Full Year 2023 Deutsche Bank AG Earnings Call

February 1, 2024

Operator: Good morning, good afternoon, ladies and gentlemen. Welcome to the Q4 2023 Analyst Conference call. I would like to remind you that all participants will be in a listen-only mode.

Good morning, good afternoon, ladies and gentlemen, welcome to the Q4 2023 I know this conference call I.

I would like to remind you that all participants will be in a listen only mode.

Operator: The conference will be recorded. The presentation will be followed by a question and answer session. If you would like to ask a question, you may do so by pressing the star key and one. For Operator Assistant, please press the star key and zero.

The conference will be recorded the presentation will be followed by a question and answer session.

If you would like to ask a question you may do so by pressing star one.

For operator assistance, please push the stocky enviable.

Operator: It has been my pleasure to turn the conference over to Ioana. Please go ahead. Thank you for joining us for our fourth quarter and full year 2023 Preliminary Results Call. As usual, our Chief Executive Officer, Christian Sewing, will speak first, followed by our Chief Financial Officer, James Von Moltke. The presentation, as always, is available to download in the Investor Relations section of our website, db.com.

Been my pleasure to turn the conference over to you Onno. Please go ahead.

Onno: Thank you for joining us for our fourth quarter and full year 2023 preliminary results call as usual, our Chief Executive Officer Christian saving 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 <unk> Dot com.

Ioana Patriniche: 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 materials. With that, I will hand over to Christian.

Onno: Before we get started let me just remind you that the presentation contains forward looking statements, which may not develop as the currently expect we that's all I'll ask you to take notice of the precautionary warning at the end of all materials with that let me hand over to Christian.

Christian Sewing: Thank you, Ioana, and a warm welcome from me. It's a pleasure to be discussing our results with you today. We have set Deutsche Bank's course for sustainable growth and returns for shareholders through our Global House Bank Strategy, and 2023 saw clear progress. We delivered business growth as the benefits of our sharpened business model came through. We grew revenues to around 29 billion euros, with a growth rate of close to 7% per year since 2021, well above our initial target, and we are now raising our revenue growth target to 5.5% to 6.5% with the aim of reaching revenues of around 32 billion euros by 2025. We have made conscious investment decisions to protect and grow our franchise by driving business growth, strengthening controls, and improving operational efficiency. We have now reached an inflection point on COF.

Christian Sewing: Thank you your honour and a warm welcome from me, it's a pleasure to be discussing our results with you today.

Christian Sewing: We have set Deutsche Bank's course for sustainable growth and returns for shareholders through our global <unk> strategy.

Christian Sewing: And 2023 so clear progress.

Christian Sewing: We delivered business growth as the benefits of our shopping business model came through.

Christian Sewing: We grew revenues to around 29 billion euros with the growth rate of close to 7% per year since 2021, well above our initial target and.

Christian Sewing: And we are now raising our revenue growth target to five and a half to six 5% with the aim of reaching revenues of around 32 billion euros by 2025.

Christian Sewing: We made conscious investment decisions to protect and grow our franchise by driving business growth.

Christian Sewing: Strengthening controls.

Christian Sewing: And improving operational efficiency.

Christian Sewing: We have now reached an inflection point on costs.

Christian Sewing: Our investments are approaching completion, and we are making solid progress on our efficiency program. As a result, we now see ourselves delivering normalized operating and financial performance. This reinforces our confidence that we will deliver on our target run rate of around €5 billion per quarter for adjusted costs, including the first quarter of this year. Our guidance for the full year 2025 non-interest rate expenses remains unchanged, at around 20 billion euros.

Christian Sewing: Our investments are approaching completion.

Christian Sewing: We are making solid progress on our efficiency program.

Christian Sewing: As a result.

Christian Sewing: We now see ourselves to deliver a normalized operating and financial performance.

Christian Sewing: This reinforces our confidence that we will deliver on our target run rate of around 5 billion euros per quarter, four adjusted costs, including the first quarter of this year.

Christian Sewing: Our guidance for the full year 2025, non interest rate expenses remains unchanged.

Christian Sewing: At around 20 billion euros.

Christian Sewing: We again demonstrated our resilience with high-quality risk management and our strong capital and balance sheet. All of this leaves us highly confident that we will meet our 2025 financial target. Furthermore, we are increasing our capital distributions as rewarding our shareholders is our priority. We increased both dividends and share buybacks by 50% compared to 2022. We plan to propose a dividend of 45 cents per share at the AGM.

Christian Sewing: We again demonstrated our resilience with high quality risk management, and our strong capital and balance sheet.

Christian Sewing: All of this leaves us highly confident that we will meet our 2025 financial targets.

Christian Sewing: Furthermore, we are increasing our capital distributions.

Christian Sewing: It's rewarding our shareholders is our priority.

Christian Sewing: We increased both dividends and share buybacks by 50% compared to 2022.

Christian Sewing: We plan to propose a dividend of 45 cents per share at the AGM.

Christian Sewing: Approximately 900 million euros in total for the financial year 2023, and we have regulatory approval for a further 675 million euros in share buybacks, which we intend to complete in the first half of 2024. And our race capital outlook, which we outlined last quarter, has created scope to accelerate and expand distributions further. We now expect to significantly outperform our original 8 billion euro target for the financial years 2021 through 2025, and we would consider proposing a dividend of one euro per share in respect of 2025, subject to our 50% payout ratio. Let's first discuss business growth, starting with our 2023 revenue performance on slide two. We deliver sustained growth and improved quality of earnings streams with a well-balanced business mix.

Christian Sewing: But the 900 million euros in total.

Christian Sewing: For the financial year 2023.

Christian Sewing: And we have regulatory approval for a further 675 million euros in share buybacks, which we intend to complete in the first half of 2024.

Christian Sewing: And our race capital outlook, which we outlined last quarter, yes.

Christian Sewing: S created scope to accelerate and expand distributions further.

Christian Sewing: We now expect to significantly outperform our original 8 billion euro target for the financial year, 2021 through 2020 five.

Christian Sewing: We would consider proposing a dividend of.

Christian Sewing: One euro per share in respect of 2025 subject to our 50% payout ratio.

Christian Sewing: Let's first discuss business growth starting with our 2023 revenue performance on slide two.

Christian Sewing: We delivered sustained growth and improved quality of earnings stream with a well balanced business mix.

Christian Sewing: Revenues were in line with our guidance at around 29 billion euros, up 6% year on year. 78% of our revenues came from recurring earning streams, up from 71% in 2020. We benefited from rising interest rates, notably in the corporate bank and private bank. We also focused on building out our fee business across all businesses. And here, let me give you a few examples.

Christian Sewing: Revenues were in line with our guidance at around 29 billion euros up 6% year on year.

Christian Sewing: 78% of our revenues came from our recurring earnings streams up from 71% in 2020.

Operator: Good morning, good afternoon, ladies and gentlemen. Welcome to the Q4 2023 Analyst Conference call. I would like to remind you that all participants will be in a listen-only mode.

Christian Sewing: We benefited from rising interest rates, notably in corporate banking and private bank.

Operator: The conference will be recorded. The presentation will be followed by a question and answer session. If you would like to ask a question, you may do so by pressing the star key and one. For operator assistance, please press the star key and zero.

Christian Sewing: We also focus on building out our fee business across all businesses.

Speaker Change: And here, let me give you a few examples.

Christian Sewing: In the corporate bank, we developed innovative products, hired relationship managers in strategic areas, and deepened relationships with key clients. This was already evidenced by the growth in fee income in the fourth quarter. We also added senior bankers in client-facing areas in the International Private Bank and the Investment Bank and completed the acquisition of Numis.

Speaker Change: The corporate bank, we developed innovative products Hyatt relationship managers in strategic areas and deepened relationships with key clients.

Operator: It has been my pleasure to turn the conference over to Iona. Please go ahead. Thank you for joining us for our fourth quarter and full year 2023 Preliminary Results Call. As usual, our Chief Executive Officer, Christian Sewing, will speak first, followed by our Chief Financial Officer, James von Moltke. The presentation, as always, is available to download in the Investor Relations section of our website, bb.com. Before we get started, let me just remind you that the presentation contains four 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 materials. With that, I will hand over to Christian.

Speaker Change: <unk> is already evidenced by the growth in fee income in the fourth quarter.

Speaker Change: We also added senior bankers and client facing areas in international private bank and the investment Bank and completed the acquisition of Numis.

Christian Sewing: We attracted net inflows of €57 billion across the private bank and asset management business, which helped to grow assets under management by €115 billion to €1.5 trillion. Our progress in strengthening our franchise has been recognized with upgrades from the leading rating agencies, which further position us well to deepen engagement with current and new clients. Now, let's look ahead at our revenue pathway to 2025 on slide three. Since 2021, we have demonstrated revenue momentum well ahead of our original target growth rate, due in part to a supportive interest rate environment. We are confident that as interest rates normalize, we can maintain a solid revenue trajectory, and this is supported by the expected growth in non-interest rate income, which already accounts for more than half of group revenues and our investments in capital-light activities. Based on this, we are raising our revenue target from between 3.5% and 4.5% to between 5.5% and 6.5% for the period 2021 through 2025, aiming to reach around 32 billion euros in 2025. We expect non-interest income growth to contribute approximately 2.5 percentage points to the targeted compound annual growth between 2021 and 2025.

Speaker Change: We attracted net inflows of 57 billion euros across the private bank and asset management, which helped to grow assets under management by 115 billion euros to one five trillion.

Speaker Change: Our progress in strengthening our franchise has been recognized with upgrades from the leading rating agencies, which further positions us well to deepen engagement with current and new clients.

Christian Sewing: Thank you, Johanna, and a warm welcome from me. It's a pleasure to be discussing our results with you today. We have set Deutsche Bank's course for sustainable growth and returns for shareholders through our Global House Bank Strategy, and 2023 saw clear progress. We delivered business growth as the benefits of our sharpened business model came through. We grew revenues to around 29 billion euros with a growth rate of close to 7% per year since 2021, well above our initial target. And we are now raising our revenue growth target to 5.5% to 6.5% with the aim of reaching revenues of around 32 billion euros by 2025. We made conscious investment decisions to protect and grow our franchise by driving business growth, strengthening controls, and improving operational efficiency. We have now reached an inflection point on cough.

Speaker Change: Now, let's look ahead at our revenue pathway through 2025 on slide three.

Speaker Change: Since 2021 with demonstrated revenue momentum well ahead of our original target growth rate.

Speaker Change: Due in part to a supportive interest rate environment.

Speaker Change: We are confident.

Speaker Change: That as interest rates normalize we can maintain a solid revenue trajectory.

Speaker Change: And this is supported by the expected growth in non interest rate income.

Speaker Change: Which already accounts for more than half of group revenues and our investments in capital light activities.

Speaker Change: Based on this we are raising our revenue target from between 3.5% and four 9% to between five and a half and six 5% for the period 2021 through 2025 Amy.

Speaker Change: Aiming to reach around 32 billion euros in 2025.

Speaker Change: We expect non interest income growth to contribute approximately two and a half percentage point to the targeted compound annual growth between 2021 and 2025.

Speaker Change: And this is achievable through a number of levers.

Speaker Change: Growing share of wallet and the corporate bank.

Speaker Change: Reaping the benefits of investments in origination and advisory.

Christian Sewing: And this is achievable through a number of levers, growing share of wallet in the corporate bank, reaping the benefits of investments in origination and advisory, building on our recent strong relative performance in our FIC business. Expanding fee-generating businesses in the private bank, benefiting from investments and growing capital-light lending businesses.

Speaker Change: Building on our recent strong relative performance in our fixed business.

Speaker Change: Expanding fee generating businesses in the private bank.

Christian Sewing: We again demonstrated our resilience with high-quality risk management and our strong capital and balance sheet. All of this leaves us highly confident that we will meet our 2025 financial targets. Furthermore, we are increasing our capital distributions, as rewarding our shareholders is our priority. We have increased both dividends and share buybacks by 50% compared to 2022. We plan to propose a dividend of 45 cents per share at the AGM, which would amount to approximately 900 million euros in total for the financial year 2023.

Speaker Change: Benefiting from investments in growing capital light lending businesses.

Speaker Change: Delivering on our growth strategies, including passive and taking full advantage of market recovery in asset management.

Speaker Change: Additionally across both the private bank and asset management, we aim to convert 2023, net inflows and growth in assets under management into revenues.

Speaker Change: In respect of net interest income growth.

Christian Sewing: Delivering on our growth strategies, including passive and taking full advantage of market recovery in asset management. Additionally, across both the private bank and asset management, we aim to convert 2023's net inflows and growth in assets under management into revenue. In respect of net interest income growth, we expect it to contribute approximately four percentage points to the targeted compound annual growth between 2021 and 2025. This reflects normalization in 2024, followed by further growth in 2025 and beyond, and James will expand on this shortly. Let me now take you through additional details on how we plan to grow non-interest rate revenues on slide 4. In the corporate bank, we already have stable sources of fee income from our payment business, trade finance offering, custody business, as well as trust and agency services.

Speaker Change: We expected to contribute approximately four percentage points to the targeted compound annual growth between 2021 and 2025.

Christian Sewing: And we have regulatory approval for a further 675 million euros in share buybacks, which we intend to complete in the first half of 2024. And our race capital outlook, which we outlined last quarter, has created scope to accelerate and expand distributions further. We now expect to significantly outperform our original 8 billion euro target for the financial years 2021 through 2025, and we would consider proposing a dividend of one euro per share in respect of 2025, subject to our 50% payout ratio.

Speaker Change: This reflects the normalization in 2024, followed by further growth in 2025 and beyond and James will expand on this shortly.

James: Let me now take you through additional details on how we plan to grow non interest rate revenues on slide four.

James: In the corporate bank, we already have stable sources of fee income from our payment business trade finance offering has to be business as well as trust and agency services.

James: We have invested into our payment platform and enhancing sector specific coverage teams.

James: In terms of products. We also continue our investment into fee generating merchant solutions and digital asset custody to support future fee growth.

Christian Sewing: Let's first discuss business growth, starting with our 2023 revenue performance on slide two. We delivered sustained growth and improved quality of earnings streams with a well-balanced business mix. Revenues were in line with our guidance at around €29 billion, up 6% year-on-year. 78% of our revenues came from recurring earning streams, up from 71% in 2020. We benefited from rising interest rates, notably in the corporate bank and private bank. We also focused on building out our fee business across all businesses. And here, I will give you a few examples.

James: We accelerated the cross divisional solution offering for example, foreign exchange hedging and risk management products, and we are helping corporates with their sustainability transition.

James: In the investment bank, we have one of the leading <unk> platforms with around 35% of revenues coming from our financing business.

James: We have consistently said that we aim to grow financing and FIC trading activities by developing the existing business growing our Americas footprint and increasing client penetration.

Christian Sewing: We have invested in our payment platforms and enhanced sector-specific coverage teams. In terms of products, we also continue our investment in fee-generating merchant solutions and digital asset custody to support future fee growth. We are accelerating the cross-divisional solution offering, for example, foreign exchange, hedging, and risk management products, and we are helping corporates with their sustainability transition. In the investment bank, we have one of the leading FIC platforms with around 35% of revenues coming from our financing business. We have consistently said that we aim to grow financing NFIC trading activities by developing the existing business, growing our America's footprint, and increasing client penetration. In ONA, revenues saw a low point in 2022.

James: And Owen a revenue saw a low point in 2022, we expect fees to be driven this year and next by some market recovery combined with the benefits of our investments.

