and we still have something in plan for 2024 and 2025, but it will go down. The 10% ROTE in Q1 is a really good guidance because Q1 is not an outlier quarter.

reward when it comes to lending. And there we need to step up. And I think that there are areas in our banks, also in the corporate bank, where we can do better when it comes to risk reward. That will be implemented. James will be all over about it. And those three items, on top of that, what we have seen in Q1.

And I really would like to focus on that again. It's an 8.3% return on equity. But if you quarter-life, so to say, the SRF, we are at 10%. We know exactly what happens with the SRF payments. It will go down. And we still have something in plan for 24 and 25, but it will go down.

So the 10% ROTE in the first quarter is a really good guidance because the first quarter is not an outlier quarter. If you now think about these three items, obviously it is our target to outperform that in 25. This is the confidence we have and with all that what we really see in numbers in the first quarter with the whole trajectory.

Christian Sewing: If you now think about these three items, obviously it is our target to outperform that in 2025. You know, this is the confidence we have and with all that, what we really see in numbers in the Q1 with the whole trajectory, I'm really excited about that way and hence very positive that we can achieve that outperformance. James, I don't know whether you would-

James von Moltke: No, nothing to add. Completely agree.

Andrew Lim: Okay, thanks. That's very comprehensive.

Chris Hallam: Okay, thanks. That's very comprehensive.

Operator: Our next question is from a line of Tom Hollett from KBW. Please go ahead.

Tom Hollett: Yeah, morning, chaps. A few questions for me, please. Firstly, on deposits, we saw EUR 27 billion of outflows, but could you just give us a sense of how that evolved throughout the quarter, particularly in and around that March period? Looking further out, what are you seeing quarter to date, and how do you see those deposit trends developing throughout the year? Secondly, you're sticking to your revenue guidance. I'm just wondering what gives you the confidence that target still holds given the missing trading, given what we're seeing quarter to date there. So maybe you could just provide us with an update by division, quarter to date dynamics, that would be helpful. One final quick one. I'm interested in your discussions with regulators around the CDS issues and the wider banking crisis.

Thomas Hallett: Yeah, morning, chaps. A few questions for me, please. Firstly, on deposits, we saw EUR 27 billion of outflows, but could you just give us a sense of how that evolved throughout the quarter, particularly in and around that March period? Looking further out, what are you seeing quarter to date, and how do you see those deposit trends developing throughout the year? Secondly, you're sticking to your revenue guidance. I'm just wondering what gives you the confidence that target still holds given the missing trading, given what we're seeing quarter to date there. So maybe you could just provide us with an update by division, quarter to date dynamics, that would be helpful. One final quick one. I'm interested in your discussions with regulators around the CDS issues and the wider banking crisis.

Yeah, morning, chaps. So a few questions from me, please. Firstly, on deposits, we saw 27 billion of outflows, but could you just give us a sense of how that evolved throughout the quarter, particularly in and around that March period? And looking further out, what are you seeing quarter to date, and how do you see those deposit trends developing throughout the year?

Secondly, you're sticking to your revenue guidance. I'm just wondering what gives you the confidence that target still holds, given the missing trading, given what we're seeing quarter to date there. So maybe you could just provide for an update by division, quarter to date dynamics. That would be helpful. And one final quick one. I'm interested in your discussion.

Tom Hollett: Do you envisage any change coming maybe through things like, you know, liquidity coverage ratio, definition changes, or some form of additional levies to ensure a wider scope of deposits? You know, any sense where you see change would be great. Thank you.

Thomas Hallett: Do you envisage any change coming maybe through things like, you know, liquidity coverage ratio, definition changes, or some form of additional levies to ensure a wider scope of deposits? You know, any sense where you see change would be great. Thank you.

discussions with regulators around the CVS issues and the water banking crisis. Do you envisage any change coming maybe through things like, you know, liquidity coverage ratio definition changes or some form of additional levies to ensure a wider scope of deposits? You know, any sense where you see change would be great. Thank you. James, I'll start where you finished and we'll come back.

James von Moltke: Sure. Thanks, Tom. It's James. I'll start. Maybe I'll start where you finished, and we'll come back to that with the liquidity metrics. You know, because we manage to the liquidity metrics rather than to absolute levels of deposits or funding. I think it's important to emphasize we were able to travel through, you know, a difficult quarter, and especially March, while maintaining and in fact improving both ratios, Liquidity Coverage Ratio and Net Stable Funding Ratio. It's important to understand what that means. We ended the quarter in as good or better a position to withstand a 30-day or a 1-year stress environment than we were at year-end based on that strong deposit base, as well as the secured and unsecured funding position we are in.

and that's the stable funding ratio. And so it's important to understand what that means. We ended the quarter in as good or better a position to withstand a 30 day or a one year stress environment than we were at year end.

James von Moltke: We think that's a significant achievement for Deutsche Bank, but also for the industry. You know, I'll talk about this when we go to your third question, but I think LCR and these other tools have withstood the test in the month of March. Turning to deposits, you mentioned the reduction in deposits over the course of the quarter. You know, the average deposits were down a little less than 2% over the quarter.

based on that strong deposit base as well as the secured and unsecured funding position we are in. And we think that's a significant achievement for Deutsche Bank, but also for the industry. You know, I'll talk about this when we go to your third question, but I think LCR and these other tools have withstood the test in the month of March.

Turning to deposits, you mentioned the reduction in deposits over the course of the quarter. You know, the average deposits were down a little less than 2% over the quarter, and as you've seen, the spot level was down 4%, excluding FX. And that, as we look at sort of banks that have reported so far, is a pretty good thing.

James von Moltke: As you've seen, the spot level was down 4% excluding FX. That, as we look at sort of banks that have reported, you know, so far, we think is, and some market sort of industry data through February, is reasonably in line with what you've seen on both sides of the Atlantic so far. Now, as we talked about, there was a lot going on in the deposit books, you know, normalization in our case from very high levels of deposits that we finished the year with. There was sort of a run-up in December, which is one of the reasons for the variance between the average and the spot. You've also seen a pickup in competition for liquidity as central banks drain liquidity from the market, and you do see some price sensitive deposits leaving the bank.

we think is, and some market sort of industry data through February , is reasonably in line with what you've seen on both sides of the Atlantic so far. Now, as we talked about, there was a lot going on in the deposit books. Normalization, in our case, from very high levels of deposits that we finished the year with. There was sort of a run up in December , which is one of the reasons.

for the variance between the average and the spot. You've also seen a pickup in competition for liquidity as central banks drain liquidity from the market and you do see some price sensitive deposits leaving the bank. We're just disciplined on pricing and so that represents, if you like, a strategy outcome.

James von Moltke: You know, we're just disciplined on pricing and so that that's you know represents if you like a strategy outcome. We have seen clients shift deposits to higher yielding investment alternatives, including, but not limited to money market funds. Some of that, as we've pointed out, was within our own system. It didn't leave the bank, it just went from deposit to other products. The other thing that happens in our deposit base is sort of usual ebbs and flows. If you're a very large cash management bank for corporates and institutionals, there's a lot of movement throughout the quarter, which means that your specific question is a little bit hard to pinpoint.

We have seen clients shift deposits to higher yielding investment alternatives, including but not limited to money market funds. And some of that, as we've pointed out, was within our own system. It didn't leave the bank, it just went from deposit to other products.

The other thing that happens in our deposit base is sort of usual ebbs and flows. So if you're a very large cash management bank for corporates and institutional, there's a lot of movement throughout the quarter. Which means that your specific question is a little bit hard to pinpoint.

James von Moltke: What we've talked about is sort of two-thirds coming in the first, say 9 or 10 weeks of the quarter. Then one-third in the last 2 weeks, including the sort of episodic, you know, idiosyncratic noise around our name. We think that 1% or 1.5%, which is what we'd estimate over those last 7 or 8 sort of business days of the quarter, actually underscores the resilience of the deposit base, and the relative absence of what I'll call hot money at DB. You know, where did you see it? It was in the portfolios that are typically the most price sensitive and sensitive, if you like, to sentiment. In a sense it's not surprising to see that amount of reduction.

But I would, and what we've talked about is sort of two thirds coming in the first, say, nine or 10 weeks of the quarter. And then one third in the last two weeks, including the sort of episodic or idiosyncratic noise around our name.

We think that one or one and a half percent, which is what we'd estimate over those last seven or eight sort of business days of the quarter, actually underscores the resilience of the deposit base and the relative absence of what I'll call hot money at DB.

you know, where did you see it? It was in the portfolios that are typically the most price sensitive and sensitive if you like to sentiment. So in a sense, it's not surprising to see that amount of reduction. And as we come back to your LCR question,

James von Moltke: As we come back to your LCR question, you know, I think it proves its value as a tool because the reality, why did the ratio stay constant? We don't apply liquidity value to those funding sources, including deposits that are most likely to flow out in a stress scenario. If I put that all together, Tom, we feel pretty good about the experience and the way we were able to manage through that environment. Credit to the teams, you know, the communication, the client outreach and engagement, the work that was done in preparation. We feel quite good about performance through that period.

I think it proves its value as a tool because the reality, why did the ratio stay constant? We don't apply liquidity value to those funding sources, including deposits, that are most likely to flow out in a stress scenario. So if I put that all together, Tom, we feel pretty good about the experience and the way we were able to manage through that environment.

And credit to the teams, the communication, the client outreach and engagement, the work that was done in preparation. We feel quite good about performance through that period.

Christian Sewing: Coming to the other question on the revenue guidance. Yes, high confidence in the midpoint of EUR 28 to 29 billion. Why? Because I'm really drawing a lot of comfort, actually from the stable business. If there is even room for improvement, it comes from the Private Bank and the Corporate Bank. You know, if I give you sort of say my numbers, which I have in my head, even if you say Q1 in the Corporate Bank was a stellar quarter where potentially on the deposit beta we may see some reduction. Clearly the Corporate Bank will be well above EUR 7 billion of revenues for the year. I mean, we started with the EUR 1.9 billion.

Tom, to the other question on the revenue guidance, yes, high confidence in the midpoint of 28 to 29 billion. And why? Because I'm really drawing a lot of comfort actually from the stable business. If there is even room for improvement, it comes from the private bank and the corporate bank.

You know, if I give you, sort of say, my numbers, which I have in my head, even if you say the first quarter in the corporate bank was a stellar quarter, where potentially on the deposit better, we may see some reduction.

But clearly the corporate bank will be well above 7 billion of revenues for the year. I mean we started with the 1.9 billion and again if I all see the forecasts and the momentum we have there, it will be clearly a number well above 7 billion. The private bank in my view is very stable and again...

Christian Sewing: If I can see the forecast and the momentum we have there, it will be clearly a number well above EUR 7 billion. The Private Bank, in my view, very stable. Think about that, what we always said before, that the real impact of the tailwind is still to come. If I look at last year, if I look at this year, if I look at Q1, kind of a number well above EUR 9 billion is well achievable in the Private Bank. Asset management, again, a EUR 2.5 billion number with all that I can see well achievable. I think the stable business will be well in excess of EUR 19 billion.

Asset management, again, a two and a half billion number with all that what I can see well achievable. So I think the stable business will be well in excess of 19 billion. If you then think about the 28.5 billion, it's approximately 9 billion, which we need from the investment bank. Now again,

Christian Sewing: If you then think about the EUR 28.5 billion, it's approximately EUR 9 billion, which we need from the Investment Bank. Now again, I think James said it in his prepared remarks, a very strong business actually in the Investment Bank. The episodic items which we recorded in Q1 2022, we always knew that this is not repeatable, but the underlying flow in the Investment Bank is strong. I just told you about additional investments, which we did also Latin America and so on. I think, you know, what we need to achieve just in order to come to the EUR 28.5 billion would be something like EUR 9 billion of revenues in the Investment Bank. We took EUR 2.7 billion in. That would mean on average EUR 2.1 billion quarterly, which we have seen.

I think James said it in his prepared remarks, very strong business actually in the investment bank. The episodic items which we recorded in the first quarter of 2022, we always knew that this is not repeatable, but the underlying flow in the investment bank is strong. I just told you about additional investments which we did also in Latin America and so on.

Christian Sewing: Which we have seen and where, I'm highly confident to get there, again, based on the momentum. Hence, you know what, the guidance stands, and I'm confident. The third question to you.

have seen and where I'm highly confident to get there again based on the momentum. And hence, you know what the guidance stands and I'm confident.

James von Moltke: You know, on LCR, we'll always back test. I think the industry and working with regulators, we'll back test what we call the outflow assumptions or the liquidity risk drivers. We'll incorporate what we learn into our own internal models and discuss with regulators as an industry, whether there are changes to LCR that are necessary. I'll tell you that the experience of the last several years, you know, the COVID crisis in 2020, the impact of the inception of the war in Ukraine last year. Now the banking sector turbulence. All of those things have actually proven out rather than disproved the severity of the liquidity risk driver. We feel really good about what the tool tells us. You mentioned the CDS market.

On LCR, we'll always back test. I think the industry and working with regulators will back test what we call the outflow assumptions or the liquidity risk drivers. We'll incorporate what we learn into our own internal models.

and discuss with regulators as an industry, whether there are changes to LCR that are necessary. I'll tell you that the experience of the last several years, you know, the COVID crisis in 2020, the impact of the inception of the war in Ukraine last year, now the banking sector turbulence, all of those things have actually proven out rather than disprove the severity of the liquidity risk drivers. So...

James von Moltke: We think CDS is an important risk management tool as well, helping banks and counterparties manage credit risk. That said, it's an illiquid market, relatively speaking, and is prone to movements that may not reflect a realistic assessment of default probability. I think it probably does bear some scrutiny as to how that market works and whether there are ways to improve it. Let's be clear, I think institutionally and speaking personally, we think short selling is a viable activity. It provides information to the marketplace and is not something that we would criticize in and of itself.

to movements that may not reflect a realistic assessment of default probability. And so I think it probably does bear some scrutiny as to how that market works and whether there are ways to improve it. Let's be clear, I think institutionally, I think that's a really good question.

And speaking personally, we think short selling is a viable activity. It provides information to the marketplace and

James von Moltke: You know, the question is there a possibility for crosstalk between different parts of the capital structure that really doesn't represent real information in the marketplace? Hence, you know, it's something that does bear some scrutiny. As I say, we went through this period, which was an idiosyncratic focus, I think well. In a sense, we were tested and we showed ourselves to be a strong, stable bank without the vulnerabilities that the market was concerned about. In a sense, that's a good thing that clients, investors, and counterparties were able to see that. I'd probably leave it there, Tom.

You know, the question is, is there a possibility for crosstalk between different parts of the capital structure that really doesn't represent the

information in the marketplace. And hence, you know, it's something that does bear some scrutiny.

As I say, we went through this period, which was an idiosyncratic focus, I think well. In a sense, we were tested and we showed ourselves to be a strong, stable bank without the vulnerabilities.

that the market was concerned about. And in a sense, that's a good thing that clients and investors and counterparties were able to see that. So I'd probably leave it there, Tom.

the market was concerned about and in a sense that's a good thing that clients and investors and counterparties were able to see that. So I'd probably leave it there Tom. Yeah that's very clear, thank you.

Andrew Lim: Yeah. No, that's very clear. Thank you.

Thomas Hallett: Yeah. No, that's very clear. Thank you.

Operator: The next question is from the line of Anka Reingen from RBC. Please go ahead.

Anka Reingen: Yeah, thank you very much. Good morning, thank you for taking my questions. The first is on costs, if you can talk a bit about the outlook and guidance. With respect to 2023, Q1 that's running in line with the target of flat adjusted and reported. If we look for the rest of the year, do you see any potential headwinds to your cost target? I mean, you mentioned hiring. Is there a risk that we don't end up on a flat adjusted and reported cost basis? Then in that respect, just confirming the EUR 500 million restructuring costs are incorporated in your flat cost guidance. Then if we travel from 2023 to 2025, is that like essentially flat trajectory as well?

The next question is from the line of Anke Rangen from RBC. Please go ahead. Yeah, thank you very much. Good morning for taking my questions. The first is on cost, if you can talk a bit about the outlook and guidance. With respect to 2023, Q1 is running in line with the target of flat adjusted and reported. The second question is on cost, if you can talk a bit about the outlook and guidance. With respect to 2023, Q1 is running in line with the target of flat adjusted and reported.

And if we look for the rest of the year, do you see any potential headwinds to your cost target? I mean, you mentioned tiring. Is there a risk that we don't end up on a flat adjusted and reported cost basis? In that respect, just confirming the 500 million restructure and cost are incorporated in your...

Anka Reingen: When do the EUR 2.5 billion cost savings come through and add a EUR 500 million, like an additional cost saving, in your cost path you modeled? Or is it basically offsetting additional headwinds, you weren't seeing initially? The cost-income ratio target, I realize you've made lots of progress, but still, 62.5% looks quite ambitious. What levers do you think it can pull, or where is the upside potential, from where we stand at the moment? Then second question is on loan losses, unchanged guidance of 25 to 30 basis points. Q1 is already 30 basis points, and your assumption is avoiding a recession in Germany. How confident are you on your loan loss provision guidance? Thank you very much.

like an additional cost saving in your cost path you modeled or is it basically offsetting additional headwinds you weren't seeing initially.

And the cost income ratio target, I realize you've made lots of progress, but still 62.5 looks quite ambitious. What levers do you think you can pull or where is the upside potential from where we stand at the moment? And then second question is on loan losses, unchanged guidance of 25.

James von Moltke: Anka Reingen, thank you for the questions. I'll dive in and Christian Sewing may want to add. I'll go in reverse order, if I may. Look, as we've talked about, the EUR 372 million this quarter is probably higher than we would have expected, and in particular focuses on the, you know, around EUR 120 million that we recognized on these two individual exposures in the IPB. If you take that out, EUR 250 million in the quarter is actually a sensible run rate, and would certainly deliver, you know, on the range and guidance that we've given. We're not seeing indicators at this point of weakness in credit.

I'll go in reverse order if I may. Look, as we've talked about, the 372 million this quarter is probably higher than we would have expected. And in particular focuses on the, you know, around 120 million that we recognized on these two individual exposures in the IPB.

If you take that out, 250 in the quarter is actually a sensible run rate and would certainly deliver on the range and guidance that we've given. We're not seeing indicators at this point of weakness in credit. So as we look at the forward-looking indicators, ratings movements, stage 2 events, and all the...

James von Moltke: As we look at the forward-looking indicators, ratings movements, you know, stage two events and all the metrics we look at, we're just not seeing it yet. We are obviously mindful of the environment that we're in and watching carefully. To your question about do the trends support the range, you know, they do. We're comfortable there. The question on the path to 25 on cost income ratio, you know, what's the lever? The lever is operating leverage. You know, what we highlighted back in February is that the sort of the cumulative, if you like, the compound rate of operating leverage improvement over the four years from 18 was 5% a year.

The lever is operating leverage. You know, what we highlighted back in February is that the sort of the cumulative, if you like, the compound rate of operating leverage improvement over the four years from 18 was 5% a year. Now, we may not achieve that every year, but.

James von Moltke: Now, we may not achieve that every year, but it doesn't take 5% a year to get us to 62.5% from 67%. That's also why we've defined the strategy as we have and why we define acceleration as we've done. You know, if we can find ways to accelerate revenue growth and at least manage the expense base flat with some of the initial additional measures that we're taking, at least offsetting additional investments and hopefully bringing a little bit more to the bottom line over that time, we think the math to get to 62.5% is very solid.

But it doesn't take 5% a year to get us to 62.5% from 67%. And so that's also why we've defined the strategy as we have and why we define acceleration as we've done. If we can find ways to accelerate revenue growth.

and at least manage the expense base flat with some of the additional measures that we're taking, at least offsetting additional investments and hopefully bringing a little bit more to the bottom line over that time. We think the math to get to 62.5% is very solid and as Christian outlined, we'd hope to be able to...

James von Moltke: As Christian outlined, you know, we'd hope to be able to make that a you know a more easily achievable target, and as I say, potentially create room for reinvestment. The 2023 path, as you say, is one where, you know, are there headwinds? There are always headwinds, you know, where we are making investments, whether it's in technology or controls, we're seeing inflation, and we need to work to offset those things. The initiatives we announced today are not that meaningful in terms of 2023. They might help us to the tune of around EUR 50 million in H2.

to make that a more easily achievable target, and as I say, potentially create room for reinvestment. The 23 path, as you say, is one where, you know, as other headwinds, there are always headwinds, you know, where we are making investments, whether it's in technology or controls, we're seeing inflation, and we need to work to offset those things. So thekeepship¯ Lydia, you talk slowly about the demo bug itself, yeah, theccive, you know, what are the data Trash alienation A distractions,.. we were making a demo of aardo

The initiatives we announced today are not that meaningful in terms of 23. So they might help us to the tune of around 50 million in the back half of the year, but they step up over the next couple of years. And so the run rate that we think to the various initiatives that we're talking about should achieve by 25 or if not dribbling a little bit into 26 would be about 250 million. So we think it's a meaningful sort of contribution to the 500 million goal that we have.

announced today are not that meaningful in terms of 23. So they might help us to the tune of around 50 million in the back half of the year, but they step up over the next couple of years. And so the run rate that we think to the various initiatives that we're talking about should achieve by 25, or if not dribbling a little bit into 26 would be about 250 million. So we think it's a meaningful sort of contribution to the 500 million goal that we have.

