Deutsche Bank Aktiengesellschaft Q1 2023 Earnings Call

April 27, 2023

Speaker 1: And Re F.

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 one on your touch-tone telephone. Please press the star key followed by zero for operator assistance.

Speaker 2: I would now like to turn the conference over to Silke Schuyper for closing comments. 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 Sehving 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.

Speaker 3: Thank you, Zülke, 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 counts 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.

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.

Speaker 3: 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.

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: 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.

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 business and delivered on the strategic steps which support our 2025 targets and strengthened 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: The Corporate Bank showed financial strength with record revenues and good client activity across our main businesses. 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 fifth consecutive quarter.

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 lines.

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.

Speaker 3: X-RAC has 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.

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

Speaker 3: Pre-provision profit for the group was 2.2 billion euros in the first quarter, up 14% 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 strengths.

Speaker 3: I'm particularly pleased with the performance at the corporate bank and private bank, which benefited from the normalised rate environment.

Speaker 3: 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.

Speaker 3: The investment bank also produces solid underlying contribution against an exceptionally strong prior year quarter.

Speaker 3: 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.

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 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.

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.

Speaker 3: In February , we said that we were working on additional efficiency measures, which we are now implementing and which are shown on slide 4.

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: 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. Once again, please use the link in the description to find out more about our balance sheet strength and resilience funding profile.

Speaker 3: 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.

Speaker 3: 77% of our German retail deposits are insured via the Statutory Protection Scheme.

Speaker 3: 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.

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.

Speaker 3: 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.

Speaker 3: To summarize, we have solid foundations to navigate through the recent turbulent environment. And importantly, I view the European banking sector as stable.

Speaker 3: Thanks in part to the regulatory efforts of recent years. Moving to slide 6.

Speaker 3: The current environment underlines the importance of our global housebank model, which positions us well to serve clients in volatile markets.

Speaker 3: When we set out our strategy in March last year, we outlined the key themes which underpin these goals and ambitions.

Speaker 3: 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 toward our 2025 goals. Benefiting from a strategy and business model, and a strategy that is not a

Speaker 3: 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.

Speaker 3: These technology investments are also designed to create value for our clients.

Speaker 3: 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.

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.

from reduction in certain sub-hurdle lending and mortgage portfolios, greater utilization of securitization, and hedging optimization.

These actions are expected to have a

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 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 and growth in the future.

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.

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 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.

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. 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.

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.

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 loanbook 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. 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, 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.

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 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.

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, were flat sequentially, but increased by 5% year-on-year, or €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 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.

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.

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.

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.

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 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.

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. For more information, visit www.fema.gov

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

on year.

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

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.

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

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%.

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.

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

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. Quarter-on-quarter balances were essentially flat, with lower origination reflecting our selective risk deployment. Provision for credit losses.

was 41 million euros 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, 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, 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.

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 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 Another now includes the impact of our legacy portfolios previously reported as the capital 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.

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. 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 remain focused on delivering positive operating leverage to the group outlook for 2023.

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, 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.

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.

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 that 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. Good morning everybody. So my first question relates to capital return. Totally profit Community.

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, coming 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 the future of the

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 when it comes to the further trajectory of our results. So and if you really look at the composition of our results that what makes me so

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 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, again, the stability now with a step-off 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.

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 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 in our view really good 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 use the word that I'm very confident that this will happen in the second half of 2023.

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'd 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. 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 Christian 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 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 past.

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 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.

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 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 ONA and financing business which is important.

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 don't only think about long-term or more long-term cost changes, but –

The reduction in force exercise which we kicked off a 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 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...

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, securitization and thirdly, discipline is not only on the cost side, it's in particular on the review of each and every individual.

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 quarterlise, 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.

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... No, nothing to add. Completely agree.

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... No, nothing to add. Completely agree. Okay, thanks. It's very comprehensive.

Our next question is from the line of Tom Hollett from KBW. Please go ahead. Morning, Chaps. 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? Looking further out, what are you seeing quarter of the day, 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.

discussions with regulators around the CVS issues and the wider 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.

Sure, thanks Tom. It's James. 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.

And I think it's important to emphasize we were able to travel through a difficult quarter, and especially March, while maintaining and in fact improving both ratios, liquidity coverage ratio and net 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.

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 of 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, 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're just disciplined on pricing and so that 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 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. 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

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. 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,

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.

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. And 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. I mean, we started with the 1.9 billion. And again, if I all see the forecast and the momentum we have there.

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 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.

So I think, you know, what we need to achieve just in order to come to the 28.5 billion would be something like a 9 billion of revenues in the investment bank. We took 2.7 billion in. That would mean on average a 2.1 billion quarterly, which we have seen, which we 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. The third question. So, 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 disprove the severity of the liquidity risk drivers. 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. You know, 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. 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. One of the question is, is there

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. 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 counter parties.