Christian Sewing: The corporate bank, we developed innovative products, hired relationship managers in strategic areas, and deepened relationships with key clients, as evidenced by the growth in fee income in the fourth quarter. We also added senior bankers in client-facing areas in the International Private Bank and the Investment Bank and completed the acquisition of Numis. We attracted net inflows of €57 billion across the private bank and asset management business, which helped to grow assets under management by €115 billion to €1.5 trillion. Our progress in strengthening our franchise has been recognized with upgrades from the leading rating agencies, which further position us well to deepen engagement with current and new clients. Now, let's look ahead at our revenue pathway to 2025 on slide three. Since 2021, we have demonstrated revenue momentum well ahead of our original target growth rate, due in part to a supportive interest rate environment. We are confident that as interest rates normalize, we can maintain a solid revenue trajectory.

James: We hired strategically across many sectors.

James: And acquired numerous to create a leading position in the U K.

James: All this will help us to deepen and broaden our client relationships and further develop our ESG capabilities.

James: In the private bank, we aim to grow revenues from investment products at around 10% per year over the next few years.

James: We are confident we can achieve this given our strong asset generation investments in hiring in the international franchise and enhancement of digital channels.

James: We will also expand our Lombard lending business in wealth management and the bank for entrepreneurs.

James: In addition to our focus on Germany, we are intensifying our business development and growing markets, such as Asia and the Middle East.

James: In asset management to give you a few examples on our growth initiatives.

James: We are building on ex strike us momentum by our product innovation and we are expanding internationally.

Christian Sewing: We expect fees to be driven this year and next by some market recovery combined with the benefits of our investments. We are hiring strategically across many sectors and have acquired Numis to create a leading position in the UK. All this will help us to deepen and broaden our client relationships and further develop our ESG capability.

James: Within alternatives, we want to focus on credit in Europe, and real estate debt in the U S and we will be strengthening fixed income and multi asset capabilities to increased potential for scaling up.

Christian Sewing: And this is supported by the expected growth in non-interest rate income, which already accounts for more than half of group revenues, and our investments in capital light activities. Based on this, we are raising our revenue target from between 3.5% and 4.5% to between 5.5% and 6.5% for the period 2021 through 2025, aiming to reach around 32 billion euros in 2025. We expect non-interest income growth to contribute approximately 2.5 percentage points to the targeted compound annual growth between 2021 and 2025.

James: And I'm encouraged by the start we've had in January so far with revenue performance that supports this trajectory.

James: Now, let me turn to operating efficiency on slide five.

Our 2023 cost base was impacted by inflation business growth and investments to accelerate execution of our global hosting strategy on three dimensions.

Christian Sewing: In the private bank, we aim to grow revenues from investment products at around 10% per year over the next years. We are confident we can achieve this given our strong asset generation, investments in hiring in the international franchise, and enhancement of digital channels. We will also expand our Lombard lending business in wealth management and the Bank for Entrepreneurs. In addition to our focus on Germany, we are intensifying our business development in growing markets such as Asia and the Middle East.

James: Improving operational efficiency.

James: Growing sustainable revenues and strengthening our control environment.

James: About 400 million of these additional investments are nonrecurring and mainly related to improvement of our operational efficiency.

James: Severance charges for targeted reductions in senior non client facing roads.

James: And real estate one offs.

Christian Sewing: In Asset Management, to give you a few examples of our growth initiatives, we are building on X-Tracker's momentum via product innovation, and we are expanding internationally. Within Alternatives, we want to focus on credit in Europe and real estate debt in the U.S., and we will be strengthening fixed income and multi-asset capabilities to increase the potential for scaling up. And I'm encouraged by the start we had in January so far, with a revenue performance that supports this trajectory. Now, let me turn to operating efficiency on slide 5.

James: We also recognized an impairment of goodwill related to numerous.

James: Some of these nonrecurring items arose in the fourth quarter.

Christian Sewing: And this is achievable through a number of levers, growing our share of wallet in the corporate bank, and reaping the benefits of investments in origination and advisory, building on our recent strong relative performance in our thick business. Expanding fee-generating businesses in the private bank, benefiting from investments, and growing capital-light lending businesses, delivering on our growth strategies, including passive and taking full advantage of market recovery in asset management. Additionally, across both the private bank and asset management, we aim to convert 2023's net inflows and growth in assets under management into revenue, in respect of net interest income growth. We are expected to contribute approximately four percentage points to the targeted compound annual growth between 2021 and 2025. This reflects normalization in 2024, followed by further growth in 2025 and beyond, and James will expand on this shortly. Let me now take you through additional details on how we plan to grow non-interest rate revenues on Slide 4. In the corporate bank, we already have stable sources of fee income from our payment business, trade finance offering, custody business, as well as trust and agency services.

James: Alongside other exceptional items, which James will discuss shortly.

James: We also made business investments of 200 million euros, which will remain in our run rate.

James: We saw incremental savings of around $340 million from our operational efficiency measures this year.

James: This will more than offset the run rate impact of the investments, which reflect our approach of self funding our investments.

James: On business growth, we have invested in capital light businesses as we just discussed.

James: On controls we further strengthened key functions with the addition of around 1000 dedicated professionals across all regions to ensure a thought leadership and increased dedicated spending to around $1 2 billion euros in 2023.

Christian Sewing: Our 2023 cost base was impacted by inflation, business growth, and investments to accelerate the execution of our global house bank strategy on three dimensions: Improving operational efficiency, Growing sustainable revenues, and Strengthening Our Control Environment. About 400 million euros of these additional investments are non-recurring and mainly related to improvements in our operational efficiency. Severance charges for targeted reductions in senior non-client-facing roads, roads, roads, roads, roads, roads, roads, roads, roads, roads, and Real Estate One Office.

Our investments over the years have materially improved our controls.

James: For example.

James: We have built automated tools into our cable I see controls to dynamically reviewed client activity and tightened quality control standards.

James: We have significantly upgraded our core control applications. For example, we successfully migrated our euro clearing business onto a new strategic transaction monitoring platform.

James: We made material strides and reengineering processes front to back at the progress. So far has made our bank safer.

James: As our remediation work across key regulatory programs is anticipated to approach completion.

Christian Sewing: We also recognize an impairment of goodwill related to Numis. Some of these non-recurring items arose in the fourth quarter. Alongside other exceptional items, which James will discuss shortly, alongside other exceptional items, which James will discuss shortly. We also made business investments of 200 million euros, which will remain in our run rate. We saw incremental savings of around 340 million euros from our operational efficiency measures this year. These will more than offset the run rate impact of the investments, which reflects our approach of self-funding our investments. On business growth, we have invested in capitalized businesses, as we just discussed. On controls, we further strengthen key functions with the addition of around 1,000 dedicated professionals across all regions to ensure thought leadership and increase dedicated spending to around 1.2 billion euros in 2023. Our investments over the years have materially improved our controls. For example.

James: We expect our focus during 2024 to gradually shift from remediation to a sustainable business as usual risk management.

James: We also continue to put long standing legal matters behind us in 2023, and we expect to see the benefits of our improved operating model coming through from 2024.

James: We believe these investments will positively impact operating leverage by boosting revenue growth, while keeping costs essentially stable to 2022 levels as we set out on slide six.

Christian Sewing: We have invested in our payment platforms and enhanced sector-specific coverage teams. In terms of products... We also continue our investment in fee-generating merchant solutions and digital asset custody to support future fee growth. We are accelerating the cross-divisional solution offering, for example, foreign exchange, hedging, and risk management products, and we are helping corporates with their sustainability transition.

James: We see a clear path to cost of approximately 20 billion euros in 2025.

James: Over the next two years, our aim is to drive reductions across both non operating cost and our adjusted cost base by managing our run rate and driving efficiency measures.

James: We foresee a reduction in nonoperating costs of around 700 million euros from 2023 levels in the next two years.

Christian Sewing: In the investment bank, we have one of the leading FIC platforms with around 35% of revenues coming from our financing business. We have consistently said that we aim to grow financing and FIC trading activities by developing the existing business, growing our Americas footprint, and increasing client penetration. In ONA, revenue saw a low point in 2022.

James: The 233 million euro impairment of goodwill relating to numerous is now behind us.

James: And we see restructuring and severance charges coming down by around $400 million from 2023 levels.

James: On adjusted cost as we have already communicated.

Christian Sewing: We have built automated tools into our KYC controls to dynamically review client activity and tighten quality control standards. We have significantly upgraded our core control applications. For example, we successfully migrated our euro-clearing business onto a new strategic transaction monitoring platform. We made material strides in reengineering processes front to back, and the progress so far has made our bank safer. As our remediation work across key regulatory programs is anticipated to approach completion, we expect our focus during 2024 to gradually shift from remediation to sustainable business as usual risk management. We will also continue to put longstanding legal matters behind us in 2023, and we expect to see the benefits of our improved operating model coming through in 2024. We believe these investments will positively impact operating leverage by boosting revenue growth while keeping costs essentially stable to 2022 levels, as we set out on slide 6. We see a clear path to costs of approximately 20 billion euros in 2025.

James: We see bank levies coming down by between 350, and 400 million euros over the next two years.

James: The additional 400 million Euro net reduction will come from further progress on our operational efficiency program.

James: So let me give you some additional detail on where we stand with our $2 5 billion euro of efficiency measures.

James: We have already executed on measures, which delivered our expected savings of $1 3 billion euros.

James: Of which around 900 million euros of savings were realized to date.

James: The residual savings of $1 6 billion euros RF flows.

Christian Sewing: In the private bank, we aim to grow revenues from investment products at around 10% per year over the next years. We are confident we can achieve this, given our strong asset generation, investments in hiring in the international franchise, and enhancement of digital channels. We will also expand our Lombard lending business in wealth management and the Bank for Entrepreneurs. In addition to our focus on Germany, we are intensifying our business development in growing markets such as Asia and the Middle East, in asset management, to give you a few examples of our growth initiatives. We are building on X-Tracker's momentum via product innovation, and we are expanding internationally.

James: On Germany optimization, we anticipate savings of around 600 million euros, reflecting our strategic ambition to increase profitability.

James: In our core home market.

James: On technology and infrastructure, we anticipate roughly 700 million euros of savings from a number of items, including application decommissioning and other operating model improvements.

James: And finally on front to back process redesign, we anticipate about 300 million euros from simplified workflows and automation.

James: Included in these measures.

James: Is the reduction of three and a half thousand roads, mainly in non client facing areas.

James: The vast majority of these measures will be in our 2025 run rate.

James: With that we have material capacity to more than offset inflation and the impact from our business growth plans.

Christian Sewing: Over the next two years, our aim is to drive reductions across both non-operating costs and our adjusted cost base by managing our run rate and driving efficiency measures. We foresee reductions in non-operating costs of around 700 million euros from 2023 levels in the next two years. The 233 million euro impairment of goodwill relating to Numis is now behind us.

Christian Sewing: Within Alternatives, we want to focus on credit in Europe and real estate debt in the U.S., and we will be strengthening fixed income and multi-asset capabilities to increase the potential for scaling up. And I'm encouraged by the start we have had in January so far, with a revenue performance that supports this trajectory. Now, let me turn to operating efficiency on slide five.

James: Our detailed inflammation implementation roadmap gives us the confidence in delivering non interest expenses of approximately 20 billion euros in 2025 gig.

James: Giving us a clear pathway to our cost to income ratio target of 62, 5%.

James: We are conscious that we are operating in a fast changing environment.

James: Our path towards 2025 may be impacted by external factors.

James: And we have taken this into account.

Christian Sewing: And we see restructuring and severance charges coming down by around 400 million euros from 2023 levels. On adjusted costs, as we have already communicated, we see bank levies coming down by between 350 and 400 million euros over the next two years. The additional 400 million euros net reduction will come from further progress on our operational efficiency program.

James: We have the toolkit in place to implement additional measures, which would enable us to further flex our cost base to meet our cost income ratio target even.

Christian Sewing: Our 2023 cost base was impacted by inflation, business growth, and investments to accelerate execution of our global house bank strategy on three dimensions: improving operational efficiency, growing sustainable revenues, and strengthening our control environment. About 400 million euros of these additional investments are non-recurring and mainly related to improvements in our operational efficiency. Severance Charges for Targeted Reductions in Senior Non-Client Facing Roles, and Real Estate One Office.

James: If we see unforeseen revenue headwinds.

Speaker Change: Now, let me turn to capital liquidity and risk management on slide seven.

Speaker Change: In 2023, we proved our resilience in a challenging environment.

Speaker Change: We demonstrated first loss risk management with a high quality and well diversified loan book supported by multiple risk mitigate.

Speaker Change: Our provision for credit losses was 31 basis points of average loans marginally above guidance range and also reflecting overlay changes applied in the fourth quarter.

Christian Sewing: So let me give you some additional detail on where we stand with our two and a half billion euro efficiency measure. We have already executed on measures with delivered or expected savings of 1.3 billion euros, of which around 900 million euros of savings were realized today. The residual savings of 1.6 billion euros are as follows. On Germany optimization, we anticipate savings of around 600 million euros, reflecting our strategic ambition to increase profitability in our core home market. On technology and infrastructure, we anticipate roughly 700 million euros of savings from a number of items, including application decommissioning and other operating model improvements. And finally, on front-to-back process redesign, we anticipate about 300 million euros from simplified workflows and automation. Included in these measures is the reduction of 3,500 roads, mainly in non-client facing areas.

Speaker Change: Liquidity has remained very robust and with substantial buffers above required levels.

Speaker Change: In addition.

Speaker Change: Our balance sheet is strong we have a large and healthy diversified deposit base, mainly in our domestic market.

Christian Sewing: We also recognize an impairment of goodwill related to Numis. Some of these non-recurring items arose in the fourth quarter, alongside other exceptional items which James will discuss shortly. We also made business investments of 200 million euros, which will remain in our run rate. We saw incremental savings of around 340 million euros from our operational efficiency measures this year. These will more than offset the run rate impact of the investments, which reflects our approach of self-funding our investments. For business growth, we have invested in capitalized businesses, as we just discussed. On controls, we further strengthen key functions with the addition of around 1,000 dedicated professionals across all regions to ensure thought leadership and increase dedicated spending to around 1.2 billion euros in 2023. Our investments over the years have materially improved our controls. For example,

Speaker Change: Furthermore, we demonstrated strong capital management, we ended the year with a robust CET one ratio at 37%.

Speaker Change: Now, let me turn to our plans for distributions to shareholders on slide eight.

Speaker Change: Our strong organic capital generation and disciplined capital management allowed us both to digest the significant regulatory inflation of the last two years and support our business growth, while still being in a position to distribute around 30.

Speaker Change: Percent of our net income to shareholders.

Speaker Change: Consistent with prior guidance, we now see scope to shift gears on capital distributions and to increase shareholder distributions through 50% of net income to shareholders from the full year 2024.

Speaker Change: In October we set our plans to accelerate and expand our distributions having raised our capital outlook by around 3 billion euros through 2025.

Christian Sewing: The vast majority of these measures will be in our 2025 run rate. With that, we have material capacity to more than offset inflation and the impact from our business growth plan. Our detailed implementation roadmap gives us confidence in delivering non-interest expenses of approximately €20 billion in 2025, giving us a clear pathway to our Cost-Income Ratio Target of 62.5%. We are conscious that we are operating in a fast changing environment.

Speaker Change: With the distributions announced to date and our positive capital outlook. We are on track to significantly outperform against our original distribution target.

Speaker Change: Let me conclude with a few words on our strategy on slide nine.

Speaker Change: We have seen rising uncertainties in the global economy and across geopolitical landscape.

Speaker Change: Since we launched our global <unk> strategy early in 2022.

Speaker Change: These developments proof that our strategy is the right one for our clients and for Deutsche Bank.