James von Moltke: They step up over the next couple of years, and the run rate that we think to the various initiatives that we're talking about should achieve by 2025 or if not dribbling a little bit into 2026 would be about EUR 250 million. We think it's a meaningful sort of contribution to the EUR 500 million goal that we have. We're seeing a number of things, obviously, in the expense base we've talked about. You know, we're gonna continue to fight through now in the Q2. Work hard to keep the company at that run rate we've talked about. In the H2, we actually start to harvest some benefits of things we've been working on for a while.

We're seeing a number of things, obviously, in the expense base we've talked about. We're going to continue to fight through now in the second quarter, work hard to keep the company at that run rate we've talked about. In the second half, we actually start to harvest some benefits of things we've been working on for a while.

James von Moltke: I think notably, as we complete the Unity integration, while it doesn't immediately happen, we start to harvest the benefits of that investment. We talked about the linearity and non-linearity of certain elements of the EUR 2 billion. We will continue to work and harvest those. You know, the short answer is, of course, it's always challenging to manage a company in an environment like this with so many moving parts to a run rate. We think we've got the tools and the measures in place to do that, and we've got an intense amount of management focus on it. As Christian says, even more so with Rebecca's expanded responsibilities.

I think notably as we complete the Unity integration, while it doesn't immediately happen, we start to harvest the benefits of that investment. We talked about the linearity and non-linearity of certain elements of the 2 billion. So we will continue to work and harvest those.

The short answer is, of course, it's always challenging to manage a company in an environment like this with so many moving parts to a run rate, but we think we've got the tools and the measures in place to do that, and we've got an intense amount of management focus on it, and as Christian says, even more so with Rebecca's expanded responsibilities.

Christian Sewing: Anka, the only point I want to add, James said it all, but potentially a number which helps you is the Q1 loan loss provisions ex these two, in my view, idiosyncratic items in the IPB was actually 21 basis points. That tells you also something about the robustness and the solidity of Deutsche Bank's credit portfolio. With the statements James just made, that also going forward and the behavior of our credit portfolios, we cannot really see a negative development or a negative outlook. Hopefully, this 21 basis points also gives you a little bit of guidance or hopefully comfort for our overall full-year guidance.

The only point I want to add, James said it all, but potentially a number which helps you is the Q1 loaners provisions X these two, in my view, idiosyncratic items in the IPB was actually 21 basis points. And that tells you also something about the robustness and the solidity of Deutsche Bank's credit portfolio. And I think as Joe You Eh Wolfe yesterday saying earlier in par with Jurassic Park, what did the instrumental what was the point of these legislations?

with the statements James just made that also going forward and the behavior of our credit portfolios we cannot really see a negative development or a negative outlook. Hopefully this 21 basis points also gives you a little bit of guidance or hopefully comfort for our overall fully-agreed. Thank you if I may just come back to the to the course.

Anka Reingen: Thank you. If I may just come back to the cost path, given some of the EUR 2.5 billion is more back-end loaded cost savings, the idea is still to be essentially flat over 2023, 2024, 2025. Thank you.

James von Moltke: Mm-hmm. That's right. Look, one thing, Anka, I think that was embedded in your question, I apologize. You know, the restructuring severance is higher than we would have planned for the year. That is true. In a sense, we've had an opportunity arise based on a lower than expected Single Resolution Fund assessment. You know, we think, you know, we've been given an opportunity, even with that investment, to manage to the original guidance we gave you this year.

for the year, that is true. In a sense, we've had an opportunity arise based on a lower than expected single resolution fund assessment. So, we think we've been given an opportunity, even with that investment, to manage to the original guidance we gave you this year. Thank you. Thank you, Anke. The next question is from the line of Stuart Graham from Autonomous Research.

Anka Reingen: Thank you.

James von Moltke: Thank you, Anka.

Operator: The next question is from the line of Stuart Graham from Autonomous Research. Please go ahead.

Stuart Graham: Oh, hi. Thanks for taking my questions. I had two, please. The first is coming back on the LCR. You set the 130% target some time ago in, I guess, what was a pre-Twitter world. I think we've all been shocked at how quickly non-sticky retail and corporate deposits can move nowadays. Given the power of social media, don't you think that 130% needs to be higher nowadays? That's the first question. The second question is on US commercial real estate office exposure. Thank you for the extra granularity on slide 38. That's really been useful. Could I also ask how much of that $4.5 billion book is criticized? And what your stock of loan loss amounts is on that book are, please? Thank you.

Please go ahead. Oh, hi. Thanks for taking my question. I had two, please. The first is coming back on the LCR. You set the 130-cent target some time ago in, I guess, what was a pre-Twitter world, and I think we've all been shocked at how quickly non-sticky retail and corporate deposits can move nowadays. So given the power of social media, don't you think that 130-cent needs to be higher nowadays?

That's the first question. And the second question is on US commercial real estate office exposure. Thank you for the extra granularity on slide 38. That's really useful. Could I also ask how much of that $4.5 billion book is criticized and what your stock of loan loss allowance is on that book are please. Thank you.

James von Moltke: Sure, Stuart. You know, it's early days with respect to LCR, and the items that you mentioned. I mean, yes, we've learned, you know, a painful lesson about the speed at which information and arguably in some cases, misinformation, travel in a social media world and the relatively frictionless movement of funds that we have. I think the important lesson is confidence in banking institutions is critical. I think that confidence arises from banks getting the basics right, and we think we've got the basics right at Deutsche Bank. Those are stable deposit bases and funding, managing risks carefully, ensuring that you're really adding value for clients. You have a sustainable business model, you know, and all of these elements. Does it affect how you think about LCR?

Sure Stuart, you know it's early days with respect to LCR and the items that you mentioned. I mean yes we've learned you know a painful lesson about about the the speed at which information and arguably in some cases misinformation travel in a social media world and the relatively frictionless movement of funds that we have.

I think the important lesson is confidence in banking institutions is critical. I think that confidence arises from banks getting the basics right. And we think we've got the basics right at Deutsche Bank. And those are stable deposit bases and funding, managing risks carefully.

ensuring that you're really adding value for clients, you have a sustainable business model. You know, all of these elements.

that you're really adding value for clients, you have a sustainable business model, you know, and all of these elements. Does it affect how you think about LCR?

James von Moltke: You know, I think LCR is misunderstood in the sense that it's very conservative. Because the banks have chosen, since it was introduced, to manage to buffers, you know, that there's room in that ratio. I think it's important to understand if a bank hits 100%, you know, in our case, we have now a 43% margin against the 100%. At 100%, we're still able to withstand a 30-day stress and come out standing. It is a conservatively constructed ratio. You have to remember also that things that flow off the balance sheet affect both the numerator and the denominator. You have this dynamic nature of the ratio on the way down.

You know, I think LCR is misunderstood in the sense that it is very conservative. And because the banks have chosen, since it was introduced, to manage to buffers, it is

you know, that there's room in that ratio. I think it's important to understand if a bank hits 100%, that, you know, in our case, we have a now 43% margin against the 100%, but at 100%, we're still able to withstand a 30 day stress and come out standing.

So it's a conservatively constructed ratio. You have to remember also that things that flow off the balance sheet affect both the numerator and the denominator. And so you have this dynamic nature of the ratio on the way down. So there's a number of interesting features about that tool that would suggest

James von Moltke: There's a number of interesting features about that tool that would suggest it's, as it is, a very sort of powerful stability driver in the industry. That doesn't mean we won't examine it. We won't examine individual risk drivers, but my hope is that a combination of the basics and the tools we have today are, you know, put us in a good place.

as it is, it's a very sort of powerful stability driver in the industry. That doesn't mean we won't examine it, we won't examine individual risk drivers, but my hope is that a combination of the basics and the tools we have today put us in in a good place.

Stuart Graham: In theory, if the Basel Committee chose to recalibrate it, you could run with a lower buffer. It wouldn't have to be 130, it might be 110 on a more conservatively stated LCR. I know it's a theoretical discussion, but.

So in theory, if the Basel committee chose to recalibrate it, you could run with a lower buffer. It wouldn't have to be 130. It might be 110 on a more conservatively stated LCL. I know it's a theoretical discussion, but... Theoretically, yes. And we're mindful, Stuart, that there is a cost to holding these buffers, right? Our shareholders essentially are paying for that buffer.

James von Moltke: Yeah. Theoretically, yes. We're mindful, Stuart, that there is a cost to holding these buffers, right?

Stuart Graham: Mm-hmm.

James von Moltke: You know, our shareholders essentially are paying for that buffer. It needs to be there, let's be clear. The sustainability of a bank which is engaged in maturity transformation relies on that buffer being there, but you want to calibrate it to a level that protects safety and soundness in essentially all market conditions, but then isn't so inefficient that it's an unreasonable tax on shareholders. That balance is an interesting one, and I think we need to continue to examine. In general, by the way, banks, we have since the crisis, we have this behavior of preserving buffers. Banks manage now not just with buffers, but with a disincentive to see buffers used.

It needs to be there, let's be clear. You know, the sustainability of a bank, which is engaged in maturity transformation, relies on that buffer being there, but you want to calibrate it to a level that, you know,ategronicregnancy launchers...

protect safety and soundness in essentially all market conditions, but then isn't so inefficient that it's an unreasonable tax on shareholders. So that balance is an interesting one and I think we need to continue to examine.

In general, by the way, banks, since the crisis, we have this behavior of preserving buffers. So banks manage now not just with buffers, but with a disincentive to see buffers used. And so I think that whole edifice, in a sense, can be discussed and examined.

James von Moltke: I think that whole edifice in a sense can be discussed and examined. I just want to draw a line under it. In a positive way, the stability and the tools and the post-crisis regulation I think should be understood as a success based on what we've learned over the past eight weeks rather than the opposite. Briefly on commercial real estate, you know, we don't actually look at it in US terms around criticized necessarily in our IFRS accounting, but what I can tell you is that one point six billion, so a little bit more than a third, would be in stages two and three. We think there's, you know, we're not saying we're immune.

But I just want to draw a line under it. In a positive way, the stability and the tools and the post-crisis regulation, I think should be understood as a success based on what we've learned over the past eight weeks rather than the opposite. Briefly on commercial real estate, we don't actually look at it.

James von Moltke: We think we're well underwritten. We have a stable portfolio. We think project by project, we're in good shape, given the market environment. But there, of course, are loans, maybe EUR 600 million of that EUR 1.6 billion that we're looking at carefully and need to work with the sponsors, around extension dates and refinancings to make sure it carries through this market environment without, you know, more scratches and bruises.

We think there's, you know, we're not saying we're immune. We think we're well underwritten. We have a stable portfolio. We think project by project. We're we're in good shape, given the market environment, but they're there, of course, are loans, maybe 600 million of that 1.6 billion that we're looking at carefully and need to work with us.

Stuart Graham: The stock of provisions on that book?

James von Moltke: Stock of provisions is, I think, in total around probably EUR 50 million against the Stage 3, not against the EUR 1.6, but against the Stage 3.

in total around probably 50 million against the stage 3 not against the 1.6 but events of stage 3. Okay thank you very much. Thank you Stuart. Next question is from the line of Nicolas Payen from Kettler-Jeffreux. Please go ahead.

Stuart Graham: Got it. Okay. Thank you very much.

James von Moltke: Thank you, Stuart.

Operator: Next question is from the line of Nicolas Payen from Kepler Cheuvreux. Please go ahead.

Nicolas Payen: Yes, good morning. Thanks for taking my question. I have two. The first one would be on the revenue path going into 2024. You mentioned that, you know, we might have seen the peak in terms of interest rates repricing. You have a bit of deposit shift and increasing beta, as well as slowing growth in mortgages and loans in general. What do you think about revenues going into 2024? And the second question, sorry to come back on the idiosyncratic event of March, but as you mentioned, you have a strong liquidity buffer, conservative risk management, and yet you are one of the most banks under pressure from stock price point of view in March. What can you do to change the perception about the riskiness and the stronger fundamentals of DB? Thank you.

Yes, good morning. Thanks for taking my question. I have two. The first one would be on the revenue path going into 2024. You mentioned that we might have seen the peak in terms of interest rates re-pricing, you have a bit of deposit shift and increasing beta, as well as...

slowing growth in mortgages and loans in general. So what do you think about the revenues going into 2024? And the second question, sorry to come back on the idiosyncratic event of March, but as you mentioned you have a strong liquidity buffer, conservative risk management, and yet you were one of the most banks under pressure from stock price point of view in March. So what can you do to change the perception about the riskiness and the...

James von Moltke: I don't know if you wanna start on, you know, revenue path. Look, I'll make a couple of comments. Christian will, I'm sure, add. Look, we're not at a point where I'll start with the Investment Bank because that's where investors tend to start. I don't think we're at a point of sort of peak revenue potential in the Investment Bank. Because just if you think about where we are, for example, right now in Origination & Advisory, you know, that's still sort of recovering. We think there's scope to improve there. As Christian mentioned, I think we've got scope to invest in that area and improve our market shares, leave aside the market wallet performance. Financing is doing quite well, both in volume sort of or market opportunity terms and in spreads.

Because just if you think about where we are, for example, right now in Origination Advisory, you know, that's still sort of recovering. So we think there's scope to improve there. As Christian mentioned, I think we've got scope to invest in that area and improve our market shares, leave aside the market wallet performance. Financing is doing quite well, both in volume sort of our market opportunity.

James von Moltke: I think our markets businesses have been, you know, strong performers and also risk managers. Of course, in that business, we're gonna ride a little bit the volatility and the volumes in the marketplace, but we feel good about the way the business has come together under Ram's leadership. All of those things would tell us, you know, we can at least sustain and perhaps improve on the Investment Bank. Christian mentioned earlier, Private Bank still has a way to run in terms of momentum that interest rates deliver, let alone assets under management, loan and deposit growth, and in the case of loans outside of mortgages. We feel comfortable there's a good path there.

leadership. So all of those things would tell us, you know, we can at least sustain and perhaps improve on the investment bank.

The Christian mentioned earlier, private banks still has a way to run in terms of the momentum that interest rates deliver, let alone assets under management, loan and deposit growth. And in the case of loans, loans outside of mortgages. So we feel comfortable there's there's a there's a good path there. And while some of the, you know, I think we're probably past peak lag.

James von Moltke: While some of the, I think we're probably past peak lag, but we're not past the generalized improvement in the rate environment in Corporate Bank. Lastly, I think the asset management business by executing the plan Stefan Hoops has laid out and has a clear path to growth in assets. Obviously it will ride the market a little bit, but is also not anywhere near sort of its peak revenue potential. All of those things I think feed into 2024 and then 2025, and there's sort of sustainable momentum built into that. Your second question was liquidity and margin, what can we do?

but we're not past the generalized improvement in the rate environment in corporate bank. Lastly, I think the asset management business by executing the plans Stefan hopes is laid out and has a clear path to growth in assets. Obviously it will ride the market a little bit, but is also not anywhere near sort of its, its peak revenue potential.

James von Moltke: Look, we're acutely aware that, you know, I don't think we were singled out uniquely, but we were, you know, in a group that were potentially perceived as vulnerable to the issues that arose. As I said earlier, it's gratifying that the market can very quickly identify that those vulnerabilities did not exist with us or frankly, our peers in Europe that, you know, that might otherwise have also come under pressure. I think the answer to your question is the more we execute on our strategy, the more we deliver sustainable profitability, but also the more we put, you know, historical issues around control failures and other events in the past.

but we were in a group that were potentially perceived as vulnerable to the issues that arose.

As I said earlier, it's gratifying that the market can very quickly identify that those vulnerabilities did not exist with us or frankly our peers in Europe that might otherwise have also come into pressure. I think the answer to your question is the more we execute on our strategy, the more we deliver sustainable.

profitability, but also the more we put historical issues around control failures and other events in the past. I hope that what some call muscle memory will fade in the market and the sort of the beta nature of Deutsche Bank will fade. As a management team, I think we're all very committed to achieving that goal.

James von Moltke: I hope that, you know, what some call muscle memory will fade in the market and the sort of the beta nature of Deutsche Bank will fade. As a management team, I think we're all very committed to achieving that goal. As it lies in our hands to some extent around execution. It lies in investors' hands in terms of their support for our securities.

It lies in our hands to some extent around execution, it lies in investors hands in terms of their support for our securities. Thank you. Next question is from Adam from Media Banker. Please go ahead.

Christian Sewing: Thank you.

Operator: Next question is from the line of Adam Terelak from Mediobanca. Please go ahead.

Adam Terelak: Morning. Thank you for the questions. I had one on NII and one on capital. Could you give us a little bit of update on the NII trajectory from here? Clearly expectation on rates have gone up, but also, deposit beta seem to be low. There's a bit of color on both sides of the balance sheet there and what that means for this year's guidance. Just to add kind of what your deposit assumptions are from here, within that guidance, for full year 2023 and beyond. Secondly, on capital, Christian, you mentioned the EUR 15 to 20 billion of RWA relief.

Morning, thanks for the questions. I had one on NII and one on capital. Could you give us a little bit of an update on the NII trajectory from here? Clearly expectation and rates have gone up, but also deposit beta seems to be low. There's a bit of a colour on both sides of the balance sheet there and what that means for this year's guidance.

and just to add kind of what your deposit assumptions are from here within that guidance before year 23 and beyond. And then secondly on capital, Kristin, you mentioned the 15 to 20 billion of RWA relief. I just want to understand your guys thinking on how to redeploy that kind of 2 billion plus potentially a capital loss.

Adam Terelak: I just wanna understand your guys thinking on how to redeploy that kind of EUR 2 billion plus potentially of capital unlocked, whether that's going back into the balance sheet, what businesses would be growth in or kind of what decisions would come to returning that to shareholders as you mentioned. Finally, just a clarification on Q4, you were talking about kind of the regulatory inflation to come with offset is the market risk benefit you've taken this quarter, the offsetting item that we've discussed in previous quarters. Thank you.

Whether that's going to go back into the balance sheet, what businesses would be growth in, or kind of what decisions would come to returning that to shareholders, as you mentioned. And finally, just a clarification on 4Q, you were talking about kind of the regulatory inflation to come with offset. Is the market risk benefit you take in this quarter the offsetting item that we've discussed in previous courses?

James von Moltke: Adam, I'm not sure I followed all the questions, but let me start with NII trajectory. You know, what I do is refer you back to page 26 of the February 2 materials. Now we're not gonna update the NII trajectory sort of every quarter. But I would say that the assumptions there on page 26 are still pretty good assumptions. There are always movements up and down in how NII will perform. But this idea that we would put on at that time EUR 900, I think it's actually a little bit better than EUR 900 given assumptions have improved relative to our expectations at that time this year, is still a really good assumption.

Thank you. So Adam, I'm not sure I followed all the questions, but let me start with NII trajectory. What I do is refer you back to page 26 of the February 2nd materials. Now we're not going to update the NII trajectory sort of every quarter, but I would say that the assumptions there on page 26 are still pretty good assumptions. There are.

always movements up and down in how NII will perform. But this idea that we would put on at that time 900, I think it's actually a little bit better than 900 given assumptions have improved relative to our expectations at that time this year, is still a really good assumption. So we did 13.65 billion of net interest income.

James von Moltke: We did EUR 13.65 billion of net interest income last year. If that grew by EUR 1 billion or more, that would be a good assumption. You know, there might be a sort of a plateau or even a small dip in 2024, and then as you see, there's another leg up in 2025 as the interest rate characteristics in the private bank come through. That guidance still holds, I think. Now one thing just to advise you, if you look at net interest income in Q1 and attempt to annualize it, you won't get to that number precisely because as we highlight, there's been a swing in the characteristic of the revenue recognition. Think of it a little bit like trading NIM in the US banks.

last year, if that grew by a billion or more, that would be a good assumption. You know, there might be a sort of a plateau or even a small dip in 24, and then as you see, there's another leg up in 25 as the interest rate characteristics in the private bank come through. So, I think that guidance still holds.

Now, one thing just to advise you, if you look at interest income in Q1 and attempt to annualize it, you won't get to that number precisely because, as we highlight, there's been a swing in the characteristic of the revenue recognition. Think of it a little bit like trading NIM in the US banks, more of the revenues.