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. For more information, visit www.rbc.gov.au

cross 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. Loan change guidance of 25 to 30 basis points.

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 the two, 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, we're seeing a lot of ratings movements, stage two events.

on cost income ratio, what's the lever? The lever is operating leverage. 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 it doesn't take 5% a year to get us to 62 1.5% from <expletive>

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 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.

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 contribution to the 500 million goal that we have.

or if not dribbling a little bit into 26 would be about 250 million. So we think it's a meaningful contribution to the 500 million goal that we have.

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. Thank you. If I may just come back to the cost path, given some of the 2.5 billion is more back-end load of cost savings, the idea is still to be essentially flat over 23, 24, 25. Thank you. That's right. And look, one thing, and I think there was embedded in your question, I apologize. The restructuring and severance is higher than we would have planned for the year. That is true.

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% needs to be higher?

please. Thank you. 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...

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 and all of these elements

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, and all of these elements. Does it affect how you think about LCR?

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, you know, that there's room in that ratio. I think it's important to understand if a bank hits 100 percent, that, you know, in our case we have a now 43 percent margin against the 100 percent. But at 100 percent, we're still able to withstand a 30-day stress and come out standing. So it is a, it's a, 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 that the ratio of the two is equal to the numerator and the denominator.

It's 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 are, you know, put us in a good place. 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.

which is engaged in maturity transformation, relies on that buffer being there, but you want to calibrate it to a level that...

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.

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 in US terms around criticism.

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 600 million of that $1.6 billion that we're looking at carefully and need to work with the sponsors around extension dates and refinancings to. To

to make sure it carries through this market environment without more scratches and bruises. And the stock of provisions on that book? Stock of provisions is I think in total around probably 50 million against the stage three, not against the 1.6 but against the stage three. Okay, thank you very much. Thank you Stuart. The next question is from the line of Nicolas Payen from Kätler-Chevroux. Please go ahead.

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?

So don't know, if you want to start your revenue path look, I'll make a couple comments. Christian will, I'm sure, add look.

on a revenue path look I'll make a couple 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 an origination advisory, you know, that's still sort of recovering So we think there's scope to 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 or market opportunity terms and in spreads.

And then I think our markets businesses have been, you know, have been strong performers and also risk managers. Of course, in that business, we're going to ride a little bit the volatility and the volumes in the marketplace, but we feel good about the way the businesses come together under Rahm's leadership.

So all of those things would tell us 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 outside of mortgages. So we feel comfortable there's a good path there.

And while some of the, you know, 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 plans Stefan hopes 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. So all of those things I think feed into 24 and then 25 and there is sort of sustainable momentum built into that.

Your second question was liquidity in March and what can we do? 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 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. 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 Lenof Adam Teralak from Media Banker. Please go ahead. Morning. Thanks 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 seems to be low.

There's a bit of 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 of capital unlocked.

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? Thank you. So Adam, I'm not sure I follow all the questions, but let me start with NII trajectory.

You know what I'd do is refer you back to page 26 of the February 2 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. It's still a really good assumption. So we did 13.65 billion of net interest income 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 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. 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.

And 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. So I think if you ask me today, it will be a combination of reinvestment into those businesses, 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. 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 dynamic, you still have to deal with those dataactic dates to get to those data make-up if you're an investor, and then there's a lot of people working with that, and we have great companions there, and even, for example, when governor George Here said to getals that everyone who's looking for us to get my name and pass, you go back and look at the changes we've made to that gap,

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, for 400 to 410. And so 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 30 billion euros 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. Great, thank you. The final point was whether the regulatory tailwind you had this quarter was the offsetting item we discussed against the model. No, it's all still. There was the one item that we talked about was a market risk RWA item that was in the plan.

but is not part of the net 40 to 60 that I talked about earlier. Okay, thank you. The next question is from the line of Kian Abou-Housain from JP Morgan, please go ahead. Yeah, thanks for taking my questions. The first one is more a general question. I mean if I look at the the turnaround of the bank, and I think Berlin should send you two medals, both to Christian and...

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. Clearly you have Rebecca Shor, she is the COO and also being responsible for cost, besides the transformation. I'm wondering if there's any change in your thinking around.

I mean, it feels like there is from the language, but just wondering if there's any, and clearly you have 500 million, but I wonder if there's any change in the way we should think about Deutschen cost management going forward now relative to last year. Yeah. Thank you, Kiehan. Thank you, Kiehan.

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 is 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. Point number two is...

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, 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 a...

a stable versus less stable business, 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 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 James just talked about the financing business a very stable business

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 exotic items, I'm just mentioning the Zim name, which we talked about in 21 and 22 a lot, which obviously is not something which comes back every quarter.