Christian Sewing: We have built automated tools into our KYC controls to dynamically review client activity and tighten quality control standards. We have significantly upgraded our core control applications. For example, we successfully migrated our euro-clearing business onto a new strategic transaction monitoring platform. We made material strides in reengineering processes front to back, and the progress so far has made our bank safer. As our remediation work across key regulatory programs is anticipated to approach completion, we expect our focus during 2024 to gradually shift from remediation to sustainable business as usual risk management. We will also continue to put long-standing legal matters behind us in 2023, and we expect to see the benefits of our improved operating model coming through in 2024. We believe these investments will positively impact operating leverage by boosting revenue growth while keeping costs essentially stable to 2022 levels, as we set out on slide 6. We see a clear path to costs of approximately 20 billion euros in 2025.

Christian Sewing: Our path towards 2025 may be impacted by external factors, and we have taken this into account. We have the toolkit in place to implement additional measures which would enable us to further flex our cost base to meet our cost income ratio target even if we see unforeseen revenue headwinds. Now, let me turn to capital liquidity and risk management on slide 7. In 2023, we proved our resilience in a challenging environment.

Speaker Change: We have seen more than ever that clients want and need a partner with the expertise.

Speaker Change: Product breadth.

Speaker Change: <unk> global network to help them navigate a more uncertain environment.

Speaker Change: Our European partner capable of helping and advising them across the world.

Speaker Change: The progress we have made on all key dimensions.

Speaker Change: Gives us a clear path to our 2025 targets.

Speaker Change: Having sharpened our business model, we have raised our revenue targets and.

Speaker Change: And make focused investments to boost revenues further, especially all in capital light businesses.

Christian Sewing: We demonstrated first-class risk management with a high-quality and well-diversified loan book supported by multiple risk mitigators. Our provision for credit losses was 31 basis points of average loans, marginally above the guidance range, and also reflecting overlay changes applied in the fourth quarter. Liquidity has remained very robust, with substantial buffers above required levels.

Speaker Change: And we are seizing the opportunities offered by our technology investments to expand our digital offering to clients.

Speaker Change: We have already completed operational efficiency measures.

Speaker Change: Which take us around halfway towards our two 5 billion euro target.

Speaker Change: And we are well positioned to increase our goals for capital distributions to shareholders through 2025.

Speaker Change: With that let me hand over to James.

Christian Sewing: In addition, our balance sheet is strong. We have a large and healthy, diversified deposit base, mainly in our domestic market. Furthermore, we demonstrated strong capital management. We ended the year with a robust C81 ratio of 13.7%. Now let me turn to our plans for distributions to shareholders on slide 8. Our strong organic capital generation and disciplined capital management allowed us both to digest the significant regulatory inflation of the last two years and support our business growth while still being in a position to distribute around 30% of our net income to shareholders. Consistent with prior guidance, we now see scope to shift gears on capital distributions and to increase shareholder distributions to 50% of net income to shareholders from the full year 2024.

James: Thank you Christian.

James: Let me start with a few key performance indicators on slide 11 and place them in the context of our 2025 targets.

James: Christian outlined our business momentum and well balanced revenue mix, which resulted in revenue growth of six 6% on a compound basis for the last two years relative to 2021.

James: This performance puts us well on track to deliver revenue growth in line with our new target.

James: Our strong franchise growth led to a 10 percentage point improvement in the cost income ratio to 75% against 2021 with the last two years being pivotal investment years.

James: Our return on tangible equity was seven 4% in the full year of 2023, including a benefit from deferred tax asset valuation.

James: Our capital position remains strong with a CET one ratio of 13, 7% at year end after absorbing regulatory headwinds.

James: Our liquidity metrics also remained strong LCR was 140% above our target of around 130%.

Christian Sewing: In October, we set out plans to accelerate and expand our distributions, having raised our capital outlook by around 3 billion euros through 2025. With the distributions announced today and our positive capital outlook, we are on track to significantly outperform against our original distribution targets.

James: Our net stable funding ratio was 122% in short our performance in the period reaffirms, our resilience and our confidence in reaching our 2025 targets.

Speaker Change: With that let me turn to the fourth quarter highlights on slide 12.

Speaker Change: Group revenues were $6 7 billion euros up 5% on the fourth quarter of 2022 or 10% excluding specific items.

Christian Sewing: Let me conclude with a few words on our strategy on slide 9. We have seen rising uncertainties in the global economy and across the geopolitical landscape since we launched our Global House Bank Strategy early in 2022. These developments prove that our strategy is the right one for our clients and for Deutsche Bank. We have seen, more than ever, that clients want and need a partner with the expertise, ProductBreadth, and Global Network to help them navigate a more uncertain environment. A European partner capable of helping and advising them across the world.

Speaker Change: Noninterest expenses were $5 5 billion euros up 5% year on year.

Speaker Change: Nonoperating expenses were down by 45% compared to the prior year period, mainly reflecting a release of litigation provisions.

Speaker Change: At the same time, we booked items related to strategy execute execution, including the impairments of goodwill and other intangibles of around 230 million euros, and restructuring and severance provisions of nearly 200 million euros.

Speaker Change: We generated a profit before tax of 698 million euros down 10% year on year, which mainly reflects the increase in adjusted costs and the non repeat of the gain on sale reported in the prior year quarter.

Christian Sewing: So let me give you some additional detail on where we stand with our 2.5 billion euro efficiency measure. We have already executed on measures with delivered or expected savings of 1.3 billion euros, of which around 900 million euros of savings were realized today. The residual savings of 1.6 billion euros are as follows. On Germany optimization, we anticipate savings of around 600 million euros, reflecting our strategic ambition to increase profitability in our Car-Hoe Market. On technology and infrastructure, we anticipate roughly 700 million euros of savings from a number of items, including application decommissioning and other operating model improvements. And finally, on front-to-back process redesign, we anticipate about EUR 300 million from simplified workflows and automation. Included in these measures is the reduction of 3,500 roads, mainly in non-client facing areas.

Speaker Change: Net profit of $1 4 billion was down 28% year on year, reflecting a lower DTA valuation adjustment compared to the prior year quarter.

Christian Sewing: The progress we have made on all key dimensions gives us a clear path to our 2025 target. Having sharpened our business model, we have raised our revenue targets and made focused investments to boost revenues further, especially in capitalized business. And we are seizing the opportunities offered by our technology investments to expand our digital offering to clients.

Speaker Change: Our cost income ratio was 82% and our post tax return on average tangible common equity.

Speaker Change: Was eight 8% in the quarter.

Speaker Change: Diluted earnings per share was <unk> 67 in the fourth quarter and tangible book value per share was <unk> 28 euros and 41.

Speaker Change: Up 6% year on year.

Speaker Change: Let me now turn to some of the drivers of these results.

Speaker Change: Let me start with a review of our net interest income on Slide 13, which also provides an outlook for the next two years.

James von Moltke: We have already completed operational efficiency measures, which take us around halfway towards our 2.5 billion euro target. And we are well positioned to increase our goals for capital distributions to shareholders through 2025. With that, I will hand over to James. Thank you, Christian.

The numbers are based on market expectations for interest rates as of the 26th of January this year.

Speaker Change: Our reported net interest income of $13 6 billion euros was broadly stable for the group.

Speaker Change: In 2023 compared to the prior year, but that does not reflect the economic contribution to group revenues due to significant moves in accounting effects, which are offset in noninterest revenues.

Focusing on our three key NII generating business units as well as other funding costs not offset by accounting FX, we see an improvement of just over 2 billion euros and accumulative benefit since 2021 of over 4 billion euros.

James von Moltke: Let me start with a few key performance indicators on slide 11 and place them in the context of our 2025 targets. Christian presented our business momentum and well-balanced revenue mix, which resulted in revenue growth of 6.6% on a compound basis for the last two years relative to 2021. This performance puts us well on track to deliver revenue growth in line with our new targets. Our strong franchise growth led to a 10 percentage point improvement in the cost-income ratio to 75% for 2021, with the last two years being pivotal investment years. Our return on tangible equity was 7.4% in the full year of 2023, including a benefit from deferred tax asset valuation. Our capital position remains strong with the CET1 ratio at 13.7% at year-end after absorbing regulatory headwinds. Our liquidity metrics also remain strong.

Speaker Change: Looking ahead on the same basis, we expect a decline of around 600 million euros in 2024, driven by the convergence of betas to steady state levels.

Christian Sewing: The vast majority of these measures will be in our 2025 run rate. With that, we have material capacity to more than offset inflation and the impact of our business growth plan. Our detailed implementation roadmap gives us confidence in delivering non-interest expenses of approximately €20 billion in 2025, giving us a clear pathway to our cost-income ratio target of 62.5%. We are conscious that we are operating in a fast-changing environment.

Speaker Change: We expect this to be followed by an increase of around 400 million euros in 2025, which brings us close to the 2023 NII levels as the beta convergence is largely offset by the rollover of our hedge portfolios as well as balance sheet growth.

Speaker Change: In line with prior guidance, we expect a larger sequential reduction in the corporate bank and the private bank in 2024.

Speaker Change: We expect a sequential improvement excluding accounting asymmetries in the corporate and other division of around 300 million euros relating to reduce funding costs for corporate assets and lower retained liquidity and other funding costs.

Speaker Change: We prepared additional slides on NII, which are in the appendix, but the key messages I want to highlight our that we have around 230 billion euros of long term interest rate hedges on our deposits and equity <unk>.

Christian Sewing: Our path towards 2025 may be impacted by external factors, and we have taken this into account. We have the toolkit in place to implement additional measures which would enable us to further flex our cost base to meet our cost income ratio target, even if we see unforeseen revenue headwinds. Now, let me turn to capital liquidity and risk management on slide seven. In 2023, we proved our resilience in a challenging environment.

The majority of these hedges are entered into with a 10 year tenor and the weighted average maturity of the portfolio is four to five years.

Speaker Change: We expect $2 5 billion euros of NII from interest rate hedges in 2024 of which more than 90% is locked in with existing positions.

James von Moltke: LCR was 140% above our target of around 130%, and the net stable funding ratio was 122%. In short, our performance in the period reaffirms our resilience and our confidence in reaching our 2025 target. With that, let me turn to the fourth quarter highlights on slide 12. Group revenues were 6.7 billion euros, up 5% on the fourth quarter of 2022, or 10% excluding specific items. Non-interest expenses were 5.5 billion euros, up 5% year on year.

Speaker Change: Once deposit betas have converged to steady state levels, our NII sensitivity will mostly be to long term rates as our hedge portfolio rolls over with limited sensitivity to short term rates and less moves are sharp enough to reintroduce beta lags or approach the zero bound.

Speaker Change: We may outperform this good performance guidance, if market expectations regarding rate cuts did not fully materialize or deposit betas increase more slowly than expected.

Christian Sewing: We demonstrated first-class risk management with a high-quality and well-diversified loan book, supported by multiple risk mitigators. Our provision for credit losses was 31 basis points of average loans, marginally above the guidance range and also reflecting overlay changes applied in the fourth quarter. Liquidity has remained very robust, with substantial buffers above required levels.

Speaker Change: With that let's turn to adjusted cost development on slide 14.

Speaker Change: First our guidance for full year 2023, adjusted costs was essentially flat compared to 2022 as we absorb the impacts from inflation ongoing investments and business growth, which Christian discussed earlier.

Speaker Change: We made it clear that this guidance included an expectation that the German banking industry would receive a restitution payment from a national resolution fund in the fourth quarter.

James von Moltke: Non-operating expenses were down by 45% compared to the prior year period, mainly reflecting a release of litigation provisions. At the same time, we booked items related to strategy execution, including impairments of goodwill and other intangibles of around €230 million, and restructuring and severance provisions of nearly €200 million. We generated a profit before tax of €698 million, down 10% year-on-year, which mainly reflects the increase in adjusted costs and the non-repeat of the gain-on-sale reported in the prior year quarter. Net profit of 1.4 billion euros was down 28% year-on-year, reflecting a lower DTA valuation adjustment compared to the prior year quarter. Our cost-income ratio was 82%, and our post-tax return on average tangible common equity was 8.8% in the quarter. Diluted earnings per share were 67 cents in the fourth quarter, and tangible book value per share was 28 euros and 41 cents, up 6% year on year.

Christian Sewing: In addition, our balance sheet is strong. We have a large and healthy, diversified deposit base, mainly in our domestic market. Furthermore, we demonstrated strong capital management. We ended the year with a robust C81 ratio of 13.7%. Now let me turn to our plans for distributions to shareholders on slide eight. Our strong organic capital generation and disciplined capital management allowed us both to digest the significant regulatory inflation of the last two years and support our business growth while still being in a position to distribute around 30% of our net income to shareholders. Consistent with prior guidance, we now see scope to shift gears on capital distributions and to increase shareholder distributions to 50% of net income to shareholders from the full year 2024.

Speaker Change: And as we announced in our pre close document. This payment was not included in the recently announced budget.

While our full year adjusted costs were up 3% year on year in line with our guidance the fourth quarter adjusted cost of $5 3 billion euros were up 9% year on year higher than the initial expectations.

Speaker Change: We had around 210 million euros of exceptional items in the fourth quarter, resulting in adjusted costs, Excluding bank levies of five to 6 billion euros.

Speaker Change: About 90 million euros of these exceptional items are not expected to repeat in the following quarters.

Speaker Change: About 35 million euros of costs related to private bank service remediation are expected to taper off overtime and around 80 million euros of other costs should normalize.

Speaker Change: Reflecting on the nature of these exceptional items and considering savings coming through from efficiency measures. We expect to return to a run rate of around 5 billion euros in the first quarter of this year.

Speaker Change: Let's now turn to provision for credit losses on slide 15.

Speaker Change: Provision for credit losses in the fourth quarter was 488 million euros equivalent to 41 basis points of average loans.

Speaker Change: Quarter on quarter development in stage, one and two provisions of $30 million, mainly reflects the non recurrence of model related adjustments in the previous quarter and the application of an overlay in this quarter.

Speaker Change: Stage three provisions of 457 million euros were also higher compared to the prior quarter as we saw elevated levels, mainly in the private bank and corporate bank, partly offset by a provision reduction in the investment bank.

James von Moltke: Let me now turn to some of the drivers of these results. Let me start with a review of our net interest income on slide 13, which also provides an outlook for the next two years. The numbers are based on market expectations for interest rates as of the 26th of January this year. Our reported net interest income of 13.6 billion euros was broadly stable for the group in 2023 compared to the prior year. But that does not reflect the economic contribution to group revenues due to significant moves in accounting effects, which are offset by non-interest revenues.

Speaker Change: Full year provisions were 31 basis points and reflect higher stage three provisions related to commercial real estate in the investment bank and certain one offs and the private bank, partly offset by lower stage, one and two provisions as well as slower than expected loan growth.

Christian Sewing: Let me conclude with a few words on our strategy on slide 9. We have seen rising uncertainties in the global economy and across the geopolitical landscape since we launched our global house bank strategy early in 2022. These developments prove that our strategy is the right one for our clients and for Deutsche Bank. We have seen, more than ever, that clients want and need a partner with the expertise, ProductBreadth, and Global Network to help them navigate a more uncertain environment, a European partner capable of helping and advising them across the world.

Before we move to performance in our businesses, let me turn to capital on the next two slides starting with slide 16.

Speaker Change: Our fourth quarter common equity tier one ratio came in at 13, 7%, a 20 basis points decrease compared to the prior previous quarter.

Speaker Change: This quarter on quarter reduction reflects lower capital as our net income was more than offset by capital deductions, most notably for shareholder dividends 81, coupons and deferred tax assets.

Speaker Change: Risk weighted assets were flat over the quarter.

Speaker Change: Credit risk <unk> increased over the quarter, reflecting business growth and model changes. These.