James von Moltke: You know, more of the revenues were characterized as fair value through P&L in Q1 than would be typical, and we can get into the reasons for that. Don't be concerned that there's any difference in the guidance from that sort of anomaly. We're very comfortable with the guidance that we've given. Actually at the moment we're seeing based on the curve and the funding profile, we see a little bit of upside to our earlier guidance.

were characterized as fair value through P&L in Q1, then would be typical and we can get into the reasons for that. So don't be concerned that there's any difference in the guidance from that sort of anomaly. We're very comfortable with the guidance that we've given and actually at the moment we're seeing based on the curve and the funding profile we see a little bit of upside to our earlier guidance. And Adam on your capital question.

Christian Sewing: Adam, on your capital question. Look, one thing is clear if you see market opportunities like I tried to describe it. Obviously some of the RWA optimizations, we will certainly reinvest also into the one or the other business. Clearly, we also believe that with the increased profitability which we expect, and with that capital efficiency which we outlined on page seven. By the way, again, this has not been only a top-down but bottom-up analysis, which we even curtailed a bit top-down so there is real potential. Of course, we will think about how much of these additional savings we can also hand back to our shareholders.

Look, one thing is clear if you see market opportunities like I tried to describe it, obviously some of the RWA optimizations we will certainly reinvest also into the one or the other business. But clearly we also believe that with the increased profitability which we expect and with that capital efficiency which we outlined on page 7.

Christian Sewing: I think, if you ask me today, it will be a combination of reinvestment into those business which is really then capital rewarding and, where we have a very good story for our shareholders and investors, but part of that will be also given back to the shareholders.

to those business which is really then capital rewarding and where we have a very good story for our shareholders and investors, but part of that will be also given back to the shareholders. And maybe just build on that, what Christian said, to give you a bit more specific guidance, you know, if I look at the consensus RWA number for 2025, which is 422, you know, without wanting to get pinned down to specific numbers because as Christian says, it's quite.

James von Moltke: Maybe just build on that, what Christian said, to give you a bit more specific guidance. You know, if I look at the consensus RWA number for 2025, which is 422, you know, I would, without wanting to get pinned down to specific numbers, because as Christian says, it's quite dynamic. You know, think of the 15 to 20 as being a net reduction from that guidance. So we would expect based on everything we know right now to be somewhere in the low 400s, 400 to 410.

James von Moltke: That can give you a sense if you're building your model based on organic revenue generation, the Basel III impact that we've talked about of about EUR 30 billion of RWA gives you a little bit of sense of where it can provide, at the very least, additional support for the capital trajectory that we've laid out already.

of RWA gives you a little bit of sense of where it can provide, at the very least, additional support for the capital trajectory that we've laid out already.

Adam Terelak: Great. Thank you. The final point was whether the regulatory tailwind you've had this quarter was the kind of offsetting item we've discussed again.

Great, thank you. The final point was whether the regulatory tailwind you had this quarter was the offsetting item we discussed against the molarly. No, it's all still. There was one item that we talked about was a market risk RWA item.ARR Multi-

James von Moltke: No.

Adam Terelak: the modeling.

James von Moltke: No, it's all still there. There was the one item that we talk about, a market risk RWA item that was in the plan, but is not part of the net EUR 40 to 60 that I talked about earlier.

That was in the plan, but is not part of the net 40 to 60 that I talked about earlier. Okay, very clear. Thank you. Thanks. The next question is from the line of Kian Abou-Hussain from JP Morgan. Please go ahead. Yes, thanks for taking my questions. The first one is for the

Adam Terelak: Okay, very clear. Thank you.

James von Moltke: Thanks.

Operator: The next question is from the line of Kian Abouhossein from J.P. Morgan. Please go ahead.

Kian Abouhossein: Yeah, thanks for taking my questions. The first one is more a general question. I mean, if I look at the turnaround of the bank, and I think Berlin should send you two medals, both to Christian and James. The market is clearly thinking differently. I mean, you're trading at 0.3 times tangible book. You're trading at 5 times roughly this year's earnings. There's a disconnect, and I'm just trying to understand how you're gonna bridge that disconnect. If there's gonna be any change in the sense that you're gonna over-communicate, maybe an investor day or any other measures that you feel are understood, in particular that we should be thinking about, an investor should be thinking about.

at five times roughly this year's earnings.

So there's a disconnect and I'm just trying to understand how you're going to bridge that disconnect.

And if there's going to be any change in the sense that you're going to over communicate maybe in an investor day or any other measures that you feel are understood, in particular, that we should be thinking about and investors should be thinking about. And the second question is, I'm quite interested in some management changes that you have announced.

Kian Abouhossein: The second question is, I'm quite interested in some management changes that you have announced, and clearly you have Rebecca Short, she being the COO and also being responsible for cost besides the transformation. Just wondering if there's any change in your thinking around cost. I mean, it feels like there is from the language, but just wondering if there's any. Clearly you have the EUR 500 million, but I wonder if there's any change in the way we should think about Deutsche and cost management going forward now relative to last year.

we should think about Deutschland cost management going forward now relative to last year.

Christian Sewing: Thank you, Kian. Look, let me try to start, and James will jump in. Look, it's always hard to talk about yourself why we are perceived in the market as we are perceived. This is actually a question I would like to always send back to you guys that you tell us what we can do better in communicating. Look, I give you three items, and one of them is not meant in any defensive way, but I do believe that if you just think 14 months back where we stood in February 2022 before this awful war broke out. I think at some point in time, our share price was around EUR 14.30 or something like that.

Thank you, Kian. Look, let me try to start and James will jump in. Look, it's always hard to talk yourself about why we are perceived in the market as we are perceived. This is actually a question I would like to always send back to you guys, that you tell us what we can do better in communicating.

Look, I give you three items and one of that is not meant in any defensive way, but I do believe that if you just think 14 months back where we stood in February 2022 before this awful war broke out, I think at some point in time we were at share price around 1430 or something like that. Not that this would be our ultimate goal, as you know, but you could see that actually people started to think about this as going into the right direction.

Christian Sewing: Not that this would be our ultimate goal as you know, but you could see that actually people started to think about this going into the right direction. Now, I still believe that the overall uncertainty and the geopolitical uncertainty is a drag for us and that we are still kind of suffering from that. That is point number one.

Now, I still believe that the overall uncertainty, the geopolitical uncertainty is a drag for us and that we are still kind of suffering from that. That is point number one. Point number two is clearly that we have to show, and we also hear it on this call, and I think it's only delivery, but you have two very resilient people here on this call.

Christian Sewing: Point number two is clearly that we have to show, and we also hear it on this call, you know, I think it's only delivery, but you have two very resilient people here on this call, and we will drive this resilience, and we will show you quarter by quarter, week by week, month by month, and day by day that we keep the ship exactly in this direction. But the composition of Deutsche Bank, of the revenues completely changed. We have 66% of revenues from the Corporate Bank, Private Bank, and Asset Management. If you would listen to me for another two hours, I can tell you, I can tell you these revenues in these businesses only have one direction. It will, this 66% will be kind of the ratio.

and we will drive this resilience and we will show you quarter by quarter, week by week, month by month and day by day that we keep the ship exactly in this direction. But the composition of Deutsche Bank of the revenues completely changed. We have 66% of revenues from the corporate bank, private bank and asset management.

And if you would listen to me for another two hours, I can tell you these revenues in these businesses only have one direction. And it will, this 66% will be kind of the ratio, potentially it even goes into an even more favorable number if you think about balanced versus stable versus less stable business.

Christian Sewing: Potentially, it even goes into an even more favorable number. If you think about balanced versus a stable versus less stable business, it even goes into an even more favorable number. You know, we have a bank which is now that balanced, that stable from a profitability, from a sustainability of revenues that I'm very confident that we can show quarter by quarter, a very sustainable development. Now to the Investment Bank, to be honest, I think we are, and again, potentially we need to do a better job, and I'm the first one who tries to learn. But I think the inner stability of the Investment Bank with all the changes we have done over the last four years is far stronger than potentially the market thinks about it.

it even goes into an even more favorable number. So, you know, we have a bank which is now that balanced, that stable from a profitability, from a sustainability of revenues that I'm very, very confident that we can show quarter by quarter a very sustainable development. Now, to the investment bank, to be honest, I think we are, and again, potentially,

Christian Sewing: James just talked about the financing business, a very stable business. I think it's a financing business in the investment bank, which is, in my view, among the top three in the world. Also from an underwriting standards, if you think about the value chain from the first line of defense to the second line of defense, I think it's a business where even others outside people of Deutsche Bank saying this is honestly, this is state-of-the-art business. That is a business which is constantly there, continuously there with above EUR 3 billion of revenues. We have reconfigured the trading business under Ram Nayak to one of the leading trading businesses.

Bank which is in my view among the top three in the world also from an underwriting standards if you think about the value chain from the first line of defense to the second line of defense I think it's it's a business where even others outside people of Deutschland saying this is honestly this is top of the art business that is a business which is constantly there continuously there

with above 3 billion of revenues. We have reconfigurated the trading business under Ram Nayak to one of the leading trading businesses and again if you look at Q1 and take out the it's exotic items, I'm just mentioning the ZIM name which we talked about in 2021 and 2022 a lot, which obviously is not something which comes back every quarter, then the underlying business in the investment bank in 2023 in the first quarter.

Christian Sewing: Again, if you look at Q1 and take out the exotic items, I'm just mentioning the ZIM name, which we talked about in 2021 and 2022 a lot, which obviously is not something which comes back every quarter. The underlying business in the Investment Bank in 2022 in Q1, 2023 in Q1 was actually even stronger than in Q1 of 2022, despite it was a very strong quarter. We will see now a comeback in the O&A business in the Investment Bank. We do some selective investments there because we see the market opportunities, and we will be awake for these market opportunities.

was actually even stronger than in the first quarter of 2022, despite it was a very strong quarter. We will see now a comeback in the O&A business in the investment bank. We do some selective investments there because we see the market opportunities and we will be awake for these market opportunities. So that I think you have three very stable business with the interest rates still to come in one of our largest business, which is the private bank, with revenues above 9 billion.

Christian Sewing: I think we have three very stable business with the interest rate still to come in one of our largest business, which is the private bank, with revenues above EUR 9 billion, clearly above EUR 9 billion. I think from a pure revenue point of view, I think this bank is completely turned around, and we are playing there where the clients want us to play and where we see the momentum. Secondly, on the cost side, yes, we are now in the second phase, and I'm grateful for your question, Kian. We are in the second phase of real cost take out.

Christian Sewing: That is a cost take out which now goes in particular front to back, that we see the revised processes where we have invested a lot in the front offices, which now need to go into the infrastructure because we need one process from the originating to the infrastructure. For that, we decided that all COOs in the infrastructure functions are now sub-summarized under Rebecca's lead so that we can do the changes in one process from the front office into the various infrastructure functions. Secondly, when you have invested so much into controls, and we keep doing this, at some point in time, obviously automation, and machine learning, artificial intelligence, but in particular, automation will also lead over time to reduce costs. Unity will pay off, as we said.

front to back, that we see the revised processes where we have invested a lot in the front offices which now need to go into the infrastructure because we need one process from the originating to the infrastructure. And for that we decided that all COOs in the infrastructure functions are now sub-summarized under Rebecca's lead so that we can do the changes.

Christian Sewing: What you now see in the second phase of taking costs out is not like in the first phase that we exited business and we took those costs out, but it's actually the smart take out of costs, plus a constant review also of our workforce, where we need to do something. The reduction in force action is something which we have done now, and I'm sure we will do similar things in 2024, 2025 again. That is a constant review of our organization. That's all now under Rebecca, and I think with one person driving that, we will even have more force on it. I think it's a normal development in this in transforming an organization, but with the robustness and resilience of the revenues.

will also lead over time to reduce costs. Unity will pay off as we said. So what you now see in the second phase of taking costs out is not like in the first phase that we exited business and we took those costs out, but it's actually the smart take out of costs plus a constant review.

also of our workforce where we need to do something. So the reduction in force action is something which we have done now. And I'm sure we will do similar things in 24, 25 again. That is a constant review of our organization. That's all now under Rebecca and I think with one person driving that, we will even have more force on it. So I think it's a normal development in this.

Christian Sewing: That discipline on the cost management, I do believe that we will show now quarter by quarter, year by year, that this bank is on the right track. At some point in time, I'm sure that also the investors will see that. If this is then even joined by hopefully, and this is, I think, the most important we should all look at, that this awful war comes to an end at some point in time. I think that also Europe will be seen differently and then latest then we will also have relief from that side. With your MREL item, actually, I will bring that message to Berlin.

transforming an organization, but with the robustness and resilience of the revenues. And that discipline on the cost management, I do believe that we will show now quarter by quarter, year by year, that this bank is on the right track. And at some point in time, I'm sure that also the investors will see that. If this is then even joined by hopefully, and this is I think the most important we should all look at.

that this awful war comes to an end at some point in time. I think that also Europe will be seen differently and then latest then we will also have relief from that side. With your medal item actually I will bring that message to Berlin. By train, with a May ticket I hope. Thank you. The next question is from the line of Amit Girl from Barclays. Please go ahead. Hi, thank you. I've got two questions, kind of actually follow-ups. One, just on, you know, I'm just trying to...

Kian Abouhossein: By train with a May ticket, I hope. Thank you.

Christian Sewing: Yeah.

Operator: The next question is from the line of Amit Goel from Barclays. Please go ahead.

Amit Goel: Hi. Thank you. I've got two questions, kind of largely follow-ups. One, just on, you know, I'm just trying to, again, gauge the size of potential share buybacks in the H2. If I use the math that you were talking about, it kinda suggested, I guess, off of a 13.6 to 13.2 CET1 ratio, you know, 40 basis points, so EUR 1.4 billion, for buybacks, growth and other things. But then obviously the last buyback was about EUR 300 million. So I'm just trying to get a sense of, are you thinking of or have you asked for numbers in the kind of EUR 750 million to 1 billion range, or is it kinda closer to what was previously done?

the size of potential share buybacks in the second half. If I use the maths that you were talking about, it kind of suggested I guess off of a 13.6 to 13.2 to C to 1 ratio, 40 bits, so 1.4 billion for buybacks, growth and other things. But then obviously the last buyback was about 300 million. So I'm just trying to get a sense of...

Are you thinking of, or have you asked the numbers in the kind of 750 to 1 billion range or is it kind of closer to what was previously done? And then the second question, just to follow up on the LCR ratio, I guess in the end I suppose I'm just wondering are you going to continue to target 130 and trend down towards that level?

Amit Goel: The second question, just to follow up on the LCR ratio. I guess in the end, I suppose I'm just wondering, are you gonna continue to target 130 and trend down towards that level, or are you gonna look to keep the LCR similar to where it is today? Do you have a benefit in your plan, on revenues for bringing that LCR down to 130? Thank you.

Or are you going to look to keep the LCR similar to where it is today? And do you have a benefit in your plan on revenues for bringing that LCR down to 130? Thank you.

James von Moltke: Thanks, Amit. Look, your math is right. So the 40 basis points would represent something a little shy of EUR 1.5 billion. So use EUR 1.5 billion. You know, as Christian indicated, you know, we look at last year's buyback at EUR 300 million, and given the progress we've made. By the way, I don't wanna be committed to a specific number, a specific timing, and it's too early, obviously, and we need to go through this with the supervisors in presenting a new capital plan. You know, a step forward on last year's number would be consistent with the guidance or the capital planning that we shared with you back in March of last year.

Thanks Amit. Look, your math is right. So the 40 basis points would represent something a little shy of one and a half billion. So use one and a half billion. You know, as Christian indicated, you know, we look at last year's buyback at 300 and given the progress we've made, and by the way, I don't want to be committed to a specific number, a specific timing.

And it's too early, obviously, and we need to go through this with the supervisors in presenting a new capital plan. But, you know, a step forward on last year's, you know, number would be consistent with the guidance or the capital planning that we shared with you back in March of last year. And as Christian mentioned, to maybe give you a sense of ranging then a 50% increase in dividend, if that was mirrored also with the increase of the buyback of a similar amount, it would give you a sense of a range of what we think is, you know, is it might be

James von Moltke: As Christian mentioned, to maybe give you a sense of ranging then, a 50% increase in dividend if that was mirrored also with an increase of the buyback of a similar amount, it would give you a sense of a range of what we think is, you know, it might be sought by us. I will say that, you know, given the starting point of 40 basis points, that's why we think, you know, it's this type of ask would be affordable. There's uncertainties in the environment. You'd expect us to remain prudent, but as we say, with the buffers we have, we think we have space for something like that.

sought by us. I will say that, you know, given the starting point of the 40 basis points, that's why we think, you know, it's this type of ask would be affordable. There's uncertainties in the environment. You'd expect us to remain prudent, but as we say with the buffers we have, we think we have space for something like that. In LCR, you know, we were very conscious as we went through Q1 that we had a high print at, you know, at the end of December , that was frankly an accident. You know, the average last quarter and the average this quarter are both

James von Moltke: In LCR, you know, we were very conscious as we went through Q1 that we had a high print at, you know, at the end of December. Yeah, that was frankly an accident. You know, we'd. The average last quarter and the average this quarter are both almost exactly where you'd want it to be in this low 130 range. If we're targeting 130, then you'd expect us to be a little bit higher than 130. I would, I think for this quarter, we'd probably target a gentle decline. We are mindful that the, that the, you know, the risks in the outlook haven't entirely abated.

almost exactly where you'd want it to be in this low 130 range. If we're targeting 130, then you'd expect us to be a little bit higher than 130. I think for this quarter, we'd probably target a gentle decline. We are mindful that the risks in the outlook haven't entirely abated. But I wouldn't want you to be surprised if the number started out with 130.

James von Moltke: I wouldn't want you to be surprised if the number, you know, started out with 130 next in July when we're talking with each other again in July. As to the cost of that buffer, obviously, it does play a role, but it is very dynamic, so I wouldn't, you know, tie a specific revenue better or worse number to a ratio better or worse view. Hope that helps.

next in when we're talking to each with each other again in July . As to the cost of that buffer, obviously it does play a role but it is it is very dynamic so I wouldn't you know tie a specific revenue better or worse number to a to a ratio better or worse view. I hope that helps. Thank you, much appreciated. Thanks Ahmed.

Jeremy Sigee: Thank you. Much appreciated.

James von Moltke: Thanks, Amit.

Operator: The next question is from the line of Jeremy Sigee from BNP Paribas Exane. Please go ahead.

Jeremy Sigee: Thank you. I'll try to be quick. It's a couple of follow-ups on capital management. The first is on balance sheets, which often has grown seasonally in Q1. With full year results, you said that again you expected it to this year, but it hasn't. It shrunk slightly in Q1. I just wondered how much of that was deliberate, sort of deliberately steering the balance sheet smaller in a choppy environment versus kind of lack of opportunity to deploy. That's my first question. My second question really just on the capital surpluses, uses, et cetera, is 13% CET1 or 13.2, is that still the right reference level in a world where, you know, the market is nervous, not just the market, but the world more broadly is nervous around banks.

The next question is from the line of Jeremy Sigu from BNP Paribas Exane. Please go ahead. Thank you. I'll try to be quick. It's a couple of follow-ups on capital management. The first is on balance sheets, which often has grown seasonally in Q1. And with all your results, you said that, again, you expected it to this year, but it hasn't. It shrunk slightly in Q1. And I just wondered how much of that was deliberately steering the balance sheet smaller.

in a choppy environment versus kind of lack of opportunity to deploy. So that's my first question. And then my second question really just on the capital surpluses, uses, et cetera, is 13% CT1 or 13.2, is that still the right reference level in a world where the market is nervous, not just the market, but the world more broadly is nervous around banks? And there are things like Basel IV to be funded. Some banks are pre-funding that, et cetera. So is 13% still the right reference level to be talking about for capital.

Jeremy Sigee: you know, there's things like Basel IV to be funded. Some banks are pre-funding that, et cetera. Is 13% still the right reference level to be talking about for capital?

James von Moltke: Yeah. Jeremy, look, I'll go in reverse order. Remember that in our capital plan, you know, we will be building to Basel III final framework. In this plan, because of the model adjustments, you know, higher LGD floors and various items, that 13.2 has been getting steadily more conservative in how we're capitalizing our risks. We do think it is appropriate to continue to target that level. As you say, there'll be a bubble in 2024 that sort of goes away on 1 January 2025, all things equal, that we need to build into our planning. We feel comfortable with the buffer at 200 basis points above MDA. As I say, it's getting more conservative steadily.

Yeah, Jeremy look I'll go in reverse order. Remember that in our capital plan you know we will be building to Basel Basel III final framework and in this plan because of the model adjustments you know higher LGD floors and various items that 13.2 has been getting steadily more conservative.

in how we're capitalizing our risks. So we do think it is appropriate to continue to target that level. As you say, there'll be a bubble in 24 that sort of goes away on 1st of January , 25, all things equal, that we need to build into our planning. But we feel comfortable with the buffer at 200 basis points above MDA. As I say, it's getting more conservative steadily. On capital management and the deliberate nature.