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 rate still to come in one of our largest Business, which is the private bank with revenues above 9 billion clearly above 9 billion So that I think from from a pure revenue point of view. I think this bank is completely turned around

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.

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. 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.

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 from that side With your metal item actually, I will bring that message to Berlin By train with a May ticket, I hope. Thank you The next question is from line of Amit Girl from Barclays, please go ahead I thank you. I've got two questions kind of actually follow-ups and one just on

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?

I think a little shy of one and a half billion. So use one and a half billion. As Christian indicated, we look at last year's buyback at 300 and given the progress we've made, and 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. But 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. 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.

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 the average last quarter and the average this quarter are both almost exactly where you'd want it to be in this 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 with 130 when we're talking to 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 tie a specific.

Revenue better or worse number to a ratio better or worse view. I hope that helps Thank you much appreciated. Thanks The next question is from the line of Jeremy Segu from BMP Paribas exam, 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

that the world more broadly is nervous around banks and you know, the things like Basel for to be funded some banks are pre-funding that etc. So is 13% still the right reference level to be talking about for capital? 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. 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, 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. It's very helpful, thank you. Thanks, Jeremy. Next question is from the line of Pierce Brown from HSBC. Please go ahead.

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-preferred 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.

not just senior non-preferred by the way, but we did covered and we did a tier two issue 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.

in any meaningful way. I think we may have done a covered bond in the interim, but the reason is not because we don't have access to it, but we don't like the price. And pre-funding therefore was, I think, economically sensible and has actually given us, to the earlier question from Chris, I think, has given us a slightly better, I think,

funding profile then for this year and going into 24, then we might have other expected, 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...

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 has 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 will survive in this form. It conceivably will be a little bit more expensive for banks to issue AT1 securities.

But, 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, you know, very constructive about where we stand and our hope and expectation is.

spreads will narrow again in the coming months. That's very clear. Thank you very much. Thanks, Piers. The next question is from the line-up, John Pease from CreditSpitz. Please go ahead. 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's always hard to 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 for that, what they have done. And you know, I think this is for me the number one lesson learned.

And if you start from that, I think there is no reason to kind of now come up with a whatever you call it, knee-jerk reaction to think about further rules. And 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 there are...

hearing 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 going forward and hence I am calm on 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 going forward. And hence, I'm calm on this. Great. Thank you.

The next question is from the line of Andrew Combs from Citi. Please go ahead. Good morning. One, if I could just come back to the LCR, 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 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 rate.

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, 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 the ratio, but one that we're, you know, 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.

slightly. So what you get is right now a significant impact of rates and within rates the lag.

Obviously, what would you 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 out. And presumably, the guidance you gave at Q4 for the group is that the

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. Brilliant, thank you. Thanks Andrew. The next question is from the line of Michelle Schaaf 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 know that 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 shift and also how is Deutsche Bank reacting to competition in terms of reprising. Thank you so much.

Sure, happy to Michelle for the questions. So there's a lot in that sort of recourse lending portfolio. So 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 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 it's as a in terms of the nature the riskiness of you like if you like and the underlying exposure.

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.

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.

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, at least in our estimation on that beta trajectory.

Thank you so much. Thanks, Vijay. Our last question is from line of Andrew Lim from Société Générale. Please go ahead. Hi, thanks for taking my question. Just a few quick-fire questions. So 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? What does that appear to be the professional solution in terms of filing deposits?

And then secondly, for 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?

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 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 14s, maybe a little better and 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 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, 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 maybe what is the German deposit base in total is that is that right? 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, no, it's a total group deposit base, but I can say that. Total group deposit base is 33% then and 41% if you exclude banks from that ratio. Great, thanks. Thanks, Andrew. And then lastly, sorry, lastly on the...

on the impact 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, the post-trim world is really characterized by some of the EBA guidance that came out and the implementation of that. So, and it particularly relates to LGDs to a lesser extent some of the other factors. It's kind of been rolling through the portfolios. So we did see some in retail last year and as we've talked about more next year. So it hasn't been uniquely to either the investment bank or the corporate bank, but it's gone.

portfolio by portfolio. There will be some implementation of new models in the aftermath of our Unity technology implementation. There's a dependency there, so there will be some adjustments in the models that are implemented then in Q3.

you know, 2024 should be a cleaner year and give us the ability to prepare then for Bazel 3 final framework implementation on the 1st of January 25. Great, thank you very much. Thanks, Andrew. Appreciate you sticking with us.

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

The.

You

Well.

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, Zürke, 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, 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 this period. As you know, our

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. 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, we were

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 500 billion euros of sustainable financing and investments, excluding DWS, by end 2025. Our cumulative volume since January 2020 has grown.

to 238 billion euros. 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 strengths 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.