James von Moltke: Focusing on our three key NII generating business units, as well as other funding costs not offset by accounting effects, we see an improvement of just over 2 billion euros and a cumulative benefit since 2021 of over 4 billion euros. Looking ahead, on the same basis, we expect a decline of around 600 million euros in 2024, driven by the convergence of betas to steady state levels. We expect this to be followed by an increase of around €400 million in 2025, which will bring us close to the 2023 NII levels, as the beta convergence is largely offset by the rollover of our hedge portfolios, as well as balance sheet growth. In line with prior guidance, we expect a larger sequential reduction in the corporate bank than in the private bank in 2024. We expect a sequential improvement excluding accounting asymmetries in the corporate and other division of around 300 million euros relating to reduced funding costs for corporate assets and lower retained liquidity and other funding costs. We prepared additional slides on NII, which are in the appendix.

Speaker Change: These increases were partly offset by capital optimization initiatives as we continue to focus on the capital efficiency of our balance sheet.

James von Moltke: The progress we have made on all key dimensions gives us a clear path to our 2025 target. Having sharpened our business model, we have raised our revenue targets and made focused investments to boost revenues further, especially in all capitalized business. And we are seizing the opportunities offered by our technology investments to expand our digital offering to clients. We have already completed operational efficiency measures, which take us around halfway towards our 2.5 billion euro target. And we are well positioned to increase our goals for capital distributions to shareholders through 2025. With that, I will hand over to James. Thank you, Christian.

Speaker Change: Lower market risk and operational risks are to be way more than offset higher credit risk ought to be way over the quarter, reflecting lower market volatility and an improved risk profile.

Speaker Change: At the end of the fourth quarter, our leverage ratio was four 5%, reflecting a lower capital position and higher leverage exposure.

Speaker Change: Building on Christian's earlier comments on the inflection point in our capital base on slide 17.

Speaker Change: Let me give you a view how we want to manage our capital through 2025, as our profitability is improving and delivering more sustainable net income.

Speaker Change: First in line with our ambition, we want to pay out 50% of net income to our shareholders.

Speaker Change: We will aim to deploy about 25% of net income into the businesses to support further growth.

Speaker Change: Finally, we expect the remaining 25% will provide us with a buffer for additional capital to use the final implemented implementation of <unk>, three and further distributions acquisitions or an increase in our capital ratio.

Speaker Change: Let me also give you an update on our capital efficiency program.

Speaker Change: In the fourth quarter, we delivered <unk> relief of a further 3 billion euros, mainly from additional securitizations.

Speaker Change: Which brings the achieved reduction to 13 billion euros and means we remain on course for our $25 to 30 billion Euro target and we aim to deliver further progress in 2024.

Speaker Change: Let me give you some more details on our intentions regarding shareholder distributions.

In March 2022, we set a goal to increase dividends per share by 50% for three consecutive years, which we are on track to deliver.

As the slide indicates subject to a 50% payout ratio. We believe there will be scope to extend that to 50% increase objectives to 2025, suggesting a dividend of one euro per share could be paid in 2026.

James von Moltke: But the key messages I want to highlight are that we have around 230 billion euros of long-term interest rate hedges on our deposits and equity. The majority of these hedges are entered into with a 10-year tenor, and the weighted average maturity of the portfolio is four to five years. We expect 2.5 billion euros of NII from interest rate hedges in 2024, of which more than 90% is locked in with existing positions. Once deposit betas have converged to steady state levels, our NII sensitivity will mostly be to long-term rates as our hedge portfolio rolls over with limited sensitivity to short-term rates unless moves are sharp enough to reintroduce beta lags or approach the zero bound. [inaudible] We may outperform this guidance if market expectations regarding rate cuts do not fully materialize or deposit betas increase more slowly than expected.

Speaker Change: This would bring the total dividend payments over the five year period to over 5 billion euros.

Speaker Change: At the same time, we're continuing to increase share buybacks.

Speaker Change: And as Christian mentioned, we will execute a further $675 million program in the first half of 2024, which is again, a 50% increase on the buyback program, we completed last year.

Speaker Change: Finally, given our strong capital and earnings outlook, we see significant scope for further share buybacks and therefore, a clear path to outperform our original distribution target of 8 billion euros.

James von Moltke: LCR was 140% above our target of around 130%, and the Net Stable Funding Ratio was 122%. In short, our performance in the period reaffirms our resilience and our confidence in reaching our 2025 target. With that, let me turn to the fourth quarter highlights on slide 12. Group revenues were 6.7 billion euros, up 5% on the fourth quarter of 2022, or 10% excluding specific items. Non-interest expenses were 5.5 billion euros, up 5% year on year.

Speaker Change: Let's now turn to performance in our businesses, starting with the corporate bank on slide 20.

Speaker Change: Corporate bank revenues in the fourth quarter were $1 9 billion euros, 9% higher compared to our prior year quarter, which already reflected the early stages of the interest rate cycle.

Speaker Change: The interest rate environment remained favorable with revenues further supported by the continued pricing discipline.

Speaker Change: A solid deposit base and higher commission and fee income.

Speaker Change: Sequentially revenues increased slightly driven by higher net interest income from higher average balances with corporate and institutional clients and higher commission and fee income in our institutional client services business.

James von Moltke: With that, let's turn to adjusted cost development on slide 14. First, our guidance for full year 2023 adjusted costs was essentially flat compared to 2022 as we absorbed the impacts of inflation, ongoing investments, and business growth, which Christian discussed earlier. We made it clear that this guidance included an expectation that the German banking industry would receive a restitution payment from a national resolution fund in the fourth quarter, and as we announced in our pre-closed document, this payment was not included in the recently announced budget. While our full-year adjusted costs were up 3% year-on-year, in line with our guidance, the fourth-quarter adjusted costs of 5.3 billion euros were up 9% year-on-year We had around €210 million of exceptional items in the fourth quarter, resulting in adjusted costs excluding bank levies of €5.26 billion. About 90 million euros of these exceptional items are not expected to repeat in the following quarters.

Speaker Change: We continue to anticipate a normalization of our deposit revenues over the coming quarters, which we expect to be partially offset by growing non interest rate sensitive revenue streams.

Speaker Change: Loan volume in the corporate bank declined by 5 billion euros compared to the prior year quarter and remained stable sequentially compensating for the impact of FX movements.

Speaker Change: <unk> were 289 billion euros 3 billion euros higher than in the third quarter with an increased share of term deposit balances compared to the prior year.

Speaker Change: Provision for credit losses was 26 basis points of average loans.

Speaker Change: The moderate increase versus the prior year was driven by higher stage three provisions across various portfolios.

Speaker Change: Noninterest expenses significantly increased year on year, driven by the FDIC special assessment charge in the current quarter and adjustments to the internal service cost allocations in the prior year quarter.

Speaker Change: This resulted in a post tax return on tangible equity of 15% and a cost income ratio of 60%.

Speaker Change: I'll now turn to the investment bank on slide 21.

Speaker Change: Revenues for the fourth quarter were 10% higher year on year on a reported basis and 8% higher excluding specific items.

Speaker Change: Revenues in fixed sales and trading increased by 1% versus an already strong prior year quarter and represented the highest fourth quarter revenues since 2010.

Speaker Change: Credit trading revenues were significantly higher driven by continued strong performance in distressed and ongoing improvements in the flow business.

James von Moltke: About €35 million of costs related to private bank service remediation are expected to taper off over time, and around €80 million of other costs should normalize. Reflecting on the nature of these exceptional items and considering savings coming through from efficiency measures, we expect to return to a run rate of around 5 billion euros in the first quarter of this year. Let's now turn to provision for credit losses on slide 15. Provision for credit losses in the fourth quarter was 488 million euros, equivalent to 41 basis points of average loan.

Speaker Change: The performance of flow reflects the successful execution of our strategic initiatives and the investments made through 2023.

Speaker Change: Emerging markets revenues were also significantly higher driven by increased client activity in Asia.

Speaker Change: Financing revenues were slightly lower versus the prior year quarter, but essentially flat on a full year basis.

Speaker Change: Rates and foreign exchange revenues were both significantly lower when compared to a very strong prior year quarter and reflected an overall decline in market activity and volatility.

Speaker Change: Moving to origination and advisory.

Speaker Change: Revenues were up 56% when compared to the prior year quarter, but down slightly sequentially due to deal slippage into the first quarter of 2024.

Speaker Change: Debt origination revenues were significantly higher benefiting from an improved <unk> performance, including the non repeat of hedge losses in the prior year quarter.

Speaker Change: The leveraged loan market saw a partial recovery from a market that was largely inactive in the prior year.

James von Moltke: [inaudible] The quarter-on-quarter development in Stage 1 and 2 provisions of $30 million mainly reflects the non-recurrence of model-related adjustments in the previous quarter and the application of an overlay in this quarter. Stage 3 provisions of 457 million euros were also higher compared to the prior quarter as we saw elevated levels, mainly in the private bank and corporate bank, partly offset by a provision reduction in the investment bank. Full year provisions were 31 basis points and reflect higher stage 3 provisions related to commercial real estate in the investment bank and certain one-offs in the private bank, partly offset by lower stage 1 and 2 provisions, as well as slower than expected loan growth. Before we move to performance in our businesses, let me turn to capital on the next two slides, starting with slide 16. Our fourth quarter Common Equity Tier 1 ratio came in at 13.7%, a 20 basis points decrease compared to the previous quarter. This quarter-on-quarter reduction reflects lower capital as our net income was more than offset by capital deductions, most notably for shareholder dividends, AT1 coupons, and deferred tax assets. Risk-weighted assets were flat over the quarter.

Speaker Change: Advisory revenues were slightly lower compared to the prior year period. However, we expect the previously communicated investments into targeted sectors and regions. During 2023 to drive improved performance this year against an improving industry backdrop.

Speaker Change: Noninterest expenses were significantly higher year on year, largely the result of a one off impairment of goodwill related to our investment in the acquisition of Numis.

James von Moltke: Focusing on our three key NII generating business units as well as other funding costs not offset by accounting effects, we see an improvement of just over 2 billion euros and a cumulative benefit since 2021 of over 4 billion euros. Looking ahead, on the same basis, we expect a decline of around 600 million euros in 2024, driven by the convergence of betas to steady state levels. We expect this to be followed by an increase of around 400 million euros in 2025, which will bring us close to the 2023 NII levels, as the beta convergence is largely offset by the rollover of our hedge portfolios, as well as balance sheet growth. In line with prior guidance, we expect a larger sequential reduction in the corporate bank than in the private bank in 2024.

Speaker Change: Adjusted costs were slightly higher reflecting targeted investments in origination and advisory which includes the numerous acquisition.

Speaker Change: Leverage exposure risk weighted assets and loans were all broadly stable year on year.

Speaker Change: Provision for credit losses was 186 million euros, or 73 basis points of average loans.

Speaker Change: The increase versus the prior year quarter was primarily driven by the model impact on stage, one and two performing loans with stage three impairments also higher and primarily driven by commercial real estate.

Speaker Change: Turning to the private bank on slide 22.

Speaker Change: Private bank revenues were $2 4 billion euros in the quarter up 9% year on year, if adjusted for the gain on sale of around 310 million euros related to the financial advisors business in Italy last year.

Speaker Change: Private bank, Germany revenues increased by 10% year on year, mainly driven by interest income, reflecting strong deposit margins and.

Speaker Change: In the international private bank revenues were up 9% year on year, if adjusted for specific items and FX movements.

Speaker Change: The growth was driven by episodic revenues in lending and higher deposit revenues across Europe, and middle East, which were partially offset by continued muted capital market activity and client deleveraging in APAC.

James von Moltke: We expect a sequential improvement, excluding accounting asymmetries, in the corporate and other division of around 300 million euros, relating to reduced funding costs for corporate assets and lower retained liquidity and other funding costs. We prepared additional slides on NII, which are in the appendix. But the key messages I want to highlight are that we have around 230 billion euros of long-term interest rate hedges on our deposits and equity. The majority of these hedges are entered into with a 10-year tenor, and the weighted average maturity of the portfolio is four to five years.

Speaker Change: Turning to costs noninterest expenses were significantly higher year on year, driven by approximately 100 million euros of restructuring and severance costs as well as investments in strategic initiatives Postbank service remediation costs and inflation.

James von Moltke: Credit Risk RWA increased over the quarter, reflecting business growth and model changes. These increases were partly offset by capital optimization initiatives as we continue to focus on the capital efficiency of our balance sheet. Lower market risk and operational risk RWA more than offset higher credit risk RWA over the quarter, reflecting lower market volatility and an improved risk profile.

Speaker Change: These were partly mitigated by continued savings from transformation programs and lower internal cost allocations.

Speaker Change: Fourth quarter provisions for credit losses of 30 basis points of average loans continued to include temporary effects caused by the operational backlog.

James von Moltke: At the end of the fourth quarter, our leverage ratio was 4.5%, reflecting a lower capital position and higher leverage exposure. Building on Christian's earlier comments on the inflection point in our capital base on slide 17, Let me give you an idea of how we want to manage our capital through 2025 as our profitability is improving and delivering more sustainable net income. First, in line with our ambition, we want to pay out 50% of net income to our shareholders. Second, we will aim to deploy about 25% of net income into the businesses to support further growth. Finally, we expect the remaining 25% will provide us with a buffer for additional capital use, the final implementation of CRR3, and further distributions, acquisitions, or an increase in our capital ratio.

Speaker Change: The development of the overall portfolio continuously reflects the high quality of the loan book, especially in the retail businesses and ongoing tight risk discipline.

Speaker Change: The business has attracted strong net inflows into assets under management of 7 billion euros, mainly in deposits.

James von Moltke: We expect 2.5 billion euros of NII from interest rate hedges in 2024, of which more than 90% is locked in with existing positions. Once deposit betas have converged to steady state levels, our NII sensitivity will mostly be to long-term rates as our hedge portfolio rolls over with limited sensitivity to short-term rates unless moves are sharp enough to reintroduce beta lags or approach the zero bound. We may outperform this guidance if market expectations regarding rate cuts do not fully materialize or deposit betas increase more slowly than expected. With that said, let's turn to adjusted cost development on slide 14. First, our guidance for full year 2023 adjusted costs was essentially flat compared to 2022 as we absorbed the impacts of inflation, ongoing investments, and business growth, which Christian discussed earlier. We made it clear that this guidance included an expectation that the German banking industry would receive a restitution payment from a national resolution fund in the fourth quarter. And, as we announced in our pre-closed document, this payment was not included in the recently announced budget.

Speaker Change: Let me continue with asset management on slide 23.

Speaker Change: My usual reminder, the asset management segment includes certain items that are not part of the dws stand alone financials.

Speaker Change: Assets under management increased to 896 billion euros in the quarter supported by net inflows and positive market depreciation of 40 billion euros, partly offset by negative FX effects.

Speaker Change: Net inflows of 11 billion euros were primarily in passive once again, continuing the positive momentum we have seen throughout the year as well as in cash products.

Speaker Change: Revenues declined by 5% versus the prior year. This is primarily the result of a decline in management fees to 575 million euros.

Speaker Change: Other revenues declined due to lower investment income and higher funding charges.

Speaker Change: Compensation and benefits costs were higher mainly driven by a change in accounting treatment related to carried interest in the prior year quarter, partly offset by lower other variable compensation.

James von Moltke: Let me also give you an update on our capital efficiency program. In the fourth quarter, we delivered RWA relief of a further €3 billion, mainly from additional securitization, which brings the achieved reduction to 13 billion euros and means we remain on course for our 25 to 30 billion euro target, and we aim to deliver further progress in 2024. Let me give you some more details on our intentions regarding shareholder distributions. In March 2022, we set a goal to increase dividends per share by 50% for three consecutive years, which we are on track to deliver. As the slide indicates, subject to a 50% payout ratio, we believe there will be scope to extend the 50% increase objectives to 2025, suggesting a dividend of €1 per share could be paid in 2026. This would bring the total dividend payments over the 5 year period to over 5 billion euros.