James von Moltke: On capital management and the deliberate nature, to be fair, it actually wasn't deliberate. Are we looking at risk appetite carefully and extensions of balance sheet in this environment? Of course. Actually the usual seasonality was a little bit less than we might otherwise have expected, both on leverage exposure and RWA. We do think loan growth is probably a little slower in the coming quarters than we might have expected given credit conditions, the possibility of recession, all the features in the environment today.

To be fair, it actually wasn't deliberate. Are we looking at risk appetite carefully and extensions of balance sheet in this environment? Of course. But actually, the usual seasonality was a little bit less than we might otherwise have expected, both on leverage exposure and RWA.

And we do think loan growth is probably a little slower in the coming quarters than we might have expected given credit conditions, the possibility of recession, all the features in the environment today.

Jeremy Sigee: It's very helpful. Thank you.

James von Moltke: Thanks, Jeremy.

Operator: Next question is from the line of Piers Brown from HSBC. Please go ahead.

That's very helpful. Thank you. Thanks, Jeremy. The next question is from the line of Pierce Brown from HSBC. Please go ahead.

Piers Brown: Yeah, good morning. Just a follow-up on funding, if I may. This was probably actually more a question for the fixed income call, but I'll ask it anyway. You've given some very good transparency around deposit flows, pre and post the events in March. I wonder if you can just give any commentary on what you're seeing in the wholesale funding markets. I think you were saying around the March events time that you had about 50% of the funding plan for this year done. Most of that was coming in senior non-preferred and covered bonds. Have you been able to access the markets, post those events? Are spreads getting back to some sort of acceptable levels?

Good morning. Just a follow up on funding, if I may. It's probably actually more a question for the fixed income call, but I'll ask it anyway. So you've given some very good transparency around the public flows pre and post the events in March. I wonder if you can just give any commentary on what you're seeing in the wholesale funding markets.

I think you were saying around the March events time, you had about 50% of the funding planned for this year done. Most of that was coming in senior non-preferable and covered bonds, but have you been able to access the markets, post those events and are spreads getting to, back to some sort of acceptable levels? And then if you've got any thoughts just on longer term issues around 81 and the viability of that market, that'd be very helpful as well. Yeah, Piers, happy to take it. Richard's with me in the room here and we look forward to talking with our fixed income investor.

Piers Brown: If you've got any thoughts just on longer term issues around AT1 and the viability of that market, that'd be very helpful as well.

James von Moltke: Yeah. Piers, happy to take it. Richard's with me in the room here, and we look forward to talking with our fixed income investors tomorrow. Nice to have fixed income topics on the equity call. Look, we came into the year, as we mentioned, cautious about the environment. When we saw the market opening in the first few weeks of the year, we decided to move quickly, much quicker than our original funding plan might have suggested. We were pleased to have done all that. Not just senior non-preferred, by the way, but we did covered and we did a tier two issue before the end of February.

James von Moltke: We'd done an AT1 deal late last year, which might look like expensive capital, but gave us real comfort traveling into an uncertain 2023 that we were making the right decisions for the bank. We haven't really gone to the market since the turbulence started in any meaningful way. I think we may have done a covered bond in the interim. The reason is not because we don't have access to it, but we don't like the price. Pre-funding therefore was I think economically sensible and has actually given us, to the earlier question from Chris, I think it has given us a slightly better funding profile than for this year and going into 2024 than we might have otherwise expected.

before the end of February . And we'd done an 81 deal late last year, which might look like expensive capital, but it gave us real comfort traveling into an uncertain 23 that we were making the right decisions for the bank. We haven't really gone to the market since the turbulence started.

and has actually given us to the earlier question from Chris, I think, has given us a slightly better funding profile for this year and going into 24 than we might have otherwise expected. Sorry, it was Adam's question on the path of net interest income.

James von Moltke: Sorry, it was Adam's question on the path of net interest income. On AT1, we think the market healed more quickly than we might have expected after that Sunday. Look, the instrument had challenges at inception as the market was being created, and I think it has now established a good convention with good investor understanding of what the various triggers and what have you are in it. I think it'll survive in this form. You know, it conceivably will be a little bit more expensive for banks to issue AT1 securities. I think it's worth a look at that. Our sense is that it'll continue to be a viable instrument going forward.

On AT1, we think the market healed more quickly than we might have expected after that Sunday. Look, the instrument sort of...

we think the market healed more quickly than we might have expected after that Sunday. Look, the instrument sort of, the instrument had

challenges at inception as the market was being created. And I think it is now established a good convention with good investor understanding of what the various triggers and what have you are in it. And I think it'll survive in this form. You know, it's conceivably will be a little bit more expensive for banks to issue AT1 securities. But, but...

James von Moltke: For us, again, given we were conservative around our issuance profile, we don't have a call date until 2025. As I say, we're in a good place on our funding plan for this year. We feel overall, you know, very constructive about where we stand, and our hope and expectation is spreads will narrow again in the coming months.

And I think it's worth a look at that, but our sense is that it'll continue to be a viable instrument going forward. For us, again, given we were conservative around our issuance profile, we don't have a call date until 2025. And as I say, we're in a good place on our funding plan for this year. So we feel overall very constructive about where we stand and our hope and expectation is spreads will narrow again in the coming months.

Piers Brown: That's very clear. Thank you very much.

James von Moltke: Thanks, Piers.

Operator: The next question is from the line of Jon Peace from Credit Suisse. Please go ahead.

That's very clear. Thank you very much. Thanks, Piers. The next question is from the line off, John Pease, from CreditSpits. Please go ahead. Yes, thank you. Just in the interest of time, maybe, Christian, I could ask you a high-level question. What would be your view of how regulators respond to the liquidity concerns of March, and would you see a risk of higher for longer deposit guarantee fund contributions? Thanks. It looks always hard to...

Speaker 16: Yeah, thank you. Just in the interest of time, maybe Christian, I could ask you a high level question. What would be your view of how regulators respond to the liquidity concerns of March? Would you see a risk of higher for longer deposit guarantee fund contributions? Thanks.

Jon Peace: Yeah, thank you. Just in the interest of time, maybe Christian, I could ask you a high level question. What would be your view of how regulators respond to the liquidity concerns of March? Would you see a risk of higher for longer deposit guarantee fund contributions? Thanks.

Christian Sewing: Look, always hard to imagine and think about what a potential reaction could be. I think first of all, in particular, the European regulators should also think back and look back at the March events, and claim that a lot of things they have done, we have done, have been right. Because I think the European banking system showed stability, resilience, and credit to the regulators for that, what they have done. You know, if I think this is, for me, the number one lesson learned. If you start from that, I think there is no reason to kind of now come up with whatever it's called, you call it, knee-jerk reaction to think about further rules.

imagine and think about what the potential reaction could be. But I think first of all, in particular the European regulators should also think back and look back at the March events and claim that a lot of things they have done, we have done, have been right. Because I think the European banking system showed stability, resilience and I think credit to the regulators.

Christian Sewing: To be very honest, I think the discussions we have also after these events are done in a very constructive way. That everybody looks at potential loopholes still or weaknesses, that is clear, and I think this should be done like we do it, if something is happening on our side. I can tell you that these discussions are really constructive, and I think regulators in particular in Europe should look back and saying, a very stable system. In this regard, I also do hope that from an SRF point of view, from a deposit scheme and from a Single Resolution Fund, that we don't see a different direction. To be honest, I'm not hearing this.

I think the discussions we have also after these events are done in a very constructive way. That everybody looks at potential loopholes still or weaknesses, that is clear and I think this should be done like we do it if something is happening on our side. But I can tell you that these discussions are really constructive and I think regular.

Christian Sewing: Again, one should also not only think about the Single Resolution Fund, but also that we have national schemes, which worked in the past. Hence, I think, again, I see regulators, politicians being actually very calm, being very constructive, and I hope that is the case going forward. Hence I'm calm on this.

this and again one should also not only think about the single resolution fund but also that we have national schemes which worked in the past and hence I think again I see regulators, politicians being actually very calm, being very constructive and I hope that is the case.

Speaker 16: Great. Thank you.

Jon Peace: Great. Thank you.

Operator: The next question is from the line of Andrew Coombs from Citi. Please go ahead.

Speaker 17: Good morning. One, if I could just come back to the LCR, but just very simple number questions. Related to TLTRO, you've obviously prepaid down. Can you tell us how much you've paid back, what your outstanding balance is, and what the LCR would be on a pro forma basis, ex the TLTRO? That's the first question. Second question is some strength in the corporate bank. In particular, when you look at the strength of CTS and ICS, if you could break down how much of that is purely driven by rates versus how much is momentum on volumes and other initiatives that you're taking. Would love your thoughts there given the strength in that division this quarter. Thank you.

Andrew Coombs: Good morning. One, if I could just come back to the LCR, but just very simple number questions. Related to TLTRO, you've obviously prepaid down. Can you tell us how much you've paid back, what your outstanding balance is, and what the LCR would be on a pro forma basis, ex the TLTRO? That's the first question. Second question is some strength in the corporate bank. In particular, when you look at the strength of CTS and ICS, if you could break down how much of that is purely driven by rates versus how much is momentum on volumes and other initiatives that you're taking. Would love your thoughts there given the strength in that division this quarter. Thank you.

but just very simple number of questions. Relates to TLTRO, you've obviously prepaid down. Can you tell us how much you've paid back, what your outstanding balance is, and what the LCR would be on a pro forma basis, X the TLTRO? First question. Second question, some strength in the corporate bank. Can you tell us how much you've paid back, how much you've paid back,

particularly when you look at the strength of CTS and ICS, if you could break down how much of that is purely driven by rates versus how much is momentum on volumes and other initiatives that you're taking, I would love your thoughts there given the strength in that division this quarter. Thank you. Andrew, on the LCR...

James von Moltke: Andrew, on the LCR, I think maybe we'll come back tomorrow in the fixed income call. I think by memory, we paid down seven of the TLTRO. What happens is TLTRO rolls into the LCR window over time. It is still there. There's a nuance in it, which has to do with what collateral is posted in the TLTRO program versus unencumbered. You know, it is a support to the ratio, but one that we have a funding plan to wean ourselves off of over time. It actually does give us some flexibility in how we manage collateral across the bank.

I think maybe we'll come back tomorrow in the fixed income call. I think by memory we paid down seven of the TLTRO and what happens is TLTRO rolls into the LCR window over time. So it is still there. There's a nuance in it, which has to do with what collateral is posted in the TLTRO program versus unencumbered. So, you know, it is a support to

to the ratio, but one that we have a funding plan to wean ourselves off of over time. And it actually does give us some flexibility in how we manage collateral across the bank. In CB, in round numbers, we were sort of flat-ish on fees and commission, a little bit up. Volumes were, depending on whether you're looking year on year or quarter on quarter, flat to up slightly. So what you get is right now a significant impact of rates and within rates.

James von Moltke: In CB, you know, in round numbers, we were sort of flat-ish on fees and commission a little bit up. Volumes were, depending on whether you're looking year on year or quarter on quarter, flat to up slightly. What you get is right now a significant impact of rates and within rates, the lag. Obviously what we'd like to see is growth in both volumes and transactions, if you like, fee and commission increasing as the lag effect begins to sort of run off.

Speaker 17: Presumably the guidance you gave at Q4 for the group where you talked about more significant deposit migration flowing through in 2024 versus 2023 would be very much the same for the Corporate Bank. To some extent, you're expecting revenues to peak out this year and then stabilize.

Andrew Coombs: Presumably the guidance you gave at Q4 for the group where you talked about more significant deposit migration flowing through in 2024 versus 2023 would be very much the same for the Corporate Bank. To some extent, you're expecting revenues to peak out this year and then stabilize.

James von Moltke: Yeah. Although that's fair, I think. Again, what remains to be seen is how the fee commission volume effect, you know, sort of offsets the runoff of the lag benefit and over what period of time. As I think we talked about in February, there's also a hedging benefit in time as certain hedges roll off. There is a step up, you know, later in 2024 from particularly dollar hedges rolling off. There's still some sort of juice in the rate environment for CB as well.

seek out this year and then stabilize? Yeah, although I think that's fair. Again, what remains to be seen is how the fee commission volume effect sort of offsets the runoff of the lag benefit and over what period of time. As I think we talked about in February , there's also a hedging benefit in time as certain.

hedges roll off there is a step up you know later in 24 from particularly dollar hedges rolling off so there's still some some sort of juice in the rate environment for CB as well.

hedges roll off, there is a step up later in 24 from particularly dollar hedges rolling off. So there's still some sort of juice in the rate environment for CB as well. Brilliant, thank you.

there is a step up you know later in 24 from particularly dollar hedges rolling off so there's still some sort of juice in the rate environment for CB as well. Thank you. Thanks Andrew.

Speaker 17: Brilliant. Thank you.

Andrew Coombs: Brilliant. Thank you.

James von Moltke: Thanks, Andrew.

Operator: The next question is from the line of Vishal Shah from Morgan Stanley. Please go ahead.

Speaker 18: Hi. Thank you so much for your presentation. I just have a few quick questions. One, can I go back to the CRE exposures? In your previous presentations, I also noted you have this additional EUR 15 billion in real estate exposures, which is recourse lending. Could you provide some clarity on the nature of that you know remaining portfolio? Secondly, on the LTVs, could you clarify if these LTVs that you provide in the presentation are as of origination, or are they your assumptions in terms of what they should look like now?

Vishal Shah: Hi. Thank you so much for your presentation. I just have a few quick questions. One, can I go back to the CRE exposures? In your previous presentations, I also noted you have this additional EUR 15 billion in real estate exposures, which is recourse lending. Could you provide some clarity on the nature of that you know remaining portfolio? Secondly, on the LTVs, could you clarify if these LTVs that you provide in the presentation are as of origination, or are they your assumptions in terms of what they should look like now?

The next question is from the line after we show it to Shaf from Morgan Stanley . Please go ahead. Hi, thank you so much for your presentation. I just have a few quick questions. One, can I go back to the CRE exposures? In your previous presentations, I also noted you have this additional $15 billion in real estate exposures, which is recourse lending. Could you provide some clarity on the nature of that remaining portfolio?

Secondly, on the LTVs, could you clarify if these LTVs that you provide in the presentation are as of origination or are they your assumptions in terms of what they should look like now? And then lastly, on the deposits, could you talk a bit about how the beta has been evolving between retail and corporates, a bit of color on the mix shifts and also how is Deutsche Bank reacting to competition in terms of re-

Speaker 18: Lastly, on the deposits, could you talk a bit about, you know, how the beta has been evolving between retail and corporates, a bit of color on the mix shifts, and also how is Deutsche Bank reacting to competition in terms of repricing? Thank you so much.

Vishal Shah: Lastly, on the deposits, could you talk a bit about, you know, how the beta has been evolving between retail and corporates, a bit of color on the mix shifts, and also how is Deutsche Bank reacting to competition in terms of repricing? Thank you so much.

James von Moltke: Sure. Happy, Vishal, to answer the questions. There's a lot in that sort of recourse lending portfolio. There can be, for example, senior revolvers to real estate investment trusts. There can be sort of working capital, sometimes construction lending to corporates that are recourse in nature, but where you have a lien on property. You know, there's a bunch of things there that also, by the way, wealth management, where you'd be lending to wealthy individuals who are investing in either their own businesses or in commercial real estate investments on their part.

There's a bunch of things there that also, by the way, wealth management, where you'd be lending to wealthy individuals who are investing in either their own businesses or in commercial real estate investments on their part. So in terms of the nature, the riskiness, if you like, and the underlying exposure.

James von Moltke: It's in terms of the nature, the riskiness, if you like, and the underlying exposure, it is very different to the non-recourse portfolio, and hence, you know, our own sort of focus versus the rest portfolio distinction. The losses in those portfolios have been negligible historically, just negligible. On the LTVs, what we provide is the most recent. Our practice is to have external evaluations no less frequently than once a year. Our internal views are updated no less frequently than every six months.

it is very different to the non-greek course portfolio. And hence, our own sort of focus versus the rest portfolio distinction. And the losses in those portfolios have been negligible historically, just negligible. On the LTVs, what we provide is the most recent. So our practice is to have external.

valuations no less frequently than once a year. Our internal views are updated no less frequently than every six months. So you do get, if not a real time, there's of course a little bit of a lag in that, but you get relatively speaking, LTVs that adjust over time. Your beta development question is an interesting one. We look at it both by currency and by portfolio.

James von Moltke: You do get, if not real time, there's of course a little bit of a lag in that, but you get relatively speaking, you know, LTVs that adjust over time. Your beta development question is an interesting one. We look at it both by currency and by portfolio. As you'd expect, you know, the dollar has moved more quickly, and I think is catching up with the models, more quickly, getting, I would argue, close on the retail side to what we might have expected, and closer on corporate. The euro is lagging that in both cases, considerably, based both on the recency of the rate increases and I think just the nature and structure of the European deposit and funding market.

James von Moltke: The euro continues to outperform again across both portfolios. While that data also has a little bit of a lag in it, looking at March right now, the turbulence the industry went through, I think it had an impact, but I wouldn't say it was a dramatic impact, at least in our estimation on that beta trajectory.

and I think just the nature and structure of the European deposit and funding markets. So the euro continues to outperform again across both portfolios and while that data also has a little bit of a lag in it, looking at March right now, the turbulence the industry went through, I think it had an impact but I wouldn't say it was a dramatic impact.

Andrew Lim: Thank you so much.

Vishal Shah: Thank you so much.

at least in our estimation on that beta trajectory. Thank you so much. Thanks, Vijay. Our last question is from the line-up, Andrew Lim from Societe Generale. Please go ahead. Hi, thanks for taking my question. Just a few quick-fire questions. Firstly, you gave the percentage deposits that are insured for your German retail deposit base.

James von Moltke: Thanks, Richard.

Operator: Our last question is from the line of Andrew Lim from Société Générale. Please go ahead.

Andrew Lim: Hi, thanks for taking my question. Just a few quick fire questions. Firstly, you gave the percentage deposits that are insured for your German retail deposit base. What does that look like on a group basis when you take into account the larger corporate deposits? Then secondly, for your group NIM, I guess that's 1.6% on an adjusted basis. How does your group NII develop with respect to the hedge gains that you've also had in the coming quarters? Do you have an expectation for that group NIM and how that should develop going forward?

What does that look like on a group basis when you take into account the larger corporate deposits? And then secondly, all your group NIM, I guess that's 1.6% on an adjusted basis. How does your group NII, how should that develop with respect to the hedge gains that you've also had in the coming quarters? And do you have an expectation for that group NIM and how that should develop going forward? Yeah, I think that's a good one. Yeah. I think that's a good one. Yeah, I think that's a good one. Thanks very much. Yeah, no worries. No worries. I'll see you on the next one.

Andrew Lim: Lastly, in a post-TRIM world, why is Deutsche Bank having a 40 to 60 basis point hit on the CET1 ratio, largely due to a review of internal modeling?

And then lastly, in a post-trim world, why is Deutsche Bank having a 40 to 60 basis point hit on the CT1 ratio largely due to a review of internal modeling? So Andrew, thank you for sticking with us. Sorry that the questions are coming so late in the call. Let me start with the NIMS. I'm always a little bit cautious about predicting NIMS because there's so many moving parts in it. But in round numbers, if you take our guidance from the beginning of the year.

James von Moltke: Andrew, I thank you for sticking with us. Sorry that the questions are coming so late in the call. Let me start with the NIM. I'm always a little bit cautious about predicting NIMs, because there's so many moving parts in it. But in round numbers, if you take our guidance from the beginning of the year, which would have led you to kind of the mid-14 maybe a little better, and interesting assets of somewhere a little bit below EUR 1 trillion, you'd probably be in the 150 basis point range. Again, subject for the year, subject to some swings on the characterization that I mentioned.

which would have led you to kind of the mid-14s, maybe a little better, and interest earning assets of somewhere a little bit below 1 trillion euros, you'd probably be in the 150 basis point range. Again, subject for the year, subject to some swings on the characterization that I mentioned. And we do provide, as always, the...

James von Moltke: We do provide, as always, the profitability by segment, you know, including both net interest revenues and fair value through P&L, through profit and loss. You see the total profitability, if you like, that the balance sheet produces with that. In terms of the deposit base, you know, the total deposit base, the numbers we gave you, I think, were 33% of the total deposit base under statutory insurance, 41% with, if you exclude banks from that. I think your question may be what is the German deposit base in total? Is that right? That's a number we don't have to hand. I'd have to get back to you on if that was the question you're after.

the profitability by segment, including both net interest revenues and fair value through profit and loss. So you see the total profitability, if you like, that the balance sheet produces with that. In terms of the deposit base, the total deposit base, the numbers we gave you, I think were 33% of the total deposit base under statutory insurance, 41% if you exclude banks from that. I think your question may be what is the German deposit base in total? Is that right?