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 six...

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. 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 am 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 is a great deal.

increased to almost 60% from 33% compared to the first quarter 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 12-month 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 variation timing in the prior year quarter. We anticipated that these would reverse over time and we are benefiting from this effect this quarter. 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 gross focus, we maintained our discipline on call.

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 resilient funding profile on slide 5. 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 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 such as retail, corporates, and private sector.

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. 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 remained sound. The LCR was 143% above our target of around 130% with a buffer of 63 billion euros above regulatory required levels.

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 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 housebank 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. 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. 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 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.

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. 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 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.

With the 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 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.

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. 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 percent 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 percent. The first quarter performance shows clear progress toward our 2025 target of less than 62.5 percent.

And we demonstrated the strength of our capital and balance sheet and the quality of our loanbook 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.

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, 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 percent, and paid

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 2 percentage points versus the prior year period.

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.

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 and L. 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. 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. These three 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 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 focus 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. 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 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 percent compared to approximately 7 percent in Europe . Our exposure in the U.S. office sector is manageable at 4.5 billion euros, less than 1 percent of our total book. Our office portfolio is high quality with around 80 percent 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.

of this book. Moving to funding and liquidity on slide 16. We ended the quarter with a liquidity coverage ratio of 143 percent equivalent to an excess of 63 billion euros above our regulatory requirements. 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. 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 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 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 overadyvine-NG 2. MAN Preview

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 driven by revenue growth across all regions and business units. However, as we highlighted at our fourth quarter results, the generate total revenue growth cost breaking in B, C, and D complaint came in part with adolescents confused among the Christensen sprinkle stock Domino's was quite impressive and very unique in their

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 four 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. 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. 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, 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% 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. Quarter on quarter balances were essentially flat, with lower origination reflecting our selective risk deployment. Provision for credit losses was 41 million euros or 16 basis points of average loans, a slight increase on the prior year. Profit before tax was 861 million euros in the quarter. Going 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, 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, 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.

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 841 billion euros, reflecting 19 billion euros of market appreciation and net inflows. Flows 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. 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 Another now includes the impact of our legacy portfolios previously reported as the capital release unit. Corporate Another 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.

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, 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, 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, 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.

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, 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. 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 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 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, again the stability now with a step off 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.

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 23. It's slow growth, minimal growth, but actually far better than that what we thought could happen at the end of 2022 for the year 23. So 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, 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. Here I used the word optimistic, now I use the word that I'm very confident that this will happen in the second half of 2023.

And 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. 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 nevertheless, right here it's as wide to inter seconds as we does today.

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'd 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. 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, 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 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 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. 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. 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.

a lot of German clients, corporate clients are actually there who want to have our help. So market opportunities are there. And all that give 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.

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 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 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 sub businesses 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. And 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 circuit 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, 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 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. And this is the confidence we have, and with all that what we really see in numbers in the first quarter 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... No, nothing to add. Completely agree. Okay, thanks. It's very comprehensive. Our next question is from the line of Tom Hollit from KBW. Please go ahead. Yeah, morning, chat. 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 evolves 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 targets still hold, 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 CVS issues and the water banking crisis.

Do you envisage any change coming maybe through things like 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. 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 managed to the liquidity metrics rather than to absolute levels of deposits or funding. And 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 that 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 based on that strong deposit base as well as the secured and unsecured funding position we were 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.

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 know, represents if you like a strategy outcome. We have seen client 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 deposits to other products. The other thing that happens in our deposit bases is sort of usual ebbs and flows. So if you're a very large cash management bank for corporate institutions, there's a lot of movement throughout the quarter.

Which means that your specific question is a little bit hard to pinpoint. 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, 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. Tom, to the other question on the revenue guidance, yes.

year. I mean we started with the 1.9 billion and again if I all see the forecast and the momentum we have there 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

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, 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

And hence, you know what, the guidance stands and I'm confident. So, 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 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. You know, helping banks and counterparties manage credit risk.

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. 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. That's very clear. Thank you. The next question is from the line of Anca Rangan from RBC. Please go ahead. 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.

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 in that respect, just confirming the 500 million restructure and 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 other 500 million like an additional cost saving in your cost path you modeled? Or is it basically offsetting additional headwinds you were?

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 two events, and all the...

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, did the trends support the range, they do? So we're comfortable there. 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% a year.

Now, we may not achieve that every year, 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. 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...

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, is other headwinds, they're 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 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.

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. I think notably as we complete the unity integration, while it doesn't immediately happen, we start to get, start to harvest the benefits of that investment. We've talked about the linearity and non-linearity of certain elements of the two 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

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