Speaker Change: Non compensation costs were also higher reflecting support for transformation and costs related to growth in assets under management.

Speaker Change: In the prior year period nonoperating costs included a significant impairment charge for an unarmored amortized intangible asset which is not repeated this year.

Speaker Change: Profit before tax is significantly lower than the prior year period, mainly impacted by lower revenues.

James von Moltke: While our full-year adjusted costs were up 3% year-on-year, in line with our guidance, the fourth quarter adjusted costs of 5.3 billion euros were up 9% year-on-year, higher than the initial expectations. We had around €210 million of exceptional items in the fourth quarter, resulting in adjusted costs excluding bank levies of €5.26 billion. About 90 million euros of these exceptional items are not expected to repeat in the following quarters.

Speaker Change: The cost income ratio for the quarter was 81% and return on tangible equity was seven 1%.

Speaker Change: Moving to corporate and other on slide 24.

Speaker Change: Corporate and other reported a pretax loss of $14 million euros this quarter versus the equivalent pretax loss of 535 million euros in the fourth quarter of 2022.

Speaker Change: This improvement was primarily driven by a net litigation release of 287 million euros in this quarter.

Speaker Change: Valuation and timing differences were positive 142 million euros compared to 48 million euros in the prior year quarter in part driven by the reversal of prior year losses.

James von Moltke: About 35 million euros of costs related to private bank service remediation are expected to taper off over time, and around 80 million euros of other costs should normalize. Reflecting on the nature of these exceptional items and considering savings coming through from efficiency measures, we expect to return to a run rate of around 5 billion euros in the first quarter of this year. Let's now turn to provision for credit losses on slide 15. Provision for credit losses in the fourth quarter was €488 million, equivalent to 41 basis points of average loans.

Speaker Change: The pretax profit associated with legacy portfolios with 75 million euros, primarily reflecting the aforementioned litigation release.

Speaker Change: Funding and liquidity impacts were negative 111 million euros in the quarter, bringing the full year in line with our guidance.

James von Moltke: At the same time, we are continuing to increase share buybacks, and as Christian mentioned, we will execute a further 675 million euro program in the first half of 2024, which is again a 50% increase on the buyback program we completed last year. Finally, given our strong capital and earnings outlook, we see significant scope for further share buybacks and, therefore, a clear path to outperform our original distribution target of 8 billion euros. Let's now turn to performance in our businesses, starting with the Corporate Bank on slide 20. Corporate bank revenues in the fourth quarter were 1.9 billion euros, 9% higher compared to the prior year quarter, which already reflected the early stages of the interest rate cycle.

Speaker Change: Expenses associated with shareholder activities were 147 million euros in the quarter, which we see as the new quarterly run rate.

Speaker Change: At the end of the fourth quarter risk weighted assets were 40 billion euros, including 19 billion euros of operational risk <unk> and leverage exposure was 39 billion euros.

Speaker Change: For the full year the loss before tax in C&I was 553 million euros.

James von Moltke: The quarter-on-quarter development in Stage 1 and 2 provisions of $30 million mainly reflects the non-recurrence of model-related adjustments in the previous quarter and the application of an overlay in this quarter. Stage 3 provisions of €457 million were also higher compared to the prior quarter, as we saw elevated levels, mainly in the private bank and corporate bank, partly offset by a provision reduction in the investment bank. Full-year provisions were 31 basis points and reflect higher Stage 3 provisions related to commercial real estate in the investment bank and certain one-offs in the private bank, partly offset by lower Stage 1 and 2 provisions, as well as slower than expected loan growth. Before we move to performance in our businesses, let me turn to capital on the next two slides, starting with slide 16. Our fourth quarter common equity tier one ratio came in at 13.7 percent, a 20 basis points decrease compared to the previous quarter. This quarter-on-quarter reduction reflects lower capital as our net income was more than offset by capital deductions, most notably for shareholder dividends, AT1 coupons, and deferred tax assets. Risk-weighted assets were flat over the quarter.

Speaker Change: Into 2024, we expect the pre tax loss for corporate and other to be more negative given the non repeat of the aforementioned litigation release.

Speaker Change: As usual this includes some uncertainty, particularly associated with valuation and timing differences.

Speaker Change: Turning to the group outlook on slide 25.

Speaker Change: As Christian and I have outlined we are increasingly confident in our growth path, particularly in our ambitions to grow fee income across divisions.

Speaker Change: We have revised our revenue growth target to five 5% to six 5% over the 2021% to 2025 period supported by investments across all business areas and a more favorable economic and market backdrop.

James von Moltke: The interest rate environment remained favorable, with revenues further supported by the continued pricing discipline, a solid deposit base, and higher commission and fee income. Sequentially, revenues increased slightly, driven by higher net interest income from higher average balances with corporate and institutional clients and higher commission and fee income in our institutional client services business. We continue to anticipate a normalization of our deposit revenues over the coming quarters, which we expect to be partially offset by growing non-interest rate-sensitive revenue streams. Loan volume in the corporate bank declined by 5 billion euros compared to the prior year quarter and remained stable sequentially, compensating for the impact of FX movements.

Speaker Change: We are fully focused on delivering our cost plan and we see our noninterest expenses, reducing due to the non repeat of certain nonoperating costs as well as management actions to maintain our targeted quarterly run rate of 5 billion euros of adjusted costs.

Speaker Change: We expect provision for credit losses to remain at around 25 to 30 basis points of average loans in 2024.

Speaker Change: As we outlined last quarter, we have passed an inflection point in our capital management plan, which supports our intention to distribute roughly half of our generated net income to shareholders, which alongside with cash cost management is our key management priority.

Speaker Change: And finally with our first half $675 million Euro share buyback approved we're poised to further accelerate distributions beyond our baseline expectations.

Honor: With that let me hand back to you honor and we look forward to your questions.

James von Moltke: Credit Risk RWA increased over the quarter, reflecting business growth and model changes. However, these increases were partly offset by capital optimization initiatives as we continue to focus on the capital efficiency of our balance sheet. Lower market risk and operational risk RWA more than offset higher credit risk RWA over the quarter, reflecting lower market volatility and an improved risk profile. At the end of the fourth quarter, our leverage ratio was 4.5%, reflecting a lower capital position and higher leverage exposure.

Honor: Yes.

Operation: Thank you James Operation, we are now ready to take questions.

Honor: Thank you very much ladies and gentlemen at this time, we will begin the question and answer session.

James von Moltke: Deposits were €289 billion, €3 billion higher than in the third quarter, with an increased share of term deposit balances compared to the prior year. Provision for credit losses was 26 basis points of average loan. The moderate increase versus the prior year was driven by higher stage 3 provisions across various portfolios. Non-interest expenses significantly increased year on year driven by the FDIC special assessment charge in the current quarter and adjustments to the internal service cost allocations in the prior year quarter. This resulted in a post-tax return on tangible equity of 15% and a cost-income ratio of 60%. I'll now turn to the Investment Bank on slide 21. Revenues for the fourth quarter were 10% higher year-on-year on a reported basis and 8% higher excluding specific items.

Speaker Change: Anyone who wishes to ask a question May press star and one.

Speaker Change: If you wish to remove yourself from the question queue, you May press star.

Speaker Change: End to end.

Speaker Change: Anyone who has a question May press star and one at this time.

Speaker Change: First question today is from Chris <unk>.

Chris: Album from Goldman Sachs International. Please go ahead with your question.

Chris: Yes. Good morning, everybody just two from me first on distribution looking at Slide 18, I guess, if I take all those numbers together that would I be wrong in saying that the $8 billion distribution targets is now about 25% higher at around $10 billion.

And for this year consensus has about $1 billion in share buybacks with respect to 'twenty three results now you've announced 675.

Chris: And so there's more to come so just do you feel comfortable with the 1 billion figure that consensus has been.

James von Moltke: Building on Christian's earlier comments on the inflection point in our capital base on slide 17, let me give you an idea of how we want to manage our capital through 2025 as our profitability is improving and delivering more sustainable net income. First, in line with our ambition, we want to pay out 50% of net income to our shareholders. Second, we will aim to deploy about 25% of net income into the businesses to support further growth. Finally, we expect the remaining 25% will provide us with a buffer for additional capital use, the final implementation of CRR3, and further distributions, acquisitions, or an increase in our capital ratio. Let me also give you an update on our capital efficiency program. In the fourth quarter, we delivered RWA relief of a further 3 billion euros, mainly from additional securitization, which brings the achieved reduction to 13 billion euros and means we remain on course for our 25 to 30 billion euro target, and we aim to deliver further progress in 2024.

Speaker Change: And then second on costs, obviously, there was a lot of one offs in Q4, and I guess, we're going to see the 5 billion underlying from Q1 as you mentioned, but just as we start the year. What can you see in terms of one offs for 24 and may be for 'twenty five as well.

Speaker Change: Thank you, Chris and good morning to everybody and thank you for your question.

Speaker Change: Start with the capital question and then James will take the cost question.

James von Moltke: Revenues in fixed sales and trading increased by 1% versus an already strong prior year quarter and represented the highest fourth quarter revenue since 2010. Credit trading revenues were significantly higher, driven by continued strong performance in distressed and ongoing improvements in the flow business. The performance of FLOW reflects the successful execution of our strategic initiatives and the investments made through 2023. Emerging markets revenues were also significantly higher, driven by increased client activity in Asia.

Speaker Change: Okay.

Speaker Change: Let me go back to the Investor Day, 2022, because I think it's important that we all understand the Pos which we have announced there in particular also regard with the capital policy and the $8 billion.

Speaker Change: Since then since March 2022, and we have consistently delivered on that what we have told you.

Speaker Change: And that is no different today.

Speaker Change: And in our our focus has always been on the execution of our strategy and the commitment actually on the one hand to focus on our clients, but Chris more and more of what we have done in the management Board of Deutsche Bank is actually to put the shareholders into the middle of folks.

Speaker Change: What we are doing.

James von Moltke: Financing revenues were slightly lower versus the prior year quarter but essentially flat on a full year basis. Rates and foreign exchange revenues were both significantly lower when compared to a very strong prior year quarter and reflected an overall decline in market activity and volatility. Moving to Origination and Advisory, revenues were up 56% when compared to the prior year quarter, but down slightly sequentially due to deal slippage into the first quarter of 2024. Debt origination revenues were significantly higher, benefiting from an improved LBCM performance, including the non-repeat of hedge losses in the prior year quarter. The leveraged loan market saw a partial recovery from a market that was largely inactive in the prior year. Advisory revenues were slightly lower compared to the prior year period.

Now with the investments, which we have done with the business how it develops with the inflection point, we see on regulatory remediation, taking the regulatory increases into our capital and.

Speaker Change: And digesting it.

Speaker Change: We can clearly see that we are at the inflection point on our franchise.

Speaker Change: But in particular also when it comes to our capital position and hence we can see that we have now the room to further step up.

Speaker Change: And that is then the result of that we said already last year in October that we see based on the efficient capital management, the operating strength of the business. The earnings profile that we see $3 billion of incremental capital.

James von Moltke: Let me give you some more details on our intentions regarding shareholder distributions. In March 2022, we set a goal to increase dividends per share by 50% for three consecutive years, which we are on track to deliver. As the slide indicates, subject to a 50% payout ratio, we believe there will be scope to extend the 50% increase objectives to 2025, suggesting a dividend of 1 euro per share could be paid in 2026. This would bring the total dividend payments over the 5 years to over 5 billion euros.

Speaker Change: At our disposal.

Speaker Change: And of course, it is our aim that a significant part of the $3 billion will be will be actually distribute it to our shareholders again also with the view that it's now the time that the shareholders go actually also into the center of what we are doing now what does it mean concretely in <unk>.

James von Moltke: However, we expect the previously communicated investments into targeted sectors and regions during 2023 to drive improved performance this year against an improving industry backdrop. Non-interest expenses were significantly higher year on year, largely the result of a one-off impairment of goodwill related to our investment in the acquisition of Numis. Adjusted costs were slightly higher, reflecting targeted investments in Origination Advisory, which included the Numis Acquisition. Leverage exposure, risk-weighted assets, and loans were all broadly stable year-on-year.

Speaker Change: Also they are Chris if we compare this year to last year last year in the January earnings call. We did not actually talk about and hit the approval for a share buyback.

Speaker Change: You'll see our confidence.

James von Moltke: At the same time, we are continuing to increase share buybacks, and as Christian mentioned, we will execute a further 675 million euro program in the first half of 2024, which is again a 50% increase on the buyback program we completed last year. Finally, given our strong capital and earnings outlook, we see significant scope for further share buybacks and, therefore, a clear path to outperform our original distribution target of €8 billion. Let's now turn to performance in our businesses, starting with the corporate bank, on slide 20. Corporate bank revenues in the fourth quarter were 1.9 billion euros, 9% higher compared to the prior year quarter, which already reflected the early stages of the interest rate cycle.

Speaker Change: All in the way the bank has done and on which way we are and therefore, we ask for the approval of the 675 million last year, we got the approval now.

Speaker Change: And that also means to your second question there on the way for 2024.

James von Moltke: Provision for credit losses was 186 million euros, or 73 basis points of average loans. The increase versus the prior year quarter was primarily driven by the model impact on stage 1 and 2 performing loans, with stage 3 impairments also higher and primarily driven by commercial real estate. Turning to the private bank on slide 22, private bank revenues were €2.4 billion in the quarter, up 9% year-on-year if adjusted for the gain on sale of around €310 million related to the financial advisors business in Italy last year. Private Bank Germany's revenues increased by 10% year-on-year, mainly driven by interest income reflecting strong deposit margins.

Speaker Change: In case and I'm very confident just looking at January in case, our business performance runs as we forecasted in Q1 I think there is an opportunity and we should obviously aspire to go for a second approach this year and that we are.

Speaker Change: Already have the approval for the first one in January is I think the big difference to last year.

Speaker Change: Secondly, if I now look at the overall earnings capacity of the bank how the revenues stay up and also James will tell you about the cost side I really clearly can see that.

Speaker Change: We can change that.

Speaker Change: In terms of what we what we retain and what goes to the shareholders to a 50 50 and it is clearly our goal that the 50% increase which we committed to in the last years, which we have done is also something which we want to do going forward of course subject to our.

James von Moltke: In the International Private Bank, revenues were up 9% year-on-year if adjusted for specific items and FX movements. The growth was driven by episodic revenues in lending and higher deposit revenues across Europe and the Middle East, which were partially offset by continued muted capital market activity and client deleveraging in APAC. Turning to costs, non-interest expenses were significantly higher year-on-year, driven by approximately €100 million of restructuring and severance costs, as well as investments in strategic initiatives, postbank service remediation costs, and inflation. However, these were partly mitigated by continued savings from transformation programs and lower internal cost allocations.

Speaker Change: Earnings forecast, but again, we are highly confident and that would mean I mean, you mentioned the number you know where the consensus is that debt off.

Speaker Change: Honestly the results in a number where I said, yes, I would like to actually go to consensus when it comes to share buybacks and capital distribution in total.

Speaker Change: So and Chris it's James on the expense side look.

Speaker Change: Q4 was was messy we had advertised that there were some items that we were expecting we obviously try to give you as much of a forward look as you as we can but.

James von Moltke: But as you can see on page 14.

James von Moltke: There was a bunch of things that sort of tumbled out.

James von Moltke: That some of which caught us by surprise.

James von Moltke: I would say is a great example, the FDIC assessment the way it was formulated.

James von Moltke: And and crafted.