Andrew Lim: Yeah. No, it's a total group deposit base, but I can check that with you more-

And that's a number we I don't have to hand I'd have to get back to you on if that was the question you're after Yeah, it's a total group deposit base Is 33% then and and and 41% if you include if you exclude banks from from that from that ratio Great, thanks

James von Moltke: Oh, total group deposit base.

Andrew Lim: Yeah.

James von Moltke: is 33% then.

Andrew Lim: Right.

James von Moltke: 41% if you exclude banks from that ratio.

Andrew Lim: Great. Thanks.

James von Moltke: Thanks, Andrew.

Andrew Lim: Then lastly on the impact due to internal modeling, it's something quite specific to Deutsche Bank, and I guess it's maybe surprising in a post-TRIM world.

Thanks Andrew. And then lastly, sorry lastly on the impacts due to internal modelling, it's something quite specific to Deutsche Bank and I guess it's maybe surprising in a post-trim world. Yeah I mean it's the post-trim world is really characterised by some of the EBA guidance that came out and the implementation of that.

James von Moltke: Yeah. I mean, it's the post-TRIM world is really characterized by some of the EBA guidance that came out and the implementation of that. It particularly relates to LGDs, to a lesser extent, some of the other factors. It's kind of been rolling through the portfolio. We did see some in retail last year and, as we've talked about, more next year. It hasn't been uniquely to either the Investment Bank or the Corporate Bank, but it's gone portfolio by portfolio. You know, there will be some implementation of new models in the aftermath of our Unity technology implementation. There just, you know, there's a dependency there.

portfolio. You know there will be some implementation of new models in the aftermath of our Unity technology implementation. There just you know there's a dependency there so there will be some adjustments in the models that are implemented then in Q3 also on the PB side, on the private bank side. And I believe that by the end of the year then we will have been through the

James von Moltke: There will be some adjustments in the models that are implemented then in Q3 also on the PB side, on the private bank side. I believe that by the end of the year then, we will have been through the reviews that we need to with the ECB and implemented what there is to do. You know, 2024 should be a cleaner year and give us the ability to prepare then for Basel III final framework implementation on 1 January 2025.

Andrew Lim: Great. Thank you very much.

James von Moltke: Thanks, Andrew. Appreciate you sticking with us.

Operator: This concludes our Q&A session, and I hand back to Silke Schubert.

Silke Schubert: Thank you very much for your questions. For any follow-up questions, please reach out to Investor Relations.

Silke Nicole Szypa: Thank you very much for your questions. For any follow-up questions, please reach out to Investor Relations.

So this concludes our Q&A session and I hand back to Silke Csupo.

Thank you very much for your questions and for any follow-up questions please reach out to Invest Relations. Ladies and gentlemen, the conference is now concluded and you may disconnect. Thank you very much for joining and have a pleasant day. Goodbye.

Operator: Ladies and gentlemen, the conference is now concluded and you may disconnect. Thank you very much for joining and have a pleasant day. Goodbye.

The.

I have.

Thank you for joining us for our first quarter 2023 results call. As usual, our Chief Executive Officer Christian Seewing will speak first, followed by our Chief Financial Officer James von Moltke. The presentation, as always, is available to download in the investor relations section of our website db.com. Before we get started, let me just remind you that the presentation contains forward-looking statements.

which may not develop as we currently expect. We therefore ask you to take notice of the precautionary warning at the end of our material. With that, let me hand over to Christian. Thank you, Zülke, and welcome from me too. It's a pleasure to discuss our first quarter 2023 results with you today and we are pleased with the progress we continue to make towards our 2025 goals. The first quarter was marked by turbulent conditions in the banking sector, particularly in March.

Christian Sewing: Thank you, Silke, and welcome from me too. It's a pleasure to discuss our Q1 2023 results with you today, and we are pleased with the progress we continue to make towards our 2025 goals. The first quarter was marked by turbulent conditions in the banking sector, particularly March, in addition to the macroeconomic challenges. However, our transformation has provided us with strong foundations, which enabled us to navigate these challenges successfully. We delivered on four critical dimensions. First, profitability. Pre-tax profits increased by 12% to EUR 1.9 billion and post-tax profit by 8% to EUR 1.3 billion, which on both counts represents our strongest Q1 since 2013. Our cost income ratio was 71% this quarter, 2 percentage points better than the prior year, driven by positive operating leverage.

in addition to the macroeconomic challenges. However, our transformation has provided us with strong foundations, which enabled us to navigate these challenges successfully. We delivered on four critical dimensions. First, profitability. Pre-tax profits increased by 12% to 1.9 billion euros.

and post-tax profit by 8% to 1.3 billion euros, which on both counts represents our strongest first quarter since 2013. Our cost-income ratio was 71% this quarter, two percentage points better than the prior year, driven by positive operating leverage. We also generated an 8.3% post-tax return on tangible equity in this period.

As you know, annual bank levies are recognised in the first quarter. Spreading these bank levies equally across the four quarters of the year, our first quarter cost income ratio would be 67% with the post-tax return on tangible equity of 10%, putting us well on track to our 2025 targets. Second, we proved the strengths of our franchise.

Our business model is focused on four client-centric businesses which complement each other and provide a well-diversified earnings mix, as this quarter shows. We delivered revenues of 7.7 billion euros, up 5% over the prior year quarter. Third, we again proved our resilience.

Christian Sewing: Our common equity tier one ratio was 13.6%, up from 13.4% in the previous quarter and 12.8% in Q1 of last year. Our liquidity reserves were EUR 241 billion and our liquidity coverage ratio rose to 143%. Finally, sustainability is an important part of our strategy. As you heard at our sustainability deep dive in March, we have updated our business strategies and policies, and expanded on our commitments in several ways to fight climate change. Namely, our thermal coal policy and our ambition is to encourage our corporate clients to commit to net zero. This quarter, we made further progress towards our target of EUR 500 billion of sustainable financing and investments excluding DWS by end 2025.

Our common equity tier 1 ratio was 13.6%, up from 13.4% in the previous quarter and 12.8% in the first quarter of last year. Our liquidity reserves were 241 billion euros and our liquidity coverage ratio rose to 143%. Finally, our peak

Sustainability is an important part of our strategy. As you heard at our sustainability deep dive in March, we have updated our business strategies and policies and expanded on our commitments in several ways to fight climate change.

Namely, our German coal policy and our ambition is to encourage our corporate clients to commit to net zero. This quarter, we made further progress towards our target of 500 billion euros of sustainable financing and investments, excluding DWS.

Christian Sewing: Our cumulative volume since January 2020 has grown to EUR 238 billion. Let me now turn to slide 2 to discuss the strong performance across our divisions this quarter. We saw good momentum across all business and delivered on the strategic steps which support our 2025 targets and strengthen our global house bank model. The Corporate Bank showed financial strength with record revenues and good client activity across our main businesses. I'm pleased that we are winning mandates with top clients to support working capital and their global value chain. In the Investment Bank, we added talent to support growth, and we are expanding our core franchise. We increased our global market share by more than 40 basis points compared to the previous quarters in origination and advisory and achieved year-on-year revenue growth in rates for the fifth consecutive quarter.

by end 2025. Our cumulative volume since January 2020 has grown to 238 billion euros. Let me now turn to slide two to discuss the strong performance across our divisions this quarter. We saw good momentum across all business and delivered on the strategic steps which support our 2025 targets.

and strengthen our global house bank model. The corporate bank showed financial strength with record revenues and good client activity across our main businesses. I am pleased that we are winning mandates with top clients to support working capital and their global value chain.

In the Investment Bank, we added talent to support growth and we are expanding our core franchise. We increased our global market share by more than 40 basis points compared to the previous quarters in origination and advisory and achieved year-on-year revenue growth in rates for the fifth consecutive quarter.

Bank, we added talent to support growth and we are expanding our core franchise. We increased our global market share by more than 40 basis points compared to the previous quarters in origination and advisory and achieved year on year revenue growth in rates for the fifth consecutive quarter. This reflects

Christian Sewing: This reflects our ongoing investments, especially in capital-light business areas. The private bank produced its best ever operating revenues, grew assets under management, and captured net inflows. We also successfully completed the next wave of the Postbank IT migration at the beginning of April, transferring over 6.5 million contracts from 5 million Postbank clients. This will unlock EUR 300 million of cost efficiencies as we previously communicated. Asset Management saw inflows of EUR 6 billion and EUR 9 billion excluding cash, despite turbulent markets. Stefan Hoops is progressing with the strategy by investing into transformation to create a standalone platform while expanding the product offering. Xtrackers launched the largest ETF of all time in the US of approximately $2 billion. This is also the single largest climate investing ETF launch. Turning now to the pre-provision profit on slide 3.

our ongoing investments, especially in capital light business areas. The private bank produced its best-ever operating revenues, grew assets under management and captured net inflows. We also successfully completed the next wave of the postbank IT migration at the beginning of April , transferring over 6.5 million contracts from 5 million postbank clients. This will unlock the 300 million euros of cost efficiencies as we previously communicated. Asset management saw inflows of 6 billion euros and 9 billion euros excluding cash, despite turbulent markets. Stefan Hobs is progressing with the strategy by investing into transformation to create a standalone platform while expanding the product offering. Xtrex has launched the largest

ETF of all time in the US of approximately 2 billion US dollars. This is also the single largest climate investing ETF launch. Turning now to the pre-provision profit on slide 3.

Christian Sewing: Pre-provision profit for the group was EUR 2.2 billion in Q1, up 14% compared to the prior year period. We again achieved positive operating leverage as we grew our revenues and controlled expenses. This quarter underlined how complementary our businesses are and how our strategic transformation has helped us to rebalance our income streams. I'm particularly pleased with the performance at the Corporate Bank and Private Bank, which benefited from the normalized rate environment. The contribution from the Corporate Bank and the Private Bank to pre-provision profit increased to almost 60% from 33% compared to Q1 of last year. The Investment Bank also produced a solid underlying contribution against an exceptionally strong prior year quarter. The rebalancing towards our stable revenue businesses is especially visible when looking at their contribution to the total group's pre-provision profit on a last twelve months basis.

Pre-provision profit for the group was 2.2 billion euros in the first quarter, up 14% compared to the prior year period. We again achieved positive operating leverage as we grew our revenues and controlled expenses. This quarter underlined how complementary our businesses are and how our strategic transformation has helped us to rebalance our income streams.

I'm particularly pleased with the performance at the corporate bank and private bank, which benefited from the normalised rate environment. The contribution from the corporate bank and the private bank to pre-provision profit increased to almost 60% from 33% compared to the first quarter of last year.

The investment bank also produces solid underlying contribution against an exceptionally strong prior year quarter. The rebalancing towards our stable revenue businesses is especially visible when looking at their contribution to the total group's pre-provision profit on a last 12 months basis. The corporate bank and private bank alone have contributed 70% over this period.

You will recall that our corporate and other results were negatively impacted by valuation timing in the prior year quarter. We anticipated that these would reverse over time and we are benefiting from this effect this quarter. The momentum and balance we see across our four businesses gives us confidence we have the right business model and a strong platform to further improve our business.

The changes we announced to the management board yesterday should support this agenda. The creation of a group chief operating officer will help us to deliver our strategic transformation agenda and drive inefficiencies out of the bank. We also focus on right sizing our non-client facing functions.

During the second quarter, we will begin to reduce our senior non-client facing workforce by 5% and will limit new hiring without compromising our controls. We continue to align our German private bank to the current trends and market environment, including actions to streamline our mortgage platform.

In addition, we are working on a series of productivity measures including sophisticated capacity planning in several areas, including anti-financial crime. Our target is to increase returns over time and we continue to look for more opportunities to deliver on this. I will speak about this later. Let me now turn to our balance sheet strength and resilience funding profile on slide 5.

Christian Sewing: Once again, we benefited from disciplined risk management in our strong and stable balance sheet. Our loan book is well diversified across businesses and regions. Around 70% of the book is secured or hedged, and almost 80% of our loan portfolio is in stable and mostly lower risk businesses in the Private Bank and Corporate Bank. Nearly half of our book is based in Germany and 40% is equally distributed across EMEA and North America with the remainder in APAC. Our deposit base funds about 60% of the net balance sheet and our loan to deposit ratio was 82% at quarter end. Over 80% of our deposits are from most stable client segments such as retail, corporates, small and medium-sized enterprises, or sovereigns where we have long-standing and deep-rooted client relationships.

Once again, we benefited from disciplined risk management and our strong and stable balance sheet. Our loan book is well diversified across businesses and regions. Around 70% of the book is secured or hedged and almost 80% of our loan portfolio is in stable and mostly lower risk businesses in the private bank and corporate bank.

Nearly half of our book is based in Germany and 40% is equally distributed across EMEA and North America with the remainder in APEC. Our deposit base funds about 60% of the net balance sheet and our loan to deposit ratio was 82% at quarter end. Over 80% of our deposits are from most stable client segments and are from most stable client segments.

such as retail, corporates, small and medium-sized enterprises or sovereigns where we have long-standing and deep-rooted client relationships. 77% of our German retail deposits are insured via the statutory protection scheme.

Christian Sewing: 77% of our German retail deposits are insured via the statutory protection scheme. In the corporate bank, close to three-quarters of all deposits are sticky operational and term deposits supporting our clients' daily needs. James will say more on deposits later. Our CET1 ratio strengthened to 13.6%, 250 basis points above the MDA buffer and our highest level for two years. Our leverage ratio was 4.6%. As I said, our liquidity metrics remain sound. The LCR was 143% above our target of around 130% with a buffer of EUR 63 billion above regulatory required levels.

In the corporate bank, close to three quarters of all deposits are sticky operational, end-term deposits supporting our clients' daily needs. James will say more on deposits later.

Our CET1 ratio strengthened to 13.6%, 250 basis points above the MDA buffer and our highest level for two years. Our leverage ratio was 4.6%.

As I said, our liquidity metrics remained sound. The LCR was 143% above our target of around 130% with a buffer of 63 billion euros above regulatory required levels.

Christian Sewing: The net stable funding ratio was 120% at the high end of the group's target range of 115% to 120% and EUR 100 billion above required levels. To summarize, we have solid foundations to navigate through the recent turbulent environment. Importantly, I view the European banking sector as stable, thanks in part to the regulatory efforts of recent years. Moving to slide 6. The current environment underlines the importance of our global house bank model, which positions us well to serve clients in volatile markets. When we set out our strategy in March last year, we outlined the key themes which underpin these goals and ambitions. These themes have become even more important in light of the geopolitical and macroeconomic upheaval since then.

The net stable funding ratio was 120% at the high end of the group's target range of 115-120% and 100 billion euros above required levels. To summarize, we have solid foundations to navigate through the recent turbulent environment. And importantly, I view.

The European banking sector is stable thanks in part to the regulatory efforts of recent years. Moving to slide 6. The current environment underlines the importance of our global house bank model, which positions us well to serve clients in volatile markets. When we set out our strategy in March last year, we outlined the key themes which underpin these goals and ambitions ofARY

And these themes have become even more important in light of the geopolitical and macroeconomic upheaval since then. Our first quarter results demonstrate the progress we are making on the path towards our 2025 goals, benefiting from a strategy and business model which are well aligned to market trends.

Christian Sewing: Our Q1 results demonstrate the progress we are making on the path toward our 2025 goals, benefiting from a strategy and business model which are well aligned to market trends. We will leverage the more favorable interest rate environment, deploy our risk management expertise to support clients, and allocate capital to high return growth opportunities. With sustainability being so important, we will deepen our dialogue with and support for clients, expand our product range, and broaden our agenda for our own operations. We will also continue to benefit from the investments we are making in technology together with our strategic partners. The investments should accelerate our transition to a digital bank, and the benefits should be seen in our efficiency and controls. These technology investments are also designed to create value for our clients.

We will leverage the more favorable interest rate environment, deploy our risk management expertise to support clients and allocate capital to high return growth opportunities.

With sustainability being so important, we will deepen our dialogue with and support for clients, expand our product range and broaden our agenda for our own operations.

We will also continue to benefit from the investments we are making in technology together with our strategic partners. The investments should accelerate our transition to a digital bank and the benefits should be seen in our efficiency and controls. These technology investments are also designed to create value for our clients. We believe we have the right strategy and the right focus on clients which allow us to make the most of our clients.

Christian Sewing: We believe we have the right strategy and the right focus on clients, which allow us to accelerate execution of our strategy, enhance our franchise, and drive returns. We see these opportunities on three dimensions, which we detail on slide 7. We have committed to self-fund our investments and increase operating leverage through efficiencies, and we now see additional scope to do that. We already indicated that we aim to deliver incremental operational efficiencies greater than the EUR 2 billion identified at the 2022 Investor Deep Dive. As discussed, we are in the process of identifying and executing on a further EUR 500 million of benefits, which we will work to extract. The incremental benefits will come from a strategic review of our entire workforce, further optimizing the distribution networks in the Private Bank.

indicated that we aim to deliver incremental operational efficiencies greater than the 2 billion euros identified at the 2022 investor deep dive.

As discussed, we are in the process of identifying and executing on a further 500 million euros of benefits, which we will work to extract. The incremental benefits will come from a strategic review of our entire workforce, further optimizing the distribution networks in the private bank. We also expect to see benefits in operations and process automation.

Christian Sewing: We also expect to see benefits in operations and process automation, and we are excited about the opportunities that should emerge from artificial intelligence and machine learning. Second, we are focusing on capital efficiency. Deploying capital to increase shareholder value has always been our priority, and we see opportunities to reallocate capital. We aim to free up EUR 15 to 20 billion of risk-weighted assets from reduction in certain sub-hurdle lending and mortgage portfolios, greater utilization of securitization, and hedging optimization. These actions are expected to have a minimal impact on revenues, but will enable us to increase returns and reallocate resources to more capital accretive businesses. We believe that the combination of cost and capital efficiency, together with additional opportunities across markets, should position us to outperform our existing growth objectives.

and we are excited about the opportunities that should emerge from artificial intelligence and machine learning. Second, we are focusing on capital efficiency. Deploying capital to increase shareholder value has always been our priority and we see opportunities to reallocate capital. We aim to free up 15 to 20 billion euros of risk-weighted assets to the world's largest industry.

from reduction in certain sub-hurdle lending and mortgage portfolios, greater utilisation of securitisation and hedging optimisation. These actions are expected to have a minimal impact on revenues but will enable us to increase returns and reallocate resources to more capital-accretive businesses. We believe that the combination of cost and capital efficiency, together with additional opportunities across markets, should position us to outperform our existing growth objectives. To support this, we continue to invest into our platforms and our

and to take opportunities created by current market conditions to attract talent to strengthen advisory capabilities in various business and regions, including Asia. We expect these actions to accelerate the execution of our strategy and more importantly, increase returns to shareholders over time.

Before I hand over to James let me summarize our progress on slide 8. Our performance in the first quarter demonstrates the strengths of Deutsche Bank's franchise, earnings power and balance sheet. Our transformation has given us a strong platform for growth with a diversified business model providing well-balanced earnings. This provides a strong step-off.

to accelerate our global house bank ambition through additional actions on the three dimensions we just discussed. We remain fully committed to our capital distribution plan.

Christian Sewing: With a successful Q1 behind us and strong capital, we have now initiated the dialogue with the supervisors about share buybacks, which are expected to take place in H2 of this year. This is in line with the promise we made last quarter that we initiate this step once we have greater clarity on a number of issues, including the macro environment. Everything we have seen this quarter supports our view that we are on the right path. The Group is well positioned to capitalize on current trends to drive returns above the cost of equity. With that, let me hand over to James.

With a successful first quarter behind us and strong capital, we have now initiated the dialogue with the supervisors about share buybacks which are expected to take place in the second half of this year. This is in line with the promise we made last quarter that we initiate this step once we have greater clarity on a number of issues, including the macro environment. Everything we have seen this quarter is a

supports our view that we are on the right path. The group is well positioned to capitalize on current trends to drive returns above the cost of equity. With that, let me hand over to James. Thank you, Christian. Let me start with a few key performance indicators in the first quarter on slide 10 and put them in the context of our 2025 targets.

James von Moltke: Thank you, Christian. Let me start with a few key performance indicators in Q1 on slide 10 and put them in the context of our 2025 targets. We have strong revenue momentum. A balanced business mix enables us to benefit from higher interest rates despite challenging financial markets, delivering revenue growth above our 2025 targeted compound annual growth rate on a last twelve months basis. Our post-tax return on tangible equity was 8.3% in Q1 or 10% prorating bank levies through the year, already in line with our 2025 target. We've made steady progress on our cost income ratio, which was 71% in the quarter, a 4 percentage point improvement on full year 2022. If the bank levies were prorated across the year, the cost income ratio would be 67%.

We have strong revenue momentum. A balanced business mix enables us to benefit from higher interest rates despite challenging financial markets, delivering revenue growth above our 2025 targeted compound annual growth rate on a last 12 month basis. Our post tax return on tangible equity was 8.3% in the first quarter or 10% pro rating bank levies through the year already in line with our 2025 target. We've made steady progress on our cost income ratio, which was 71% in the quarter.

a four percentage point improvement on full year 2022. If the bank levies were prorated across the year, the cost income ratio would be 67%. The first quarter performance shows clear progress toward our 2025 target of less than 62.5%. And we demonstrated the strength of our capital and balance sheet and the quality of our loan book in challenging conditions. Our capital ratio was 13.6% in the first quarter in line with our 2025 target of around 13%. With that, let me turn to the first quarter highlights on Flight 11.

Group revenues were 7.7 billion euros, up 5% on the first quarter of 2022, and with a better balance across our businesses. Non-interest expenses were 5.5 billion euros, and adjusted costs of 5.4 billion euros were essentially flat year-on-year. We booked bank levies of 473 million euros this quarter, down 35% year-on-year as a result of a reduction in the sector-wide single resolution fund assessment, as well as our improved relative sector contribution, and an increased use of irrevocable commitments. Our provision for credit losses was 372 million euros.

James von Moltke: We booked bank levies of EUR 473 million this quarter, down 35% year-on-year as a result of a reduction in the sector-wide Single Resolution Fund assessment, as well as our improved relative sector contribution and an increased use of irrevocable commitments. Our provision for credit losses was EUR 372 million or 30 basis points of average loans. Overall, credit losses remained well contained despite a small number of idiosyncratic events. We generated a profit before tax of EUR 1.9 billion, up 12%, and net profit of EUR 1.3 billion, up 8% compared to the prior year quarter. Our cost income ratio came in at 71%, down 2 percentage points versus the prior year period. Diluted earnings per share was EUR 0.61 in Q1, with an effective tax rate of 29%.

or 30 basis points of average loans. Overall, credit losses remained well-contained despite a small number of idiosyncratic events. We generated a profit-before-tax of 1.9 billion euros, up 12%, and net profit of 1.3 billion euros, up 8%, compared to the prior year quarter.

Our cost income ratio came in at 71%, down two percentage points versus the prior year period. Deluded earnings per share was 61 cents in the first quarter, with an effective tax rate of 29%. Tangible book value per share was 27 euros and 28 cents, up 2% on the fourth quarter of 2022, and up 8% year on year. Now let me turn to some of the drivers of these results, starting with our NIM development on slide 12.

James von Moltke: Tangible book value per share was EUR 27.28, up 2% on Q4 2022 and up 8% year on year. Now let me turn to some of the drivers of these results, starting with our NIM development on slide 12. We have continued to benefit from the interest rate environment in Q1, as demonstrated by the rise in net interest margin in the Corporate Bank and Private Bank. Group NIM, however, declined due to the accounting treatment of some of our central hedges and balance sheet management activities. This quarter, the accounting effect resulted in a sequential impact on group NIM of around -20 basis points. This effect is held in C&O, where it is fully offset by an increase in non-interest revenue, and there is no economic loss to the firm or overall impact on group P&L.

We have continued to benefit from the interest rate environment in the first quarter, as demonstrated by the rise in net interest margin in the corporate bank and private bank. Group NIM, however, declined due to the accounting treatment of some of our central hedges and balance sheet management activities. This quarter, the accounting effect resulted in a sequential impact on group NIM of around negative 20 basis points. This effect is held in C&O, where it is fully offset by an increase in non-interest revenue, and there is no economic loss to the firm or overall impact on group P&L.

James von Moltke: Realized deposit betas remain favorable when compared to our models, but we expect this to partially normalize in the coming quarters as the pace of interest rate rises slow. Average interest earning assets decline modestly, driven mainly by our TLTRO payments. With that, let's turn to costs on slide 13. Adjusted costs excluding bank levies of EUR 4.9 billion were flat sequentially, but increased by 5% year on year or EUR 240 million. This reflected cumulative investments over the past 12 months in technology, controls, and people together with higher business activity and inflationary pressures. The monthly average run rate of around EUR 1.63 billion is in line with our prior guidance, and we expect to operate at the run rate of between EUR 1.6 and EUR 1.65 billion per month for the rest of the year.

This reflected cumulative investments over the past 12 months in technology, controls, and people, together with higher business activity and inflationary pressures.

James von Moltke: Looking at the individual components, compensation and benefits costs were essentially flat as increased fixed remuneration was offset by lower variable remuneration. Ongoing workforce optimization limited the impact of higher headcount. IT costs were up EUR 66 million or 8% year-on-year, reflecting continued investments in technology and innovation. Professional services increased by EUR 25 million, driven by business consulting and legal fees. The increase of around EUR 100 million in other costs mainly reflects increasing expenses for banking services and outsourced operations. We also saw a normalization of travel and marketing expenses. Let's now turn to provision for credit losses on slide 14. Provision for credit losses for Q1 was 30 basis points of average loans or EUR 372 million. Stage three provisions increased to EUR 397 million compared to EUR 114 million in the prior year quarter.

Compensation and benefits costs were essentially flat, as increased fixed remuneration was offset by lower variable remuneration. Ongoing workforce optimization limited the impact of higher headcount. IT costs were up 66 million euros or 8% year on year, reflecting continued investments in technology and innovation.

Professional services increased by 25 million euros, driven by business consulting and legal fees. And the increase of around 100 million euros in other costs mainly reflects increasing expenses for banking services and outsourced operations.

We also saw a normalization of travel and marketing expenses. Let's now turn to provision for credit losses on slide 14. Provision for credit losses for the first quarter was 30 basis points of average loans, or 372 million euros.

Stage 3 provisions increased to 397 million euros compared to 114 million euros in the prior year quarter. The majority of this increase was driven by the private bank and included a small number of idiosyncratic events in the international private bank.

James von Moltke: The majority of this increase was driven by the private bank and included a small number of idiosyncratic events in the international private bank. This was partly offset by a release of EUR 26 million in Stage 1 and Stage 2 provisions, partially driven by a slight improvement in the macroeconomic outlook since Q4 2022, compared to a charge of EUR 178 million in the prior year quarter. We did not see a wider deterioration in the portfolio outside of this small number of specific events, and overall credit quality remains high. For the full year 2023, we reaffirm our previous guidance range of 25 to 30 basis points of average loans. Let me also cover our commercial real estate portfolio on slide 15. Our EUR 33 billion commercial real estate focused portfolio represents 7% of our loan book.

This was partly offset by a release of 26 million euros in stages one and two provisions, partially driven by a slight improvement in the macroeconomic outlook since the fourth quarter of 2022 compared to a charge of 178 million euros in the prior year quarter. We did not see a wider deterioration in the portfolio outside of this small number of specific events, and overall credit quality remains high. For the full year 2023, we reaffirm our previous guidance range of 25 to 30 basis points of average loans.

Let me also cover our commercial real estate portfolio on slide 15. Our 33 billion euro commercial real estate focused portfolio represents 7% of our loan book and as you know it consists of non-recourse lending within the core CRE business units in the investment bank and the corporate bank. As a reminder, we have provided disclosure on this focus portfolio since the COVID crisis. The portfolio is well diversified across regions and property types.

James von Moltke: As you know, it consists of non-recourse lending within the core CRE business units in the Investment Bank and the Corporate Bank. As a reminder, we have provided disclosure on this focused portfolio since the COVID crisis. The portfolio is well diversified across regions and property types. Despite the headwinds facing the sector, we are comfortable with our exposure for several reasons. First, our loan originations are focused on larger institutional quality assets in more liquid primary markets and with strong institutional sponsorship. Second, the moderate weighted average LTVs or loan to value of 62% in the Investment Bank and 53% in the Corporate Bank provide material cushion against the expected decline of collateral values.

Despite the headwinds facing the sector, we are comfortable with our exposure for several reasons. First, our loan originations are focused on larger, institutional quality assets in more liquid primary markets and with strong institutional sponsorship. Second, the moderate weighted average LTVs, or loan to value, of 62% in the investment bank and 53% in the corporate bank provide material cushion against the expected decline of collateral values. Our sponsors typically have significant skin in the game in the form of cash equity invested in their properties.

James von Moltke: Our sponsors typically have significant skin in the game in the form of cash equity invested in their properties and have invested more equity where needed to ensure the ongoing performance of their assets. However, we recognize the market is under pressure, especially in the US, where lending markets have tightened with further uncertainty caused by recent turmoil in the regional banking sector. The US office sector is also facing greater pressure as the office vacancy rate is approaching 20% compared to approximately 7% in Europe. Our exposure in the US office sector is manageable at EUR 4.5 billion, less than 1% of our total book. Our office portfolio is high quality, with around 80% in class A properties, and we have institutional sponsorship in major markets. The loans are primarily backed by multi-tenant properties in large urban markets and, again, with high-quality sponsors.

and have invested more equity where needed to ensure the ongoing performance of their assets. However, we recognize the market is under pressure, especially in the U.S. where lending markets have tightened with further uncertainty caused by recent turmoil in the regional banking sector. The U.S. office sector is also facing greater pressure as the office vacancy rate is approaching 20% compared to approximately 7% in Europe .

Our exposure in the US office sector is manageable at 4.5 billion euros, less than 1% of our total book. Our office portfolio is high quality with around 80% in Class A properties, and we have institutional sponsorship in major markets. The loans are primarily backed by multi-tenant properties in large urban markets and, again, with high quality sponsors. The portfolio has an average LTV of around 64%, with a weighted average lease term of 6.7 years, which provides relative stability of cash flows. At the same time, only approximately 600 million euros of exposure has final maturities over the course of the year.

James von Moltke: The portfolio has an average LTV of around 64%, with a weighted average lease term of 6.7 years, which provides relative stability of cash flows. At the same time, only approximately EUR 600 million of exposure has final maturities over the course of the year, which limits the refinancing risk in a higher rate environment. In Q1, provisions related to US office were EUR 16 million, or just 4% of the Q1 stage three provisions, which shows the relative resiliency and quality of this book. Moving to funding and liquidity on slide 16. We ended the quarter with a liquidity coverage ratio of 143%, equivalent to an excess of EUR 63 billion above our regulatory requirements.

which limits the refinancing risk in a higher rate environment. In the first quarter, provisions related to US office were 16 million euros, or just 4% of the first quarter stage three provisions, which shows the relative resiliency and quality of this book. Moving to funding and liquidity on slide 16. We ended the quarter with a liquidity coverage ratio of 143%, equivalent to an excess of 63 billion euros above our regulatory requirements. Over time, as market conditions improve,

James von Moltke: Over time, as market conditions improve, we would look to prudently steer our LCR down towards our 130% target. As Christian outlined, we have a well-diversified deposit base across client segments and regions. Our deposit base of EUR 592 billion declined by 5% sequentially or 4% on an FX-adjusted basis, and 2% year on year. The decline in part reflected a normalization from the elevated levels seen in the H2 of last year and was broadly in line with the market. About a third of the reduction in balances came at the end of the quarter as certain clients repositioned parts of their exposures. This constitutes about 1% of our overall deposit portfolio and speaks to the underlying quality of our book.

we would look to prudently steer our LCR down towards our 130% target. As Christian outlined, we have a well-diversified deposit base across client segments and regions. Our deposit base of 592 billion euros declined by 5% sequentially, or 4% on an FX-adjusted basis, and 2% year-on-year.

James von Moltke: Deposits in the corporate bank declined by 7% sequentially or 6% if adjusted for FX, mostly due to normalizations from elevated levels in the last two quarters, as well as increased pricing competition. Private bank deposits declined by 2% in the quarter. Approximately 30% of flows migrated into higher yielding investment products in the private bank, while the remainder reflected the ongoing inflationary pressures and increasing price competition. Before we move to performance in our businesses, let me turn to capital on slide 17. Our common equity tier one ratio came in at 13.6%, up by 25 basis points compared to the pre-previous quarter. Net capital build was 30 basis points, reflecting our strong organic capital generation from net income, partially offset by higher equity compensation awards. Risk-weighted assets grew modestly, reducing the CET1 ratio by only 6 basis points.

Deposits in the corporate bank declined by 7% sequentially or 6% if adjusted for FX, mostly due to normalizations from elevated levels in the last two quarters, as well as increased pricing competition. Private bank deposits declined by 2% in the quarter. Approximately 30% of flows migrated into higher yielding investment products in the private bank, while the remainder reflected the ongoing inflationary pressures and increasing price competition. Before we move to performance in our businesses, let me turn to capital on slide 17.

Our common equity tier one ratio came in at 13.6%, up by 25 basis points compared to the previous quarter. Net capital build was 30 basis points, reflecting our strong organic capital generation from net income, partially offset by higher equity compensation awards. Risk-weighted assets grew modestly, reducing the CET1 ratio by only six basis points. Credit risk-weighted assets increased, primarily to seasonal loan growth in the investment bank and corporate bank. Market risk RWA declined slightly following ECB approved reduction in our qualitative multiplier add-on. The leverage ratio was 4.6% at quarter end, up six basis points on the previous quarter, mainly due to higher retained earnings.

James von Moltke: Credit risk weighted assets increased primarily to seasonal loan growth in the Investment Bank and Corporate Bank. Market risk RWA declined slightly following an ECB-approved reduction in our qualitative multiplier add-on. The leverage ratio was 4.6% at quarter-end, up 6 basis points on the previous quarter, mainly due to higher retained earnings. Finally, we continue to operate with loss-absorbing capacity well above our requirements. Our MREL surplus, as our most binding constraint, has increased by EUR 1 billion to EUR 19 billion over the quarter. Moving to the Corporate Bank on slide 19. Corporate Bank revenues in Q1 of EUR 2 billion were 35% higher year-on-year, driven by increased interest rates and continued pricing discipline.

And finally, we continue to operate with loss-absorbing capacity well above our requirements. Our MREL surplus, as our most binding constraint, has increased by 1 billion euros to 19 billion euros over the quarter. Moving to the corporate bank on slide 19. Corporate bank revenues in the first quarter of 2 billion euros were 35 percent higher year on year, driven by increased interest rates and continued pricing discipline. This was the highest quarterly revenue performance since the formation of the corporate bank, driven by revenue growth across all regions and business units.

James von Moltke: This was the highest quarterly revenue performance since the formation of the Corporate Bank, driven by a revenue growth across all regions and business units. However, as we highlighted at our Q4 results, we expect a normalization of our interest revenues in H2. Our Q1 results were supported by still very benign passthrough rates, which we believe marks the peak revenue impact of this pricing dynamic. Momentum was particularly strong in cash management with corporate, institutional, and business banking clients, as well as in corporate trust. Loan volume in the Corporate Bank was EUR 121 billion, down by EUR 4 billion compared to the prior year quarter and flat sequentially.

However, as we highlighted at our fourth quarter results, we expect a normalization of our interest revenues in the second half of the year. Our first quarter results were supported by still very benign pass-through rates, which we believe marks the peak revenue impact of this pricing dynamic. Momentum was particularly strong in cash management with corporate, institutional, and business banking clients.

as well as in corporate trust. Loan volume in the corporate bank was 121 billion euros, down by 4 billion euros compared to the prior year quarter, and flat sequentially. Deposits were 269 billion euros, essentially flat compared to the prior year quarter, but down 7% from elevated prior quarter levels, as I have just outlined.

James von Moltke: Deposits were EUR 269 billion, essentially flat compared to the prior year quarter, but down 7% from elevated prior quarter levels, as I have just outlined. Credit loss provisions remained contained despite a more challenging macroeconomic environment and were primarily driven by one larger Stage Three event, which was offset in revenues by insurance recoveries. Credit loss provisions remained well below the prior year quarter, which was impacted by the start of the war in Ukraine. Non-interest expenses were EUR 1.1 billion, an increase of 2% year on year, driven by higher internal service cost allocations, partly offset by a lower bank levy contribution.

Credit loss provisions remained contained despite a more challenging macroeconomic environment and were primarily driven by one larger stage three event, which was offset in revenues by insurance recoveries. Credit loss provisions remained well below the prior year quarter, which was impacted by the start of the war in Ukraine. Non-interest expenses were 1.1 billion euros, an increase of 2% year on year driven by higher internal service cost allocations, partly offset by a lower bank levy contribution. Profit before tax was 822 million euros in the quarter, more than triple the prior year quarter. The cost income ratio improved to 55%.

James von Moltke: Profit before tax was EUR 822 million in the quarter, more than triple the prior-year quarter. The cost-income ratio improved to 55% and post-tax return on tangible equity was 18.3% despite the recognition of bank levies. I'll now turn to the Investment Bank on slide 20. Revenues for Q1 were 19% lower year-on-year. Revenues in FICC sales and trading decreased by 17% in Q1 compared to a prior year, which included approximately EUR 500 million of episodic items. Client flows were robust, with institutional activity broadly flat year-on-year and underlying business performance strong despite the extreme market volatility in March. Rates revenues were higher compared to a very strong prior-year quarter, reflecting improvements across the platform and effective risk management.

and post-tax return on tangible equity was 18.3%, despite the recognition of bank levies. I'll now turn to the investment bank on slide 20. Revenues for the first quarter were 19% lower year on year. Revenues in fixed sales and trading decreased by 17% in the first quarter compared to a prior year, which included approximately 500 million euros of episodic items. Client flows were robust with institutional activity broadly flat year on year and underlying business performance strong, despite the extreme market volatility in March. Rates revenues were higher compared to a very strong prior year quarter.

James von Moltke: Credit trading, financing, and emerging markets revenues were lower, principally reflecting the absence of episodic items in the prior year period, while underlying per-performance improved. Foreign exchange revenues were significantly lower compared to a strong prior year period, driven by the impact of extreme interest rate volatility and market dislocation during March. Moving to Origination and Advisory, revenues were down 31% in a market which remained challenging. Our performance was in line with the industry fee pool and reflected a market share recovery and a shift in the underlying product mix compared to Q4 2022. Debt origination revenues were significantly lower. Volumes remained low in leveraged loans, although the market did start to see a partial recovery in high yield. Investment-grade debt revenues also declined, as did the industry fee pool. Equity origination revenues were down in a challenging market with limited issuance.

reflecting improvements across the platform and effective risk management. Credit trading, financing, and emerging markets revenues were lower, principally reflecting the absence of episodic items in the prior year period while underlying performance improved. Foreign exchange revenues were significantly lower compared to a strong prior year period driven by the impact of extreme interest rate volatility and market dislocation during March.

Moving to origination and advisory, revenues were down 31 percent in a market which remained challenging. Our performance was in line with the industry fee pool and reflected a market share recovery and a shift in the underlying product mix compared to the fourth quarter of 2022. Debt origination revenues were significantly lower. Volumes remained low in leveraged loans, although the market did start to see a partial recovery in high yield. Government grade debt revenues also declined as did the industry fee pool. Equity origination revenues were down in a challenging market with limited issuance. Reuse and advisory were significantly lower.

James von Moltke: Revenues and advisory were significantly lower, though by less than the industry fee pool decline. Turning to costs, both non-interest expenses and adjusted costs were essentially flat versus the prior year, as reduced bank levies were largely offset by investments in technology and our control functions. Loan balances increased year-on-year, driven by higher originations, primarily in the financing businesses. Quarter-on-quarter balances were essentially flat, with lower origination reflecting our selective risk deployment. Provision for credit losses was EUR 41 million or 16 basis points of average loans, a slight increase on the prior year. Profit before tax was EUR 861 million in the quarter. Turning to the Private Bank on slide 21.

Profit before tax was 861 million euros in the quarter. Turning to the private bank on slide 21.

James von Moltke: Private Bank revenues were EUR 2.4 billion in Q1, up 10% year-on-year, and marked the highest quarterly revenues since the beginning of our transformation of the Private Bank, excluding specific revenue items. Revenues in the Private Bank Germany increased by 14% to EUR 1.6 billion. Higher net interest income from deposits more than compensated for a decline in fee income, which reflected changes in contractual and regulatory conditions, market uncertainty, and to a lesser extent, lower client activity. In the international Private Bank, revenues were up 3%. Revenues in wealth management and Bank for Entrepreneurs were up 4% or 7% if adjusted for the impact of the sale of our financial advisors business in Italy. Revenues in premium banking declined by 1%.

Private bank revenues were 2.4 billion euros in the first quarter, up 10% year-on-year, and marked the highest quarterly revenues since the beginning of our transformation of the private bank, excluding specific revenue items. Revenues in the private bank Germany increased by 14% to 1.6 billion euros.

Higher net interest income from deposits more than compensated for a decline in fee income, which reflected changes in contractual and regulatory conditions, market uncertainty, and to a lesser extent, lower client activity. In the International Private Bank, revenues were up 3%.

Revenues in wealth management and bank for entrepreneurs were up 4% or 7% if adjusted for the impact of the sale of our financial advisors business in Italy. Revenues in premium banking declined by 1%. Non-interest expenses were up 10% partly due to the non-recurrence of releases of restructuring provisions which benefited the prior year quarter. Adjusted costs increased by 5% year on year due to higher internal service cost allocations, higher investment spending, including costs related to the post-bank IT migration, and inflation impacts.