James von Moltke: Fourth Quarter Provisions for Credit Losses of 30 Basis Points of Average Loans continue to include temporary effects caused by the operational backlog. However, the development of the overall portfolio continuously reflects the high quality of the loan book, especially in the retail businesses, and ongoing tight risk discipline. The business has attracted strong net inflows into assets under management of 7 billion euros, mainly in deposits. Let me continue with asset management on slide 23. As a reminder, the asset management segment includes certain items that are not part of the DWS standalone financials. Assets under management increased to €896 billion in the quarter, supported by net inflows and positive market depreciation of €40 billion, partly offset by negative FX effects. Net inflows of 11 billion euros were primarily in passive funds, once again, continuing the positive momentum we've seen throughout the year, as well as in cash products. However, revenues declined by 5% versus the prior year. This was primarily the result of a decline in management fees to 575 million euros. Other revenues declined due to lower investment income and higher funding charges.

James von Moltke: Brought basically two years' worth of assessment into into the one quarter.

James von Moltke: Deposits were €289 billion, €3 billion higher than in the third quarter, with an increased share of term deposit balances compared to the prior year. Provision for credit losses was 26 basis points of average loan. The moderate increase versus the prior year was driven by higher stage 3 provisions across various portfolios. Non-interest expenses significantly increased year-on-year, driven by the FDIC special assessment charge in the current quarter and adjustments to the internal service cost allocations in the prior year quarter. This resulted in a post-tax return on tangible equity of 15% and a cost-income ratio of 60%. I'll now turn to the Investment Bank on slide 21. Revenues for the fourth quarter were 10% higher year-on-year on a reported basis and 8% higher excluding specific items.

James von Moltke: And if I go to another question that frequently comes up on these calls what flexibility do we have to offset.

James von Moltke: While we think that product flexibility is greater than it has been in the past.

James von Moltke: $50 million coming out of nowhere.

James von Moltke: In late November early December is not something you can really offset at that point in time.

James von Moltke: But your question is what comfort can we give you that that the one offs are coming to an end.

James von Moltke: I think our goal is to deliver a much cleaner more predictable profile.

James von Moltke: And.

James von Moltke: The last few years have been anything but that with transformation charges. Obviously the bank levy that introduces volatility some of the litigation items that have come at us that we that we hadn't expected to fall out the way they did.

James von Moltke: And while we can you can never guarantee that there won't be new things coming up if I look at the.

James von Moltke: The various risks and uncertainties that lie ahead. There there are much fewer than than lies behind us and so I'd like to think that our path to normalization is is close.

James von Moltke: There would be I mean, if I look to 'twenty four.

James von Moltke: We do expect some restructuring charges in 'twenty four.

James von Moltke: Perhaps $400 million Thats still an elevated level relative to what I would think of as normalized and.

James von Moltke: And clearly our goal is that by 2025, we will have normalized in respect of both restructuring and severance and litigation. It's one of the reasons our investment in nonfinancial risk is so critical in the control environments has stopped.

James von Moltke: Compensation and benefits costs were higher, mainly driven by a change in accounting treatment related to carried interest in the prior year quarter, partly offset by lower other variable costs. Non-compensation costs were also higher, reflecting support for transformation and costs related to growth in assets under management. In the prior year period, non-operating costs included a significant impairment charge for an unamortized intangible asset, which is not repeated this year. Profit before tax is significantly lower than the prior year period, mainly impacted by lower revenues.

James von Moltke: Ourselves vulnerable to those types of things. So we do think we're much closer to providing a normalized picture.

James von Moltke: And also to having the levers in our hands to offset.

James von Moltke: Adverse development is better.

Okay. Thanks very helpful. Thank you.

James von Moltke: Financing revenues were slightly lower versus the prior year quarter but essentially flat on a full year basis. Rates and foreign exchange revenues were both significantly lower when compared to a very strong prior year quarter and reflected an overall decline in market activity and volatility. Moving to origination and advisory, revenues were up 56% when compared to the prior year quarter, but down slightly sequentially due to deal slippage into the first quarter of 2024. Debt origination revenues were significantly higher, benefiting from an improved LBCM performance, including the non-repeat of hedge losses in the prior year quarter. The leveraged loan market saw a partial recovery from a market that was largely inactive in the prior year, although advisory revenues were slightly lower compared to the prior year period.

Speaker Change: Thank you.

Speaker Change: Our next question is from Ken <unk> Hussain from JP Morgan. Please go ahead.

Ken Hussain: Can you I know you're there are you on mute.

Ken Hussain: Yeah.

Speaker Change: Mr. <unk> your line as well.

Ken Hussain: Yeah apologies I was on mute.

Ken Hussain: Thanks for taking my question.

The first question is related to trading revenues, which you indicated I think James.

Speaker Change: Has started very well and I just wanted to see what youre comparing this to us this year on year comparison, and what is driving that.

James von Moltke: The cost income ratio for the quarter was 81%, and return on tangible equity was 7.1%. Moving to Corporate Another on slide 24, Corporate Another reported a pre-tax loss of 14 million euros this quarter versus an equivalent pre-tax loss of 535 million euros in the fourth quarter of 2022.

Speaker Change: Yeah, I assume in fixed income.

Speaker Change: Secondly.

Can you also talk clearly in that context around the investment banking fee.

James von Moltke: However, we expect the previously communicated investments into targeted sectors and regions during 2023 to drive improved performance this year against an improving industry backdrop. Non-interest expenses were significantly higher year-on-year, largely the result of a one-off impairment of goodwill related to our investment in the acquisition of Numis. Adjusted costs were slightly higher, reflecting targeted investments in origination advisory, which included numerous acquisitions. Leverage exposure, risk-weighted assets, and loans were all broadly stable year on year.

Speaker Change: I think you also indicated momentum is continuing from what you said earlier.

Speaker Change: At a recent conference and then secondly.

Speaker Change: Just coming back to cost clearly the target is adjusted cost 5 billion about $5 billion and.

Speaker Change: Yes.

Speaker Change: You could talk a little bit about the levers that you have in case, you will not be able to get to about $5 billion of what 5 billion about actually means to the plus or minus 4%, 5% how should we think about that.

James von Moltke: This improvement was primarily driven by a net litigation release of 287 million euros in this quarter. Valuation and timing differences were positive 142 million euros compared to 48 million euros in the prior year quarter, in part driven by the reversal of prior year losses. The pre-tax profit associated with legacy portfolios was 75 million euros, primarily reflecting the aforementioned litigation release. Funding and liquidity impacts were negative 111 million euros in the quarter, bringing the full year in line with our guidance. Expenses associated with shareholder activities were 147 million euros in the quarter, which we see as the new quarterly run rate. At the end of the fourth quarter, risk-weighted assets were €40 billion, including €19 billion of operational risk RWA, and leverage exposure was €39 billion. For the full year, the loss before tax in C&O was 553 million euros.

Speaker Change: Thank you.

Speaker Change: Let me start and then James will.

James von Moltke: For sure it look.

James von Moltke: Ken Thanks for your question I think on the trading revenues.

James von Moltke: We know it's obviously early days with January but what are we doing we are comparing it to last year, we are comparing it to our own plan.

James von Moltke: Provision for credit losses was 186 million euros, or 73 basis points of average loans. The increase versus the prior year quarter was primarily driven by the model impact on Stage 1 and 2 performing loans, with Stage 3 impairments also higher and primarily driven by commercial real estate. Turning to the private bank on slide 22, private bank revenues were €2.4 billion in the quarter, up 9% year-on-year if adjusted for the gain on sale of around €310 million related to the financial advisors business in Italy last year.

James von Moltke: And we also look at the consistency actually of the day to day trading also with regard to our box and it looks very healthy it looks a very kind of a consistent picture across the different sectors in the in the trading area. So it is broad.

James von Moltke: <unk> based across the regions and I would say one reaching for the one reason for the strong start is for sure that we have been investing in rum has has really built up.

The FIC business over the last five years quarter by quarter and of course, the latest rating upgrade by S&P also helps I mean these are all things, which are then self fulfilling so to say you will remember my speeches.

That each rating upgrade also means that obviously clients are coming back I doing different and more trades with us we.

James von Moltke: Private Bank Germany revenues increased by 10% year-on-year, mainly driven by interest income reflecting strong deposit margins. In the International Private Bank, revenues were up 9% year-on-year if adjusted for specific items and FX movements. The growth was driven by episodic revenues in lending and higher deposit revenues across Europe and the Middle East, which were partially offset by continued muted capital market activity and client deleveraging in AIPAC. Turning to costs, non-interest expenses were significantly higher year-on-year, driven by approximately €100 million of restructuring and severance costs, as well as investments in strategic initiatives, postbank service remediation costs, and inflation. These were partly mitigated by continued savings from transformation programs and lower internal cost allocations.

James von Moltke: Looking into 2024, we expect the pre-tax lofts for corporate and other to be more negative, given the non-repeat of the aforementioned litigation release. As usual, this includes some uncertainty, particularly associated with valuation and timing differences. Turning to the group outlook on slide 25.

James von Moltke: We are changing the east us all of that is coming through and therefore, we can see that yes January was good a nice and better than we expected, but I can see from the basis and foundation.

That in my view this is a quite consistent trend.

James von Moltke: And I also expect by the way we set it at 78% of the 'twenty three revenue year, where recurring revenues, which is a pretty good picture and therefore I also expect with all the investments we have done in the sort to say more stable business.

James von Moltke: As Christian and I have outlined, we are increasingly confident in our growth path, particularly in our ambitions to grow fee income across divisions. We have revised our revenue growth target to 5.5-6.5% over the 2021-2025 period, supported by investments across all business areas and a more favorable economic and market backdrop. We are fully focused on delivering our cost plan, and we see our non-interest expenses reducing due to the non-repeat of certain non-operating costs as well as management actions to maintain our targeted quarterly run rate of 5 billion euros of adjusted costs. We expect provision for credit losses to remain at around 25 to 30 basis points of average loans in 2024.

James von Moltke: We have a solid and strong start into into January.

James von Moltke: On the fee income in the <unk>, Yes, we expect a recovery in 'twenty four it is always very hard to say when exactly.

James von Moltke: But you know we have planned our investments last year in terms of the numerous acquisition, but also in terms of the hiring on the O&M side with regard to a long term development of the bank, we wanted to invest into our capital light business and Fortunately, we can now see the re.

James von Moltke: Lots of that so also here, we can see a recovery in terms of mandates a recovery in terms of.

James von Moltke: Market activities and therefore, we do believe that we will see compared to 2023, a nice uptick in the revenues and the first results. We have already seen also in January but again I know, it's just the first 30 days of the year, but also they are very promising and that what we wanted to achieve.

James von Moltke: Fourth quarter provisions for credit losses of 30 basis points of average loans continue to include temporary effects caused by the operational backlog. The development of the overall portfolio continuously reflects the high quality of the loan book, especially in the retail businesses, and ongoing tight risk discipline. The businesses attracted strong net inflows into assets under management of 7 billion euros, mainly in deposits.

Ioana Patriniche: As we outlined last quarter, we have passed an inflection point in our capital management plan, which supports our intention to distribute roughly half of our generated net income to shareholders, which, alongside with cost management, is our key management priority. And finally, with our first-half €675 million share buyback approved, we're poised to further accelerate distributions beyond our baseline expectations. With that, let me hand it back to Ioana, and we look forward to your questions. Thank you, James. Operator, we are now ready to take questions. Thank you very much.

James von Moltke: Is coming is coming through.

James von Moltke: On the cost side.

James von Moltke: Look I I, James just said it and he will give you more details but.

James von Moltke: Eight.

James von Moltke: We have the full focus after Q4, showing you already in Q1 that we hit a $5 billion run rate in Q1. This is daily management daily monitoring weekly and the management Board.

James von Moltke: Let me continue with asset management on slide 23. As a usual reminder, the asset management segment includes certain items that are not part of the DWS standalone financials. Assets under management increased to €896 billion in the quarter, supported by net inflows and positive market depreciation of €40 billion, partly offset by negative FX effects. Net inflows of 11 billion euros were primarily in passive funds once again, continuing the positive momentum we've seen throughout the year, as well as in cash products. Revenues declined by 5% versus the prior year, primarily as a result of a decline in management fees to 575 million euros. Other revenues declined due to lower investment income and higher funding charges.

James von Moltke: And I'm very confident that we will achieve that number of around five zero billion. In Q1, now why am I overall, so confident on that because of that what James said I mean, if you if you take.

James von Moltke: The $21 7 billion cost and we need to come to $20 billion.

We will expect nonoperating costs to decrease by around $700 million.

Operator: Ladies and gentlemen, at this time, we will begin the question and answer session. Anyone who wishes to ask a question may press star and 1. If you wish to remove yourself from the question queue, you may press star and two.

Speaker Change: We will.

Speaker Change: Expect approximately a reduction of bank levies in the amount of $350 million to $400 million and 24 versus 23 that would bring us roughly 225 billion euros.

Chris Hallam: Anyone who has a question may press star and 1 at this time. Our first question today is from Chris Hallam from Goldman Sachs International. Please go ahead with your question. Yeah, morning, everybody.

Speaker Change: And now we are looking at that what we are constantly managing.

Speaker Change: With the front office with the back offices and Rebecca is leadership and that means we expect that we have another 400 million net reduction.

Chris Hallam: Just two from me first on distribution, looking at slide 18. I guess if I take all those numbers together, would I be wrong in saying that the 8 billion distribution target is now about 25% higher at around 10 billion. And for this year, ConsenSys has about 1 billion in share buybacks with respect to 23 results. Now you've announced 675 and said that there's more to come.

Speaker Change: Or what is still coming of our operational efficiency program. You know the $2 5 billion of gross reductions. We have delivered savings are expected savings of $1 3 billion of which $900 million have been realized up to up to now.

And the remainder comes from 600 million bus in Germany in the optimization Claudia is doing in particular on the business side with all the rationalization on the branch side with all the investments which have been done into unity and now we're getting the fruits out of this.

James von Moltke: Compensation and benefits costs were higher, mainly driven by a change in accounting treatment related to carried interest in the prior year quarter, partly offset by lower other variable compensation. Non-compensation costs were also higher, reflecting support for transformation and costs related to growth in assets under management. In the prior year period, non-operating costs included a significant impairment charge for an unamortized intangible asset, which is not repeated this year. Profit before tax is significantly lower than in the prior year period, mainly impacted by lower revenues.

Chris Hallam: So just do you feel comfortable with the 1 billion figure that ConsenSys has, and then secondly on costs, obviously there was a lot of one-offs in Q4 and I guess we're going to see the five billion underlying from Q1 as you mentioned, but just as we start the year, what can you see in terms of one-offs for 24 and maybe for 25 as well? Thank you, Chris. And good morning to everybody.

Speaker Change: We have on technology and infrastructure, another $700 million, which we will reduce application decommissioning and so on and then you know that we have for our core processes. We have invested a lot money and we will do this also going forward in the front to back process redesign, where we think we.

We'll get another 300 million out now against that there is obviously some inflation some business growth, but that makes us highly highly confident that we can get the next $4 million to $500 million of operational efficiency net out and that brings us to the $20 billion. The good thing is that as the long term plan for 2020.

Christian Sewing: Thank you for your question. But let me start with the capital question and then James will take the cost question. Let me go back to the Investor Day 2022 because I think it's important that we all understand the path which we have announced there in particular also regard with the capital path and the 8 billion. Since then, since March 2022, we have consistently delivered on that what we have told you, and that is no different today, and and our our focus has always been on the execution of our strategy and and the commitment actually on the one hand to focus on our clients but Chris more and more what we have done in the management board of Deutsche Bank is actually to put the shareholders into the middle of focus what we are doing Now, with the investments which we have done, with the business, how it develops, with the inflection point we see on regulatory remediation, taking the regulatory increases into our capital in and digesting it, We can clearly see that we are at the inflection point on our franchise, but in particular also when it comes to our capital position. And hence, we can see that we have now the room to further step up.