James von Moltke: Non-interest expenses were up 10%, partly due to the non-recurrence of releases of restructuring provisions which benefited the prior year quarter. Adjusted costs increased by 5% year-on-year due to higher internal service cost allocations, higher investment spending, including costs related to the Postbank IT migration, and inflation impacts, partly offset by lower bank levies and savings from transformation initiatives. Net inflows were EUR 6 billion in the quarter, driven by growth in investment products in both Germany and the international private bank. Provision for credit losses was EUR 267 million, up from EUR 101 million in the prior year quarter. The increase was driven mainly by a small number of single name losses in the International private bank. Excluding these items, the development of the portfolio continued to reflect the high quality of the loan book and continued risk discipline. Before...

partly offset by lower bank levies and savings from transformation initiatives. Net inflows were 6 billion euros in the quarter, driven by growth in investment products in both Germany and the International Private Bank. Provision for credit losses was 267 million euros, up from 101 million euros in the prior year quarter. The increase was driven mainly by a small number of single-name losses in the International Private Bank, excluding these items.

the development of the portfolio continued to reflect the high quality of the loan book and continued risk discipline. Profit before tax was 280 million euros in the quarter, including the full year impact of bank levy charges. Cost income ratio was 78% in the quarter with a post-tax return on tangible equity of 5%. Let me continue with asset management on slide 22. Let me continue with asset management on slide 22.

James von Moltke: Profit before tax was EUR 280 million in the quarter, including the full year impact of bank levy charges. Cost-income ratio was 78% in the quarter, with a post-tax return on tangible equity of 5%. Let me continue with asset management on slide 22. My usual reminder, the asset management segment includes certain items that are not part of the DWS standalone financials. As you will have seen in their materials, DWS reported a decline in performance compared to the prior year, reflecting lower market levels. Sequentially, assets under management increased to EUR 841 billion, reflecting EUR 19 billion of market appreciation and net inflows. Inflows excluding cash were nearly EUR 9 billion, primarily in passive and multi-asset. Flows in cash products were very volatile throughout the quarter, ending with net outflows of EUR 3 billion.

My usual reminder, the asset management segment includes certain items that are not part of the DWS stand-alone financials. As you will have seen in their materials, DWS reported a decline in performance compared to the prior year, reflecting lower market levels. Sequentially, assets under management increased to 841 billion euros, reflecting 19 billion euros of market appreciation and net inflows.

Inflows excluding cash were nearly 9 billion euros, primarily in passive and multi-asset. Flows in cash products were very volatile throughout the quarter, ending with net outflows of 3 billion euros. Revenues declined by 14% versus the prior year quarter. This was predominantly driven by an 8% decline in management fees to 571 million euros, which reflected financial market performance during 2022. Performance and transaction fees were also lower year on year from performance fee recognition and lower real estate transaction fees. Other revenues declined on lower gains from co-investments and a smaller benefit from fair value guarantees.

James von Moltke: Revenues declined by 14% versus the prior year quarter. This was predominantly driven by an 8% decline in management fees to EUR 571 million, which reflected financial market performance during 2022. Performance and transaction fees were also lower year-on-year from performance fee recognition, and lower real estate transaction fees. Other revenues declined on lower gains from co-investments and a smaller benefit from fair value guarantees. Non-interest expenses and adjusted costs increased by 3% and 1% respectively. Profit before tax of EUR 115 million in the quarter was down 44% compared to the prior year. The cost income ratio for the quarter was 74% and return on tangible equity was 14%. Moving to Corporate & Other on slide 23.

Non-interest expenses and adjusted costs increased by 3% and 1% respectively. Profit before tax of 150 million euros in the quarter was down 44% compared to the prior year. The cost income ratio for the quarter was 74% and return on tangible equity was 14%. Moving to corporate another on slide 23. A reminder that corporate another now includes the impact of our legacy portfolios previously reported as the capital release unit.

James von Moltke: A reminder that Corporate and Other now includes the impact of our legacy portfolios previously reported as the Capital Release Unit. Corporate and Other reported a pre-tax loss of EUR 226 million this quarter, a significant improvement from the pre-tax loss of EUR 677 million in Q1 2022. The year-on-year improvement was principally driven by valuation and timing differences, which were EUR +239 million in this quarter compared to EUR -184 million in the prior year quarter. The pre-tax loss associated with our legacy portfolios was EUR 130 million, an improvement of EUR 166 million year on year, primarily driven by lower expenses. Excluding bank levies, adjusted costs associated with these portfolios approximately halved to EUR 66 million.

Corporate & Other reported a pre-tax loss of 226 million euros this quarter, a significant improvement from the pre-tax loss of 677 million euros in the first quarter of 2022. The year-on-year improvement was principally driven by valuation and timing differences, which were positive 239 million euros in this quarter, compared to negative 184 million in the prior year quarter. The pre-tax loss associated with our legacy portfolios was 130 million euros.

an improvement of 166 million euros year on year, primarily driven by lower expenses. Excluding bank levies, adjusted costs associated with these portfolios approximately halved to 66 million euros. Funding and liquidity impacts were negative 106 million euros in the current quarter versus negative 127 million euros in the prior year quarter.

James von Moltke: Funding and liquidity impacts were -EUR 106 million in the current quarter versus -EUR 127 million in the prior year quarter. Expenses associated with shareholder activities not allocated to the business divisions as defined in the OECD transfer pricing guidelines were EUR 124 million in this quarter, essentially flat year on year. The reversal of non-controlling interests in the operating businesses, primarily from DWS, was +EUR 37 million, down from EUR 56 million in the prior year quarter. Other impacts reported in the segment aggregated to -EUR 142 billion. Risk-weighted assets stood at EUR 43 billion at the end of Q1, including EUR 19 billion of operational risk RWA, representing a EUR 3 billion reduction since Q4 2022. Turning to the group outlook for 2023 on slide 24.

Expenses associated with shareholder activities not allocated to the business divisions as defined in the OECD transfer pricing guidelines were 124 million in this quarter, essentially flat year on year. The reversal of non-controlling interests in the operating businesses, primarily from DWS, was positive 37 million euros, down from 56 million euros in the prior year quarter. Other impacts reported in the segment aggregated to negative 142 billion euros. Risk weighted assets stood at 43 billion euros at the end of the first quarter, and were not

including 19 billion euros of operational risk RWA, representing a 3 billion euro reduction since the fourth quarter of 2022. Turning to the group outlook for 2023 on slide 24, we remain focused on delivering positive operating leverage. We expect 2023 revenues around the midpoint of a range between 28 and 29 billion euros. We expect to keep our non-interest expenses broadly flat to 2022. As confirmed earlier, we expect the monthly run rate of adjusted costs, excluding bank levies, to be about 1.6 to 1.65 billion euros for the rest of the year. To deliver on the cost reduction measures, which Christian outlined—

James von Moltke: We remain focused on delivering positive operating leverage. We expect 2023 revenues around the midpoint of a range between EUR 28 and 29 billion. We expect to keep our non-interest expenses broadly flat to 2022. As confirmed earlier, we expect the monthly run rate of adjusted costs, excluding bank levies, to be about EUR 1.6 to 1.65 billion for the rest of the year. To deliver on the cost reduction measures which Christian outlined, we now expect to record restructuring and severance provisions of approximately EUR 500 million in 2023. In line with our previous guidance, provision for credit losses is expected in the range of 25 to 30 basis points of average loans. Christian mentioned our commitment to capital distributions.

We now expect to record restructuring and severance provisions of approximately 500 million euros in 2023. In line with our previous guidance, provision for credit losses is expected in the range of 25 to 30 basis points of average loans. Christian mentioned our commitment to capital distributions. Consistent with our path laid out at the investor deep dive last year, we have proposed a cash dividend of 30 euro cents per share for approval at the AGM in May, and the dialogue with supervisors about share buybacks in the second half of the year has been initiated. We are also committed to maintaining a strong capital position and a solid liquidity and funding base.

James von Moltke: Consistent with our path laid out at the investor deep dive last year, we have proposed a cash dividend of EUR 0.30 per share for approval at the AGM in May, and the dialogue with supervisors about share buybacks in H2 has been initiated. We are also committed to maintaining a strong capital position and a solid liquidity and funding base, all of which we demonstrated during turbulent conditions in Q1. With that, let me hand back to Silke, and we look forward to your questions.

all of which we demonstrated during turbulent conditions in the first quarter. With that, let me hand back to Silke and we look forward to your questions. Thank you, operator. We would be ready to take the first question, please. Ladies and gentlemen, at this time we will begin the question and answer session. Anyone who wishes to ask a question may press star followed by one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star followed by two. If you are using speaker equipment today, please lift the handset before making your selections. So, anyone who has a question may press star followed by one at this time. Our first question is from the line of Chris Holland from Goldman Sachs. Please go ahead.

Silke Schubert: Thank you, operator. We would be ready to take the first question, please.

Silke Nicole Szypa: Thank you, operator. We would be ready to take the first question, please.

Operator: Ladies and gentlemen, at this time, we will begin the question and answer session. Anyone who wishes to ask a question may press star followed by one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star followed by two. If you're using speaker equipment today, please lift the handset before making your selections. Anyone who has a question may press star followed by one at this time. Our first question is from the line of Chris Hallum from Goldman Sachs. Please go ahead.

Chris Hallum: Good morning, everybody. My first question relates to capital return. Clearly, profitability and capital formation was better than expected in Q1. Previously, you've commented that the timing and size of potential share buybacks this year would be dependent on getting clarity on the size of regulatory model headwinds and the macro outlook. Today, you've said that you've initiated dialogue with the ECB. What updates do you have on those headwinds? How comfortable do you feel on the macro backdrop? How far are you with those ECB discussions, and what does that all mean for the potential timing and size of share buybacks this year? That's the first question.

Chris Hallam: Good morning, everybody. My first question relates to capital return. Clearly, profitability and capital formation was better than expected in Q1. Previously, you've commented that the timing and size of potential share buybacks this year would be dependent on getting clarity on the size of regulatory model headwinds and the macro outlook. Today, you've said that you've initiated dialogue with the ECB. What updates do you have on those headwinds? How comfortable do you feel on the macro backdrop? How far are you with those ECB discussions, and what does that all mean for the potential timing and size of share buybacks this year? That's the first question.

Good morning everybody. So my first question relates to capital return. Clearly profitability and capital formation was better than expected in the first quarter. Previously you've commented that the timing and size of potential share buybacks this year would be dependent on getting clarity on the size of regulatory model headwinds and the macro outlook. And today you've said that you've initiated dialogue with the ECB. So what updates do you have on those headwinds? How comfortable do you feel on the macro backdrop? And how far are you with those ECB discussions and what does that all mean for the potential timing and size of share buybacks this year? That's the first question. And then secondly perhaps for Christian, going back to slide 7, if we look across those three pillars, cost, capital and revenues, how much is the total revenue?

Chris Hallum: Secondly, perhaps for Christian, going back to slide 7, if we look across those three pillars, cost, capital, and revenues, could you talk a little bit about what these measures really mean incrementally to the 2025 strategy and targets? What are the key timing points regarding progress in those areas, and are you in a position to upgrade any of those targets at this point?

Chris Hallam: Secondly, perhaps for Christian, going back to slide 7, if we look across those three pillars, cost, capital, and revenues, could you talk a little bit about what these measures really mean incrementally to the 2025 strategy and targets? What are the key timing points regarding progress in those areas, and are you in a position to upgrade any of those targets at this point?

Could you talk a little bit about what these measures really mean incrementally to the 2025 strategy and targets? What are the key timing points regarding progress in those areas and are you in a position to upgrade any of those targets at this point? Hey Chris, it's Christian and good morning. Thank you very much for your question, and I'm sure James will jump in I'm going after both questions and again James will contribute look on your first question I think it was very important for us For the management board and for James and myself that we wanted to see the first quarter development and indeed This development is not only important, but gives us all the confidence and all the tailwind we need

James von Moltke: Hey, Chris, it's Christian, and good morning. Thank you very much for your question. I'm sure James will jump in. I'm going after both questions, and again, James will contribute. Look, on your first question, I think it was very important for us, for the Management Board, and for James and myself that we wanted to see the Q1 development. This development is not only important but gives us all the confidence and all the tailwind we need, when it comes to the further trajectory of our results.

Christian Sewing: If you really look at the composition of our results, that's what makes me so positive and confident, that is the stable business development in the Private Bank and in the Corporate Bank. If you then think about that, what James already outlined in the previous calls and what we always refer to, that kind of the real tailwind in the interest rates is coming in the Private Bank only in the outer years in 2024 and 2025. With the momentum we see right now already in the stable business, that was obviously the right starting point now to change gears and to initiate the discussions on the share buybacks with the ECB.

when it comes to the further trajectory of our results. And if you really look at the composition of our results, that what makes me so positive and confident, that is the stable business development in the private bank and in the corporate bank. And if you then think about that, what James already outlined in the previous calls, and what we always refer to that kind of the real tailwind in the interest rates is coming in the private bank only in the outer years in 24 and 25. With the momentum we see right now already in the stable business, that was obviously the right starting point now to change gears and to initiate the discussions on the share buybacks with the ECB. Secondly, to take a step back, I think also in the aftermath it was right actually not to do this end of January because we said that we were going to have a

Christian Sewing: Thirdly, I do believe that the environment, the economic outlook for Europe, particularly for Germany, you may have seen the guidance of the German economic minister yesterday, and we agree to that. We don't see a recession in Germany coming in 2023. It's a slow growth, a minimal growth, but actually far better than what we thought could happen at the end of 2022 for the year 2023. There, clearly better visibility when it comes to the economic outlook. James will give you more details when it comes to the model changes, but also there we did a lot of progress and have far better visibility what it means.

Germany coming in 23. It's a slow growth, a minimal growth, but actually far better than that what we thought could happen at the end of 2022 for the year 23. Also there, clearly better visibility when it comes to the economic outlook. And James will give you more details when it comes to the

the model changes but also there we did a lot of progress and have far better visibility what it means. And in this regard we concluded based on this in our view really good number a quarter numbers that it's now time to approach the discussions initiate the discussions with regard to timing in line with that what I said on February 2nd we believe that the share by bags will happen in the second half of 2023 there I use the word optimistic now I use the word that I'm very confident that this will happen in the second half of 23 and with regard to the amount look I think we need to have the discussions with the ECB.

Christian Sewing: If you think about the kind of increase in the dividends which we propose for the year 2022 versus the previous year, I think for consistent reasons, we should also think about such an increase when it comes to share buybacks. James, potentially you step in on the model before I take the second question.

But James and I are both believing in consistency. If you think about the kind of the increase in the dividends which we propose for the year 22 versus the previous year, I think for consistent reasons we should also think about such an increase when it comes to share buybacks. James, potentially you step in on the model before I take the second question. Sure, happy to do that. So Chris, remember in the February call we were talking about the model impacts. There are a number of different items, one big one which is what we call the wholesale model review, but then many other items, some of which are netting.

James von Moltke: Now, obviously, we'd like to do better than that, but if you use that, essentially earnings for the rest of the year would offset the model impact. That leaves us sort of the gap to EUR 13.2 to fund growth, you know, a buyback, and any other events during the year, uncertainties in the first two numbers, which we feel pretty good about. To give you a sense that therefore the range of outcomes that Christian refers to, we think at this point is affordable based on the information we have.

impact.

And that leaves us sort of the gap to 13.2 to fund growth, you know, a buyback and any other events during the year, uncertainties in the first two numbers, which we feel pretty good about. And to give you a sense that therefore, the range of outcomes that Christian, you know, refers to, we think at this point is affordable based on the information we have. To your second question and page seven, look again, first of all, I really would like.

Christian Sewing: To your second question and page seven, look, again, first of all, I really would like to say it is nothing else, Chris, than a continuous development of our strategy and a confirmation of the strategy and the trajectory which we have taken over the last years. Of course, when you are in the middle of that, you see the client reaction, you see the momentum I was just talking about, before. In the stable business, the foundation and the resilience which we have found in the Investment Bank, then obviously, you always reconsider what else can we do. Let me start on the business side, so on the right-hand side of the slide.

Christian Sewing: Number one, yes, momentum in the business is so important because it goes back to something which I always try to outline in this call, and which I think sometimes gets still underestimated, but that is all about our people. If they see these results, when you think about the momentum, the passion, the spirit in this bank, you can see that in particular now in the Corporate Bank and the Private Bank. It goes only into one direction, and that's what we want to build on. We see growth rates which are higher than what we initially planned. Now then, there are market opportunities also as a result of the events which we have seen in our competitive environment also here in Europe, which obviously we would like to bank on.

you always reconsider what else can we do and let me start on the business side on the right hand side of the slide. Number one. Yes, momentum in the business is so important because it goes to back to something which I always try to outline in this call and which I think sometimes gets still underestimated. But that is.

all about our people. If they see these results, when you think about the momentum, the passion, the spirit in this bank, you can see that in particular now in the corporate and the private bank, it goes only into one direction. And that's what we want to build on. We see growth rates which are higher than that what we initially planned. Now then there are market opportunities. Also, as a result of the events which we have seen in our competitive environment, also here in Europe , which obviously we would like to bank on. And you have seen the one or the other announcement over the last weeks that we will start to do some selectifying. Very important either in the corporate bank platform or in capital-like businesses like the advisory piece.

Christian Sewing: You have seen the one or the other announcement over the last weeks that we will start to do some selective hiring. Very important, either in the Corporate Bank platform or in capital-light businesses like the advisory piece. You also see that we are actually focusing on additional markets. We have hired a team for Latin America in the O&A and financing business, which is important for us because a lot of German clients, corporate clients are actually there who want to have our help.

You also see that we are actually focusing on additional markets. We have hired a team for Latin America in the ONA and financing business, which is important for us because a lot of German corporate clients are actually there who want to have our help. So market opportunities are there. And all that gave us actually the opportunity again with the momentum we see also when I look forward and obviously with the tailwind of the interest rates that we think the revenue gross numbers which we put forward are not only achievable but we have a real chance to outperform that. Now secondly obviously on the cost management side.

Christian Sewing: Market opportunities are there. And all that gives us actually the opportunity, again, with the momentum we see also when I look forward and obviously with the tailwind of the interest rates, that we think the revenue growth numbers which we put forward are not only achievable, but we have a real chance to outperform that. Now secondly, obviously on the cost management side, if you work on those EUR 2 billion which we always laid out and where we gave details in last year's IDD and we always reconfirmed the numbers, you then go deeper, you see there is more room and therefore we also changed the governance in the Management Board. We have a clear allocation of cost management now in the Management Board front to back, which will create further opportunities.

If you work on those 2 billion euros, which we always laid out and where we gave details in last year's IDD, and we always reconfirmed the numbers, you then go deeper, you see there is more room. And therefore, we also changed the governance in the management board. We have a clear allocation of cost management now in the management board, front to back, which will create further opportunities. And I think we also don't only think about long-term or more long-term cost changes, but the reduction in force exercise, which we kicked off in March, which will be actually then fully implemented in March.

Christian Sewing: I think we also don't only think about long-term or more long-term cost changes, but the reduction in force exercise which we kicked off in March, which will be actually then fully implemented in Q2, is something which shows you that we see now with all that what has happened with the sharpening of our businesses, but also implementation of front-to-end processes that we have more potential than we saw before. Hence, we believe that the additional EUR 500 million is a target and a goal which we should achieve. Thirdly, capital efficiency. To be honest, to criticize ourselves, I think we have done a very good capital management, but when it comes to capital efficiency in each and every sub-businesses, we can further step up.

Christian Sewing: What I like about this exercise, which will in our view bring approximately 15 to 20 billion of risk-weighted assets over the next couple of years in risk-weighted assets reductions while not losing revenues over that, is actually a more disciplined capital allocation. That is on two or three items. Number one, yes, we will act on items which we see, for instance, in the German mortgage business. If the counter-cyclical capital buffer has been increased like it was, we obviously will act and will move capital out of this business and either shift it to higher rewarding businesses, or we give it back to the shareholders. Secondly, we have found ways to increase hedging securitizations. Thirdly, discipline is not only on the cost side, it's in particular on the review of each and every individual reward when it comes to lending.

in each and every subbusinesses, we can further step up. And what I like about this exercise, which will in our view bring approximately 15 to 20 billion of risk-weighted assets over the next couple of years, in risk-weighted assets reductions, while not losing revenues over that, is actually a more disciplined capital allocation.

rewarding businesses or we give it back to the shareholders. Secondly, we have found ways to increase hedging, securitization and thirdly discipline is not only on the cost side it's in particular on the review of each and every individual reward when it comes to lending and there we need to step up and I think that there are

Christian Sewing: There we need to step up. I think that there are areas in our banks, also in the Corporate Bank, where we can do better when it comes to risk reward. That will be implemented. James will be all over about it. Those three items on top of that, what we have seen in Q1, and I really would like to focus on that again. It's an 8.3% return on equity. But if you quarterize, so to say, the SRF, we are at 10%. We know exactly what happens with the SRF payments. It will go down, and we still have something in plan for 2024 and 2025, but it will go down. The 10% ROTE in Q1 is a really good guidance because Q1 is not an outlier quarter.

areas in our banks, also in the corporate bank, where we can do better when it comes to risk reward. That will be implemented, James will be all over about it, and those three items. On top of that, what we have seen in Q1, and I really would like to focus on that again. It's an 8.3% return on equity. But if you quarter-lyze, so to say, the SRF, we are at 10%. We know exactly what happens with the SRF payments. It will go down, and we still have something in plan for 24 and 25, but it will go down. So the 10% ROTE in the first quarter is a really good guidance, because the first quarter is not an outlier quarter. If you now think about these three items, obviously it is our target to outperform that in 25. And this is the confidence we have, and with all that, what we really see in numbers in the first quarter was your whole trajectory.

Christian Sewing: If you now think about these three items, obviously it is our target to outperform that in 25. You know this is the confidence we have and with all that, what we really see in numbers in Q1 was the whole trajectory. I'm really excited about that way and hence very positive that we can achieve that outperformance. James, I don't know whether you would.

James von Moltke: No, nothing to add. Completely agree.

I'm really excited about that way and hence very positive that we can achieve that out performance. James, I don't know whether you would. No, nothing to add. Completely agree. Okay, thanks. It's very comprehensive. Our next question is from a line of Tom Holland from KBW. Please go ahead. Yeah, morning chat. So I ask you questions from me, please. Firstly, on the positive, you saw 27 billion of outflows, but could you just give us a sense of how that evolved throughout the quarter, particularly in and around that March period. And looking further out, what are you seeing, quarter to the date and how do you see those the public trends developing throughout the year? Secondly, you're sticking to your revenue guidance. I'm just wondering what gives you the confidence that target still holds, given the missing trading, given what we're seeing, quarter to the date there. So maybe you could just provide for the within update by division quarter to date dynamics that would be helpful. And one final quick one, I'm interested in your discussion, discussions with Regulator around the CDS issues and the water banking crisis.

Andrew Lim: Okay, thanks. That's very comprehensive.

Operator: Our next question is from a line of Tom Hollett from KBW. Please go ahead.

Tom Hollett: Yeah, morning, chaps. A few questions for me, please. Firstly, on deposits, you saw EUR 27 billion of outflows, but could you just give us a sense of how that evolved throughout the quarter, particularly in and around that March period. Looking further out, what are you seeing quarter to date and how do you see those deposit trends developing throughout the year. Secondly, you're sticking to your revenue guidance. I'm just wondering what gives you the confidence that target still holds given the miss in trading, given what we're seeing quarter to date there. Maybe you could just provide us with an update by division, quarter to date dynamics, that would be helpful. One final quick one. I'm interested in your discussions with regulators around the CDS issues and the wider banking crisis.

Thomas Hallett: Yeah, morning, chaps. A few questions for me, please. Firstly, on deposits, you saw EUR 27 billion of outflows, but could you just give us a sense of how that evolved throughout the quarter, particularly in and around that March period. Looking further out, what are you seeing quarter to date and how do you see those deposit trends developing throughout the year. Secondly, you're sticking to your revenue guidance. I'm just wondering what gives you the confidence that target still holds given the miss in trading, given what we're seeing quarter to date there. Maybe you could just provide us with an update by division, quarter to date dynamics, that would be helpful. One final quick one. I'm interested in your discussions with regulators around the CDS issues and the wider banking crisis.

Tom Hollett: Do you envisage any change coming maybe through things like, you know, Liquidity Coverage Ratio, definition changes, or some form of additional levies, to ensure a wider scope of deposits? You know, any sense where you see change would be great. Thank you.

Thomas Hallett: Do you envisage any change coming maybe through things like, you know, Liquidity Coverage Ratio, definition changes, or some form of additional levies, to ensure a wider scope of deposits? You know, any sense where you see change would be great. Thank you.

James von Moltke: Sure. Thanks, Tom. It's James. I'll start. Maybe I'll start where you finished, and we'll come back to that with the liquidity metrics, you know, because we manage to the liquidity metrics rather than to absolute levels of deposits or funding. I think it's important to emphasize we were able to travel through, you know, a difficult quarter, and especially March, while maintaining and in fact improving both ratios, liquidity coverage ratio, and net stable funding ratio. It's important to understand what that means. We ended the quarter in as good or better a position to withstand a 30-day or a 1-year stress environment than we were at year-end based on that strong deposit base, as well as the secured and unsecured funding position we are in.

on secured funding position we are in. And we think that's a significant achievement for Deutsche Bank, but also for the industry. I'll talk about this when we go to your third question, but I think LCR and these other tools have withstood the test in the month of March. Turning to deposits, you mentioned the reduction that deposits over the course of the quarter.

You know, the average deposits were down a little less than 2% over the quarter. And as you've seen, the spot level was down 4% excluding FX. And as we look at banks that have reported so far, we think is, and some market industry data through February , is reasonably in line with what you've seen on both sides of the Atlantic so far. Now as we've talked about, there was a lot going on in the deposit books, you know, normalization in our case from very high levels of deposits that we finished the year with. There was sort of a run up in December , which is one of the reasons for the variance between the average and the spot.

James von Moltke: That, as we look at sort of banks that have reported, you know, so far, we think is, and some market sort of industry data through February is reasonably in line with what you've seen on both sides of the Atlantic so far. Now, as we've talked about, there was a lot going on in the deposit books, you know, normalization in our case from very high levels of deposits that we finished the year with. There was sort of a run-up in December, which is one of the reasons for the variance between the average and the spot. You've also seen a pickup in competition for liquidity as central banks drain liquidity from the market, and you do see some price sensitive deposits leaving the bank.

You've also seen a pickup in competition for liquidity as central banks drain liquidity from the market and you do see some price sensitive deposits leaving the bank. We're just disciplined on pricing and so that's represents if you like a strategy outcome. We have seen clients shift deposits to higher yielding investment alternatives, including but not limited to money market funds. And some of that, as we've pointed out, was within our own system. So it didn't leave the bank, it just went from deposit to other products. The other thing that happens in our deposit base is sort of usual ebbs and flows. So.

James von Moltke: You know, we're just disciplined on pricing and so that's, you know, represents, if you like, a strategy outcome. We have seen clients shift deposits to higher yielding investment alternatives, including but not limited to money market funds. Some of that, as we've pointed out, was within our own system. It didn't leave the bank, it just went from deposit to other products. The other thing that happens in our deposit base is sort of usual ebbs and flows. If you're a very large cash management bank for corporates and institutionals, there's a lot of movement throughout the quarter, which means that your specific question is a little bit hard to pinpoint.

James von Moltke: What we've talked about is sort of two-thirds coming in the first, say 9 or 10 weeks of the quarter. Then one-third in the last 2 weeks, including the sort of episodic or, you know, idiosyncratic noise around our name. We think that 1 or 1.5%, which is what we'd estimate over those last 7 or 8 sort of business days of the quarter, actually underscores the resilience of the deposit base, and the relative absence of what I'll call hot money at DB. You know, where did you see it? It was in the portfolios that are typically the most price sensitive and sensitive, if you like, to sentiment.

we'd estimate over those last seven or eight sort of business days of the quarter actually underscores the resilience of the deposit base and the relative absence of what I'll call hot money at DB.

you know, where did you see it? It was in the portfolios that are typically the most price sensitive and sensitive, if you like, to sentiment. So in a sense, it's not surprising to see that amount of reduction. And as we come back to your LCR question, you know, I think it proves its value as a tool because the reality, why did the ratio stay constant?

James von Moltke: In a sense it's not surprising to see that amount of reduction. As we come back to your LCR question, you know, I think it proves its value as a tool because the reality, why did the ratio stay constant? We don't apply liquidity value to those funding sources, including deposits that are most likely to flow out in a stress scenario. If I put that all together, Tom, we feel pretty good about the experience and the way we were able to manage through that environment. Credit to the teams, you know, the communication, the client outreach and engagement, and the work that was done in preparation. We feel quite good about performance through that period.

we don't apply liquidity value to those funding sources, including deposits, that are most likely to flow out in a stress scenario. If I put that all together, Tom, we feel pretty good about the experience and the way we were able to manage through that environment. Credit to the teams, the communication, the client outreach and engagement, the work that was done in preparation. We feel quite good about performance through that period. Tom, to the other question on the revenue guidance, yes, high confidence in the midpoint of 28 to 29 billion. And why? Because... It's just time to think about a program or myself.

Christian Sewing: Tom, to the other question on the revenue guidance. Yes, high confidence in the midpoint of EUR 28 to 29 billion. Why? Because I'm really drawing a lot of comfort, actually, from the stable business. If there is even room for improvement, it comes from the Private Bank and the Corporate Bank. You know, if I give you sort of my numbers, which I have in my head, even if you say the Q1 in the Corporate Bank was a stellar quarter where potentially, on the deposit beta, we may see some reduction. Clearly the Corporate Bank will be well above EUR 7 billion of revenues for the year. I mean, we started with the EUR 1.9 billion.

I'm really drawing a lot of comfort actually from the stable business. If there is even room for improvement, it comes from the private bank and the corporate bank. If I give you my numbers, which I have in my head, even if you say the first quarter in the corporate bank was a stellar quarter where potentially on the deposit better, we may see some reduction, but clearly the corporate bank will be well above 7 billion of revenues for the year. We started with the 1.9 billion and again, if I all see the forecast and the momentum we have there.

Christian Sewing: Again, if I can see the forecast and the momentum we have there, it will be clearly a number well above EUR 7 billion. The Private Bank, in my view, very stable. Again, think about that, what we always said before, that the real impact of the tailwind is still to come. If I look at last year, if I look at this year, if I look at Q1, kind of a number well above EUR 9 billion is well achievable in the Private Bank. Asset management, again, a EUR 2.5 billion number with all that what I can see well achievable. I think the stable business will be well in excess of EUR 19 billion.

it will be clearly a number well above 7 billion. The private bank in my view very stable and again think about that what we always said before that the real impact of the tailwind is still to come. So if I look at last year, if I look at this year, if I look at the first quarter kind of a number well above 9 billion is well achievable in the private bank. Asset management again a 2.5 billion number with all that what I can see well achievable. So I think the stable business will be well in excess of 19 billion. If you then think about the 28.5 billion it's approximately 9 billion which we need from the investment bank. Now again I think James said it in his prepared remarks, a very strong business actually in the investment bank the episodic items which we recorded in the first quarter of 2022 we always knew that this is not repeated.

Christian Sewing: If you then think about the EUR 28.5 billion, it's approximately EUR 9 billion which we need from the Investment Bank. Now, again, I think James said it in his prepared remarks, a very strong business actually in the Investment Bank. The episodic items which we recorded in Q1 2022, we always knew that this is not repeatable, but the underlying flow in the Investment Bank is strong. I just told you about additional investments, which we did also Latin America and so on. I think, you know, what we need to achieve just in order to come to the EUR 28.5 billion would be something like a EUR 9 billion of revenues in the Investment Bank. We took EUR 2.7 billion in.

Christian Sewing: That would mean on average EUR 2.1 billion quarterly, which we have seen and where I'm highly confident to get there again based on the momentum. Hence, you know what, the guidance stands and I'm confident. There's a third question, you.

James von Moltke: You know, on LCR, we'll always back test. I think the industry and working with regulators we'll back test what we call the outflow assumptions or the liquidity risk drivers. We'll incorporate what we learn into our own internal models and discuss with regulators as an industry, whether there are changes to LCR that are necessary. I'll tell you that the experience of the last several years, you know, the COVID crisis in 2020, the impact of the inception of the war in Ukraine last year, now the banking sector turbulence. All of those things have actually proven out rather than disproved the severity of the liquidity risk drivers. We feel really good about what the tool tells us. You mentioned the CDS market.

own internal models and discuss with regulators as an industry whether there are changes to LCR that are necessary. I'll tell you that the experience of the last several years, you know, the COVID crisis in 2020, the impact of the inception of the war in Ukraine last year, now the banking sector turbulence, all of those things have actually proven out rather than

then disprove the severity of the liquidity risk drivers. So we feel really good about what the tool tells us. You mentioned the CDS market. We think CDS is an important risk management tool as well. Helping banks and counterparties manage credit risk. That said, it's an illiquid market, relatively speaking, and is prone to movements that may not reflect a realistic assessment of...

James von Moltke: We think CDS is an important risk management tool as well, you know, helping banks and counterparties manage credit risk. That said, it's an illiquid market, relatively speaking, and you know, is prone to movements that may not reflect you know, a realistic assessment of default probability. I think it you know, it probably does bear some scrutiny as to how that market works and whether there are ways to improve it. Let's be clear, you know, I think institutionally and speaking personally, we think short selling is a viable activity. It provides information to the marketplace, and is not something that we would criticize in and of itself.

the fault probability. And so I think it probably does bear some scrutiny as to how that market works and whether there are ways to improve it. Let's be clear. I think institutionally and speaking personally, we think short selling is a viable activity. It provides information to the marketplace and is not something that we would criticize in and of itself. You know, the question is, is there a possibility for crosstalk between different parts of the capital structure that really doesn't represent information in the marketplace. And hence, you know, it's something that does bear some scrutiny.

James von Moltke: You know, the question is there a possibility for crosstalk between different parts of the capital structure that really doesn't represent real information in the marketplace? Hence, you know, it's something that does bear some scrutiny. As I say, we went through this period, which was an idiosyncratic focus, I think well. In a sense, we were tested, and we showed ourselves to be a strong, stable bank without the vulnerabilities that the market was concerned about. In a sense, that's a good thing that clients and investors and counterparties were able to see that. I'd probably leave it there, Tom Hollett.

which was an idiosyncratic focus, I think, well. In a sense, we were tested and we showed ourselves to be a strong, stable bank without the vulnerabilities that the market was concerned about. And in a sense, that's a good thing that clients and investors and counterparties were able to see that. So I'd probably leave it there, Tom. Yeah, that's very clear, thank you. The next question is from the line of Anke Rangen from RBC. Please go ahead. Yeah, thank you very much. Good morning for taking my questions. The first is on cost. If you can talk a bit about the outlook and guidance. With respect to 2023, Q1 is running in line with the target. So I'm just wondering, what is the target for the Q1? So the target is the market. So the market is running in line with the target.

Tom Hollett: Yeah. No, that's very clear. Thank you.

Thomas Hallett: Yeah. No, that's very clear. Thank you.

Operator: The next question is from the line of Anka Reingen from RBC. Please go ahead.

Anka Reingen: Yeah, thank you very much. Good morning for taking my questions. The first is on costs, if you can talk a bit about the outlook and guidance. With respect to 2023, Q1 is running in line with the target of flat adjusted and reported. If we look for the rest of the year, do you see any potential headwinds to your cost target? I mean, you mentioned hiring. Is there a risk that we don't end up on a flat adjusted and reported cost basis? In that respect, just confirming, the EUR 500 million restructuring costs are incorporated in your flat cost guidance. If we travel from 2023 to 2025, is that essentially flat trajectory as well?

or flat adjusted and reported. And if we look for the rest of the year, do you see any potential headwinds to your cost target? I mean, you mentioned tiring. Is there a risk that we don't end up on a flat adjusted and reported cost basis? And then in that respect, just confirming the 500 million restructuring costs are incorporated in your flat cost guidance. And then if we travel from 23 to 25, is that like essentially flat trajectory as well? Or when do the 2.5 billion cost savings come through and add the 500 million, like an additional cost saving in your cost path?

Anka Reingen: When do the EUR 2.5 billion cost savings come through and add EUR 500 million, like an additional cost saving, in your cost path you modeled? Or is it basically offsetting additional headwinds you weren't seeing initially? The cost-income ratio target, I realize you've made lots of progress, but still, 62.5 looks quite ambitious. What levers do you think you can pull, or where is the upside potential, from where we stand at the moment? Second question is on loan losses, unchanged guidance of 25 to 30 basis points. Q1 is already 30 basis points, and your assumption is avoiding a recession in Germany. So how confident are you on your loan loss provision guidance? Thank you very much.

James von Moltke: Anka Reingen, thank you for the questions. I'll dive in and Christian Sewing may want to add. I'll go in reverse order, if I may. Look, as we've talked about, the EUR 372 million this quarter is probably higher than we would have expected, and in particular, focuses on the, you know, around the EUR 120 million that we recognized on these two individual exposures in the IPB. If you take that out, EUR 250 million in the quarter is actually a sensible run rate, and would certainly deliver, you know, on the range and guidance that we've given. We're not seeing indicators at this point of weakness in credit.

questions I'll dive in and and and Christian may want to add I'll go in reverse reverse order if I may look as we've talked about the 372 million this quarter is probably higher than we would have expected and and in particular focuses on the you know around 120 million that that we recognized on on the two these two individual exposures in the IPB if you take that out to 50 in the quarter

is actually a sensible run rate and would certainly deliver on the range and guidance that we've given. We're not seeing indicators at this point of weakness and credit. So as we look at the forward looking indicators, ratings, movements, stage two events and all the metrics we look at, we're just not seeing it yet. We are obviously mindful of the environment that we're in and when watching carefully, but to your question about do the trends support the range, you know, they do? So we're comfortable there.

James von Moltke: As we look at the forward-looking indicators, ratings movements, you know, stage two events and all the metrics we look at, we're just not seeing it yet. We are obviously mindful of the environment that we're in and watching carefully. To your question about do the trends support the range? You know, they do. We're comfortable there. The question on the path to 25 on cost income ratio, you know, what's the lever? The lever is operating leverage. You know, what we highlighted back in February is that the sort of the cumulative, if you like, the compound rate of operating leverage improvement over the four years from 18 was 5% a year.

The question on the path to 25 on cost income ratio, what's the lever? The lever is operating leverage. What we highlighted back in February is that the cumulative, if you like, the compound rate of operating leverage improvement over the four years from 18 was 5 percent a year. Now, we may not achieve that every year, but it doesn't take 5 percent a year to get us to 62 and a half percent from 67 percent. That's also why we've defined the strategy as we have and why we define acceleration as we've done. If we can

James von Moltke: Now, we may not achieve that every year, but it doesn't take 5% a year to get us to 62.5% from 67%. That's also why we've defined the strategy as we have and why we define acceleration as we've done. You know, if we can find ways to accelerate revenue growth and at least manage the expense base flat with some of the additional measures that we're taking, at least offsetting additional investments and hopefully bringing a little bit more to the bottom line over that time. We think the math to get to 62.5% is very solid.

find ways to accelerate revenue growth and at least manage the expense-based flat with some of the additional measures that we're taking, at least offsetting additional investments and hopefully bringing a little bit more to the bottom line over that time, we think the math to get to 62.5 percent is very solid and as Christian outlined, we'd hope to be able to make that a more easily achievable target and as I say, potentially create room for reinvestment. The 23 path, as you say, is one where, you know, are there headwinds, there are always headwinds, you know, where we are making investments, whether it's in technology or controls, we're seeing inflation.

James von Moltke: As Christian outlined, you know, we'd hope to be able to make that a more easily achievable target, and as I say, potentially create room for reinvestment. The 2023 path, as you say, is one where, you know, are there headwinds? There are always headwinds. You know, we are making investments, whether it's in technology or controls. We're seeing inflation, and we need to work to offset those things. The initiatives we announced today are not that meaningful in terms of 2023, so they might help us to the tune of around EUR 50 million in H2.

James von Moltke: They step up over the next couple of years, and the run rate that we think the various initiatives that we're talking about should achieve by 2025 or if not dribbling a little bit into 2026 would be about EUR 250 million. We think it's a meaningful sort of contribution to the EUR 500 million goal that we have. We're seeing a number of things, obviously in the expense base we've talked about. You know, we're gonna continue to fight through in Q2. Work hard to keep the company at that run rate we've talked about. In H2, we actually start to harvest some benefits of things we've been working on for a while.

Obviously in the expense base we've talked about, we're gonna continue to fight through now in the second quarter, work hard to keep the company at that run rate we've talked about. In the second half, we actually start to harvest some benefits of things we've been working on for a while. I think notably as we complete the Unity integration, while it doesn't immediately happen, we start to harvest the benefits of that.

James von Moltke: I think notably, as we complete the Unity integration, while it doesn't immediately happen, we start to harvest the benefits of that investment. We've talked about the linearity and non-linearity of certain elements of the EUR 2 billion. We will continue to work and harvest those. You know, the short answer is, of course it's always challenging to manage a company in an environment like this with so many moving parts to a run rate. We think we've got the tools and the measures in place to do that, and we've got an intense amount of management focus on it. As Christian says, even more so with Rebecca's expansion.

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