James von Moltke: The cost-income ratio for the quarter was 81%, and return on tangible equity was 7.1%. Moving to Corporate Another on slide 24, Corporate Another reported a pre-tax loss of 14 million euros this quarter versus an equivalent pre-tax loss of 535 million euros in the fourth quarter of 2022.

Speaker Change: But if you see the bottom up plan for the first quarter, we will achieve.

Speaker Change: The 5.0 on a rounded basis this quarter.

Speaker Change: So in Kent.

Speaker Change: Entirely endorsed with Christian just went through and it just to put a couple of numbers behind it as well in fact I would draw your attention to page 47 of the analyst deck, where we tried to give you a little bit more color on how the FIC franchise performs on a daily basis and relative to its var and so it gives you a good kind of comparison.

Speaker Change: As to what you know so far the quarter might look like compared to last year's first quarter.

Speaker Change: I think the second thing to add.

Speaker Change: In the corporate finance wallet, if you look at some of the external sort of providers of data on that marketplace. I think those providers would say that the market will the wallet will grow 15% to 20%. This year as Christian just outlined that obviously still needs to happen, but we think the conditions are there and as Christian.

Speaker Change: Just outlined through numerous and the other hires we've invested to participate in that.

James von Moltke: Funding and liquidity impacts were negative 111 million euros in the quarter, bringing the full year in line with our guidance. Expenses associated with shareholder activities were 147 million euros in the quarter, which we see as the new quarterly run rate. At the end of the fourth quarter, risk-weighted assets were €40 billion, including €19 billion of operational risk RWA, and leverage exposure was €39 billion. For the full year, the loss before tax in C&O was 553 million euros.

Speaker Change: And then lastly on the unexpected is to give you a sense of what we would think is a significant as a range of of outcomes.

Speaker Change: 1% rather than 4%.

Speaker Change: We have the discipline and for us missing by by 1% or $50 million would be.

Speaker Change: A disappointment and that gives you a sense of how we're managing the place.

Speaker Change: Very clear thank you.

Speaker Change: Okay.

Speaker Change: Our next question is from Adam <unk> from Mediobanca. Please go ahead.

Christian Sewing: And that is then the result that we said already last year in October that, based on the efficient capital management, the operating strengths of the business, the earnings profile, we see three billion of incremental capital at our disposal. And of course, it is our aim that a significant part of these three billion will be actually distributed to our shareholders, again, also with the view that it's now the time that the shareholders go actually also into the center of what we are doing. Now, what does it mean concretely?

Adam: Good morning, Thank you for the questions one on revenues and one on costs on the revenue side, you've given a lot of detail on NII and NII trajectory.

James von Moltke: Looking into 2024, we expect the pre-tax lofts for corporate and other to be more negative given the non-repeat of the aforementioned litigation release. As usual, this includes some uncertainty, particularly associated with valuation and timing differences. Turning to the group outlook on slide 25.

You've given US 32 billion for 25 30 billion still for this year, but could you put a little bit more meat on the bones claims that would be by division and expectations by division, but also on the non NII rice.

James von Moltke: As Christian and I have outlined, we are increasingly confident in our growth path, particularly in our ambitions to grow fee income across divisions. We have revised our revenue growth target to 5.5-6.5% over the 2021-2025 period, supported by investments across all business areas and a more favorable economic and market backdrop. We're fully focused on delivering our cost plan, and we see our non-interest expenses reducing due to the non-repeat of certain non-operating costs, as well as management actions to maintain our targeted quarterly run rate of 5 billion euros of adjusted costs. We expect provision for credit losses to remain at around 25 to 30 basis points of average loans in 2024.

Adam: What you see in terms of <unk> you might imagine.

Adam: Beyond the RNA piece.

Adam: But also on loan growth as well, which Kelly is baked into your NII assumptions. So some more color around revenue and revenue expectations on why we shouldnt be as bullish as you guys all great.

Christian Sewing: And also, Chris, if we compare this year to last year, last year on the January earnings call, we did not actually talk about and have the approval for a share buyback. You can see our confidence overall in the way the bank has done and in the direction we are going. And therefore, we asked for the approval of 675 million last year. We got the approval now.

Adam: And secondly on cost and cost trajectory, you're talking to $5 billion into Q1, clearly the run rate for next year is going to be below that if youre going to get 20 billion. So what does that adjusted cost like through this year, we actually end up kind of below 5 billion by the end of the year and sorry, Jeff.

Christian Sewing: And that also means to your second question there on the way for 2024, in case, and I'm very confident just looking at January, in case our business performance runs as we forecasted in Q1, I think there is an opportunity, and we should obviously aspire to go for a second approach this year. Secondly, if I now look at the overall earnings capacity of the bank, how the revenues stack up, and also what James will tell you about the cost line, I can really clearly see that we can change the payout in terms of what we retain and what goes to the shareholders to a 50-50. And it is clearly our goal that the 50% increase which we committed to in the last years, which we have done, is also something which we want to do going forward. Of course, this is subject to our earnings forecast, but again, we are highly confident. And that would mean, you know where the consensus is, that obviously results in a number where I said, yes, I would actually go to consensus when it comes to share buybacks and capital distribution in total. Chris, it's James.

Adam: It cost sprint.

Adam: Could be in the $20 billion range for 2024.

Adam: Obviously, the reported number might be higher but I think about just the cost side at this stage. Thank you.

Speaker Change: So I can start Chris you may want to add.

Speaker Change: On revenues Adam first of all.

Speaker Change: We provided the additional disclosure on net interest revenues.

Speaker Change: Our net interest income to try to sort of put that to one side.

Speaker Change: Hopefully thats helpful disclosure and.

Operator: As we outlined last quarter, we have passed an inflection point in our capital management plan, which supports our intention to distribute roughly half of our generated net income to shareholders, which, alongside with cost management, is our key management priority. And finally, with our first-half €675 million share buyback approved, we're poised to further accelerate distributions beyond our baseline expectations. With that, let me hand it back to Ioana, and we look forward to your questions. Thank you, James. Operator, we are now ready to take questions. Thank you very much.

Speaker Change: And indicates the relatively high degree of confidence we have on delivering against that whether that's by hedging out the the remaining sort of curve.

Speaker Change: Or or also indicating how.

Speaker Change: Conservative we think we're being on for example, beta assumptions and growth in volumes, but set that to one side and then that allows you to focus on the on the noninterest revenues.

Speaker Change: There to give you a sense.

Speaker Change: We think all of the businesses are poised to to grow their revenues and on noninterest side pretty considerably. When you just think of all the sources of noninterest revenues, we have I mean start with the corporate bank custody transactions payments the merchant acquiring business.

Speaker Change: The documentary custody business, I mean, we earn fees and across that business in lots of different ways.

James von Moltke: On the expense side, look, Q4 was messy. We'd advertised that there were some items that we were expecting. We obviously tried to give you as much of a forward look as we could. But as you can see on page 14, there were a bunch of things that sort of tumbled out, some of which caught us by surprise.

Speaker Change: The do co here with the overall sort of performance and level of activity in the marketplace.

Speaker Change: In asset management, and private bank, obviously the assets under management are the key driver and therefore, our inflows.

Operator: Anyone who has a question may press star and 1 at this time. Our first question today is from Chris Hallum from Goldman Sachs International. Please go ahead with your question. Good morning, everybody. Just two from me.

Speaker Change: Are encouraging to us it means our step off into 'twenty four is higher than the average considerably in both businesses that we ran out in 'twenty three and we also think in general investor behavior, particularly in the international private Bank wealth management business has been relatively muted. So we think there there's there's growth.

Operator: First, on distribution, looking at slide 18, I guess if I take all those numbers together, would I be wrong in saying that the $8 billion distribution target is, and then second on costs, obviously, there was a lot of one-offs in Q4, and I guess we're going to see the $5 billion underlying from Q1, as you mentioned. But just as we start the year, what can you see in terms of one-offs for 2024 and, maybe, for 2025 as well? Thank you, Chris, and good morning to everybody.

James von Moltke: I'd say, you know, as a great example, the FDIC assessment, the way it was formulated and crafted, you know, brought basically two years' worth of assessments into one quarter. [inaudible] And if I go to another question that frequently comes up on these calls, you know, what flexibility do we have to offset? While we think that FLOC flexibility is greater than it has been in the past, $50 million coming out of nowhere in late November and early December is not something you can really offset at that point in time.

Speaker Change: As well.

Speaker Change: And that then leads you to the investment bank, we've talked about where we what we see is a recovery in origination and advisory coupled with potentially market share expansion given the investments that we've made.

Speaker Change: And that's encouraging to us and we think Theres also run rate runway in FIC as we've continued to put.

Speaker Change: Investments in place across sort of.

James von Moltke: But your question is, you know, what comfort can we give you that the one-offs are coming to an end? You know, I think our goal is to deliver a much cleaner, more predictable profile. And, you know, the last few years have been anything but that, with transformation charges, obviously, the bank levy that introduces volatility, some of the litigation items that have come at us that we hadn't expected to fall out the way they did. And while we can, we can never guarantee that there won't be new things coming up.

Speaker Change: I won't call them the adjacencies, so within our footprint areas, where we think we're underperforming our potential and Robin and his team have been very deliberate executing on those that those investments we think that that also.

Christian Sewing: Thank you for your question. But let me start with the capital question, and then James will take the cost question. Look at this. Let me go back to Investor Day 2022, because I think it's important that we all understand the path which we have announced there, in particular with regard to the capital path and the $8 billion. Since then, since March 2022, we have consistently delivered on what we have told you, and that is no different today. And our focus has always been on the execution of our strategy and the commitment, actually, on the one hand, to focus on our clients.

Speaker Change: We will provide.

Speaker Change: A strong backdrop drop.

Speaker Change: In terms of to give you orders of magnitude obviously, the the origination advisory piece is is the largest in terms of our expectations in absolute terms.

Speaker Change: But it's also the market in our view that is that has been most muted and you know in the past couple of years. So so there we think of it less as growth from our foundation is rather than recovery.

Kian Abouhossein: If I look at the various risks and uncertainties that lie ahead, they're much fewer than those that lie behind us. And so I'd like to think that our path to normalization is close. There would be, I mean, if I look to 24, you know, we do expect some restructuring charges in 24, perhaps 400 million. That's still an elevated level relative to what I would think of as normalized, and clearly, our goal is that by 2025 we will have normalized in respect of both restructuring and severance and litigation. One of the reasons our investment in non-financial risk is so critical in control environments is to stop, you know So we do think we're much closer to providing a normalized picture and also to having the levers in our hands to offset, you know, adverse developments better. Okay, thanks. Really helpful. Our next question is from Kian Abouhossein from JP Morgan. Please go ahead. Kian, are you there? Or are you on mute?

Speaker Change: And that's something we see the pre conditions is clearly in place for.

Speaker Change: I just wanted to add one one item and just to give you a little bit of a CLO and also how stable. The revenues for instance in the corporate Bank has performed over the last six months.

Speaker Change: Of course, we have already seen in the corporate bank on a monthly basis, some kind of normalization on the NII, but that was always fully compensated already by fee income given our investments, which we have done and.

Christian Sewing: But, Chris, more and more what we have done on the management board of Deutsche Bank is actually to put the shareholders into the middle of what we are doing. Now with the investments which we have made, with the business, how it develops, with the inflection point we see on regulatory remediation, taking the regulatory increases into our capital and digesting them. We can clearly see that we are at an inflection point on our franchise, but in particular when it comes to our capital position. Hence, we can see that we now have room to further step up. And that is then the result that we said already last year in October, that based on efficient capital management, the operating strengths of the business, and the earnings profile, we see 3 billion of incremental capital at our disposal. And, of course, it is our aim that a significant part of these 3 billion will be actually distributed to our shareholders. Again, also with the view that it's now the time that shareholders go actually also into the center of what we are doing. Now, what does that mean concretely?

Speaker Change: And we feel that this is also happening in 24, given the mandates, which we have one you remember potentially that in October and the earnings call. We talked about the increase of one mandate with multinational corporates well that is continuing and obviously this is helping US now a lot also to go against the.

Speaker Change: NII normalization in the corporate bank. So it is actually a healthy it's a healthy distribution.

Going forward and if I, then think from a starting point of view that we have is James is just saying 57 billion of additional assets under management in the private bank and asset management and what already that brings us at the start of the year, which we already so to say captured.

Kian Abouhossein: Mr. Abouhossein, your line is open. Yeah, apologies, I was on mute. Thanks for taking my question. The first question is related to trading revenues, which you indicated. I think James has started very well. And I just wanted to see what you're comparing this to in this year and a year comparison and what is driving that, I assume, in fixed income. Secondly, can you also talk clearly in that context around the investment banking fee pool, where I think you also indicated momentum is continuing from what you said earlier at a recent conference. And then secondly, just coming back to cost, clearly the target is adjusted cost 5 billion, about 5 billion. And, just if you can talk a little bit about the levers that you have in case you will not be able to get to about 5 billion and what 5 billion actually means the plus minus 4% 5%. How should we do? Thank you. Let me start, and then James will for sure add more.

Speaker Change: That makes us highly confident that we come to that number.

Speaker Change: You just quoted the 30 billion for 'twenty four.

Speaker Change: And just briefly on the run rate look we've got to continue working it back down as you saw in 2023, it crept up a little bit. It was basically four nine for much of the year and then it could crept up to $5 billion as we've advertised it did kind of go further.

Speaker Change: There than we expected.

Speaker Change: But we'd like to bring it back to five and impossible below what that depends on us strong execution of our initiatives.

Speaker Change: Controlling if you like the throttling of investments so that we line them up with the crystallization of savings.

Christian Sewing: And also, Chris, if we compare this year to last year, last year in the January earnings call, we did not actually talk about and have the approval for a share buyback. You can see our confidence overall in the way the bank has done and in the way we are. And therefore, we asked for the approval of 675 million last year.

Speaker Change: And to Chris's point it at the at the outset, the absence of surprises but.

Speaker Change: But we feel like we've got the tools in our in our hands to achieve that and a lot of hard work lies ahead, but we've got a clear path.

Christian Sewing: Look, Kian, thanks for your question. I think on the trading revenues... We know it's obviously early days with January, but what are we doing? We are comparing it to last year We are comparing it to our own plan and we also look at the Consistency actually of the day-to-day trading also with regard to our VAR and it looks very healthy It looks very kind of a consistent picture across the different Sectors in the in the trading area So it is broad based Across the regions and I would say one region for the one reason for the strong start is is for sure That we have been investing and RUM has has really built up the FIC business over the last five years quarter by quarter and Of course the latest rating upgrade by S&P also helps I mean, these are all things which are then self-fulfilling so to say and you will remember my speeches That each rating upgrade also means that obviously clients are coming back are doing different and more trades with us We are changing the ISTAS all that is coming through and therefore we can see that Yes, January was good and nice and and better than we expected But I can see from the basis and foundation that in my view, this is a quite consistent trend, And I also expect, by the way, we said that 78% of the 23 revenue year were recurring revenues, which is a pretty good picture, and therefore I also expect with all the investments we have done in the, so to say, more stable business, that we have a solid and strong start into January.

Speaker Change: Do want to say is it proviso all of that.

Speaker Change: One of the things, we always found difficult and talking about absolute expense numbers as FX.

James von Moltke: We got the approval now. And that also means, to your second question there on the way for 2024, in case, and I'm very confident just looking at January, in case our business performance runs as we forecasted in Q1, I think there is an opportunity, and we should obviously aspire to go for a second approach this year. And that we already have the approval for the first one in January is, I think, a big difference from last year. Secondly, if I now look at the overall earnings capacity of the bank, how the revenues stack up, and also what James will tell you about the cost line, I can really clearly see that we can change the payout in terms of what we retain and what goes to the shareholders to a 50-50.

Speaker Change: It can move it around so so you have to.

Speaker Change: Keep that in mind, but in general we're managing to that ex FX run rate.

Speaker Change: Okay. So all else equal 5 billion is ideally.

Speaker Change: The peak as we look at.

Speaker Change: Yes, yes, I think so.

Speaker Change: Alright, thank you.

Speaker Change: The next question comes from Stuart Graham. Please go ahead with your question.

Oh Hi, Thank you for taking my question I had two please.

Stuart Graham: First is on return on tangible book value isn't as far as I see the 10% group target to 25, but I guess, that's still in place, but my question was on the return on tangible in the investment Bank was only 4% in 2023 after eight four in 'twenty, two and nine points or in 'twenty. One so what's your target return on tangible book for the investment Bank in 2000.

James von Moltke: And it is clearly our goal that the 50% increase which we committed to in the last years and which we have done, is also something which we want to do going forward. Of course, subject to our earnings forecast, but again, we are highly confident. And that would mean, you mentioned the number, you know where the consensus is, that obviously results in a number where I said, yes, I would like to actually go to consensus when it comes to share buybacks and capital distribution in total. And Chris, it's James. On the expense side, look... Q4 was messy. We'd advertised that there were some items that we were expecting. We obviously try to give you as much of a forward look as we can.

Stuart Graham: Please.

Speaker Change: And then secondly, geeky question on U S CRE, but the Q3 stage you said there was a 3 billion U S. CRE loans be modified the next 15 months, but you did $2 three already in Q4.

Speaker Change: Our revised expectation for the next 12 months in terms of the modifications.

Speaker Change: And do you have an update on the North point 9 billion stress loss estimates you gave at the Q3 stage. Please thank you.

Stuart Graham: Thanks Stuart look.

<unk> needs to be above 10% in 2025.

Stuart Graham: Very simply just it's a it's a kind of law of averages.

Stuart Graham: That we have.

Stuart Graham: <unk>.

Stuart Graham: What gives us real comfort there is we've been going through some amount of transition as well.

James von Moltke: But, as you can see on page 14, there were a bunch of things that sort of tumbled out, some of which caught us by surprise. I'd say, as a great example, the FDIC assessment, the way it was formulated and crafted, brought basically two years worth of assessments into the first quarter. And if I go to another question that frequently comes up on these calls, you know, what flexibility do we have to offset? While we think that flexibility is greater than it has been in the past, $50 million coming out of nowhere in late November and early December is not something you can really offset at that point in time. But your question is, you know, what comfort can we give you that the one-offs are coming to an end?

Stuart Graham: In the mix of business, where as we shift to more capital light revenue sources.

Stuart Graham: You should be able to see that a strong lift.

Stuart Graham: The investment Bank will also benefit from some of the cost saving initiatives that are there and they're allocated expenses. So we think their path to that.

Christian Sewing: On the fee income in the ONA, yes, we expect a recovery in 2024. It is always very hard to say when exactly, but, you know, we planned our investments last year in terms of the numis acquisition but also in terms of the hiring on the ONA side with regard to the long-term development of the bank. We wanted to invest in our capitalized business, and fortunately, we can now see the results of that.

Stuart Graham: 10, 10% well above 10%.

Is is reasonably clear.

Stuart Graham: On U S. CRE actually I don't have a number to hand.

Stuart Graham: The we are continuing to work through.

Stuart Graham: And I just want to make one distinction clear there are maturities of and extensions of loans and then modifications.

Stuart Graham: And so we think there is a.

Stuart Graham: About $10 billion of of either extension or maturity events to work through this year.

James von Moltke: You know, I think our goal is to deliver a much cleaner, more predictable profile. And, you know, the last few years have been anything but that with transformation charges, obviously the bank levy that introduces volatility, some of the litigation items that have come at us that we hadn't expected to fall out the way they did. And while you can never guarantee that there won't be new things coming up, if I look at the... the various risks and uncertainties that lie ahead, they're much fewer than those that lie behind us. And so I'd like to think that our path to normalization is close. There would be, I mean, if I look to 24, we do expect some restructuring charges in 24, perhaps 400 million. That's still an elevated level relative to what I would think of as normalized.

Christian Sewing: So also here, we can see a recovery in terms of mandates, a recovery in terms of market activities. And therefore, we do believe that, compared to 2023, we will see a nice uptick in revenues and the first results we have already seen in January. But again, I know it's just the first 30 days of the year.

Stuart Graham: Some of which will lead to modifications of various sorts and then applying the percentage that we show you.

Stuart Graham: Of 445% you would expect.

Stuart Graham: Some of that too obviously translate into into credit loss provisions. So hopefully that gives you a sense on both of those those questions can I just said Stuart because to your question on the investment Bank is obviously important and rightly to James.

Stuart Graham: Went to the composition of revenues.

Christian Sewing: But also, they are very promising and that what we wanted to achieve is coming through. On the cost side... Look, I, James just said it, and he will give you more details, but, We have a full focus after Q4 showing you already in Q1 that we hit a 5 billion run rate in Q1. This has daily management, daily monitoring, and weekly meetings in the management board. And I'm very confident that we will achieve that number of around $5.0 billion in Q1. Now, why am I overall so confident on that? Because of what James said.

Stuart Graham: Our investments with it in a capital light business, which will obviously help.

Stuart Graham: Secondly, our focus in bringing the cost down is on the infrastructure and you said that.

Stuart Graham: I would also like to mention that if you simply look at the market comparison of Deutsche Bank versus other peers and you look revenues over <unk>. The investment bank is doing actually already an excellent job. So it's now very much about the composition of the balance of revenues, which we which we are starting in <unk>.

Operator: And clearly, our goal is that by 2025, we will have normalized in respect of both restructuring and severance, and litigation. One of the reasons our investment in non-financial risk is so critical in control environments is to stop making ourselves vulnerable to those types of things. So we do think we're much closer to providing a normalized picture and also to having the levers in our hands to offset adverse developments better. Okay, thanks. Really helpful. Our next question is from Kian Abouhossein from JP Morgan. Please go ahead. Kian, are you there? Or are you on mute?

Stuart Graham: Started to address last year with our investments and I can see that the <unk> business is obviously coming back in 'twenty four and the infrastructure cost. So I think the investment bank on the top line versus other <unk> is actually already doing an excellent job and obviously, we expect that to be maintained and last but not least just for clarification.

Christian Sewing: I mean, if you take the $21.7 billion cost and we need to come to $20 billion, we will expect non-operating costs to decrease by around 700 million. We will expect approximately a reduction in bank levies in the amount of 350 to 400 million in 2024 versus 2023. That would bring us roughly to 20 and a half billion euros. And now we are looking at that what we are constantly managing with the front office and with the back offices under Rebecca's leadership. And that means we expect that we have another 400 million net reduction from all that is still coming out of our operational efficiency program. You know, the two and a half billion in gross reductions. We have delivered savings or expected savings of 1.3 billion, of which 900 million have been realized up to now.

Stuart Graham: You indicated at the start it's a full confirmation, yes, we clearly we clearly confirm the larger 10% out for the year 2025, there is no doubt.

Speaker Change: Okay. Thank you thanks for taking my questions.

Operator: Mr. Abouhossein, your line is open. Yeah, apologies, I was on mute. Thanks for taking my question. The first question is related to trading revenues, which you indicated. I think James has started very well. And I just wanted to see what you're comparing this to, is this a year-on-year comparison, and what is driving that, I assume, in fixed income. Secondly, can you also talk clearly in that context around the investment banking fee pool, where you also indicated momentum is continuing from what you said earlier at a recent conference. And then secondly, just coming back to cost, clearly the target is adjusted cost $5 billion, about $5 billion. And, just if you can talk a little bit about the levers that you have in case you will not be able to get to about five billion and what five billion actually means the plus minus four percent plus minus four percent. Thank you. Let me start, and then James will for sure add more.

Speaker Change: The next question comes from Nicholas Pain from Kepler. Please go ahead with your question.

Nicholas Pain: Yes. Thanks for taking my question I have two please the first one will be on the litigation right back.

Nicholas Pain: It was quite significant so we could have a bit more color on the.

Nicholas Pain: And what is it related to that piece and the second question is coming back on your U S. E T L. P.

Nicholas Pain: It has doubled in Q4 versus Q3, so I'd like to know what kind of assumption baked in our.

Nicholas Pain: Regarding U S retail piece or 2024, and how does it.

Nicholas Pain: Seeking to your.

Nicholas Pain: Cost of risk had some incentive for 25 to 30 bps for 2024, Thank you very much.

Speaker Change: Sure Nicholas James I'm happy to take the questions. Unfortunately, as you know we.

Speaker Change: Don't give detailed information about what goes in and out of the litigation provisions.

Christian Sewing: And the remainder comes from 600 million euros in Germany. In the optimization, Claudia is doing in particular on the business side with all the rationalization on the brand side, with all the investments which have been made into unity. And now we are getting the fruits out of this.

Speaker Change: <unk> is it's a large one.

And that is fair.

Speaker Change: I can't say more really it's been a long standing provision that we've held and now taken the view there isn't any more basis to retain it.

Christian Sewing: We have on technology and infrastructure another 700 million which we will reduce, application decommissioning, and so on. And then you know that we are for our core processes; we have invested a lot of money, and we will do this also going forward in the front to back process redesign, where we think we will get another 300 million out. Now against that, there is obviously some inflation, some business growth, but that makes us highly, highly confident that we can get the next 400 to 500 million of operational efficiency netted out, and that brings us to the 20 billion. The good thing is that is the long-term plan for 2024 and 2025, but if you see the bottom-up plan for the first quarter, we will achieve the 5.0 on a rounded basis this quarter. So Kian, I've entirely endorsed what Christian just went through, and it's just to put a couple of numbers behind it as well.

On CRE look I could imagine that the next couple of quarters Q1, Q2 could remain elevated.

Speaker Change: But I can also and.

Speaker Change: My own expectation is that it would begin to sort of ameliorate towards the second half of the year and into 2025.

Speaker Change: You know what you shouldnt be surprised if it were in line with 23.

Speaker Change: As a sort of a baseline expectation.

Christian Sewing: Look Kian, thanks for your question. I think about the trading revenues... We know it's obviously early days in January, but what are we doing? We are comparing it to last year. We are comparing it to our own plan. And we also look at the consistency, actually, of the day-to-day trading, also with regard to our VAR, and it looks very healthy. It looks, kind of, a consistent picture across the different sectors in the trading area. So, it is broad-based across the regions, and I would say one reason for the strong start is, for sure, that we have been investing, and RUM has really built up the FIG business over the last five years, quarter by quarter. And, of course, the latest rating upgrade by S&P also helps. I mean, these are all things which are then self-fulfilling, so to say.

Speaker Change: And in an ideal world it might be a little bit better than 23.

Speaker Change: We'll publish a revised stress scenario in in our annual report.

Speaker Change: I'd say thats, probably deteriorated a little bit given the circumstances, we see in the in the marketplace.

Speaker Change: And as you can see cumulatively, we're tracking closer to the level that we'd laid out.

Speaker Change: In our Q2 and Q3 reporting.

Speaker Change: That said I think it's important to say as you think about our forward guidance.

Speaker Change: If you take out the 450 across the various portfolios that we booked in commercial real estate in 2003 and take that out of the numbers you can see our CRP level that is running actually in a relatively normalized range and that's in a year in which we actually.

James von Moltke: And FIC, I would draw your attention to page 47 of the analyst deck, where we tried to give you a little bit more color on how the FIC franchise performs on a daily basis and relative to its VAR. And so it gives you a good kind of comparison as to what, you know, so far this quarter might look like compared to last year's first quarter. I think the second thing to add, you know, in the corporate finance wallet, if you look at some of the external providers of data on that marketplace, I think those providers would say that the wallet will grow by 15-20% this year. As Christian just outlined, that obviously still needs to happen, but we think the conditions are there.

Speaker Change: Incurred some some losses, particularly in the private bank that would that went beyond what we would normally see in the private bank Youll recall, a couple of idiosyncratic cases in the first quarter and then in the third and fourth quarter, some amount of what I'd call.

Speaker Change: Excess provisioning associated with the operational backlog backlog issue.

Christian Sewing: You will remember from my speeches that each rating upgrade also means that, obviously, clients are coming back, doing different and more trades with us. We are changing the ISTAs. All that is coming through, and therefore, we can see that, yes, January was good and nice and better than we expected.

Speaker Change: So we think that all gives us confidence that is.

Speaker Change: This cycle and in commercial real estate abates.

Speaker Change: Over the next six quarters, you should see a much more normalized credit loss provision emerge.

Speaker Change: Thank you very much.

Speaker Change: The next question.

Christian Sewing: But I can see from the basis and foundation that, in my view, this is a quite consistent trend. And I also expect, by the way, we said that 78% of the 23 revenue year was recurring revenues, which is a pretty good picture, and therefore, with all the investments we have made in the, so to say, more stable business, we have a solid and strong start in January. On the fee income in the ONA, yes, we expect a recovery in 2024. It is always very hard to say when exactly, but, you know, we planned our investments last year in terms of the numis acquisition but also in terms of the hiring on the ONA side with regard to the long-term development of the bank. We wanted to invest in our capitalized business, and fortunately, we can now see the results of that.

Speaker Change: Our next question is from anchor Rankin from RBC. Please go ahead.

Rankin: Thank you very much for taking my question I'm, just too small a number of questions.

James von Moltke: And as Christian just outlined, through Numis and the other hires, we've invested to participate in that. And then lastly, on expenses, to give you a sense of what we would think is a range of outcomes, you know, 1% rather than 4%, you know, is that we have the discipline. And for us, missing by 1% or 50 million would be a disappointment, and that gives you a sense of how we' Very clear. Thank you. Our next question is from Adam Terelak from Mediobanker. Please go ahead. Good morning.

Rankin: Just to clarify the payment from the resolution fund.

Rankin: But she didn't get in Q4, that's not included in any of your commentary about costs 24, 25, and maybe you can give us a bit of an indication of what's the magnitude.

Rankin: And then lastly, sorry, just one last question given the many moving parts can you help us a bit with your tax rate guidance. Thank you.

Speaker Change: Okay. Thank you for your question.

Yes.

We.

On the metal that's the German word for the payment from the German resolution fund.

Speaker Change: Here, we expect it to the repayment into the banks because we feel from a legal analysis that this is our money.

Speaker Change: We also made to various proposals to the German government together by the way was all banks the savings banks.

Christian Sewing: So, also here, we can see a recovery in terms of mandates, and a recovery in terms of market activities. And therefore, we do believe that, compared to 2023, we will see a nice uptick in revenues and the first results we have already seen in January. But again, I know it's just the first 30 days of the year.

Adam Terelak: Thank you for the questions. One on revenues and one on costs. On the revenue side, you've given a lot of detail on NII and NII trajectory. You've given us $32 billion for 2025, hinted at $30 billion still for this year. But could you put a little bit more meat on the bones, please?

Speaker Change: Cooperative banks and private banks, how we actually can use that money nicely in order to fund the transformation in Germany.

Speaker Change: It seems to be that the German government is doing another route and obviously, we need to review that from all kinds of prospectuses as you can imagine but to use clear.

Adam Terelak: That would be by division and expectations by division, but also on the non-NII growth in terms of what you see in terms of sea momentum and beyond the ONA piece, but also on loan growth as well, which clearly is baked into your NII assumptions. So some more color around revenue and revenue expectations and why we should be as bullish as you guys are would be great. And secondly, on cost and cost trajectory, you're talking about five billion for Q1. Clearly, the run rate for next year is going to be below that if we're going to get to 20 billion. So what does that adjusted cost look like this year? Do we actually end up kind of below five billion by the end of the year?

Speaker Change: Question for the guidance of $24 25. This is not part of our plan I E. There is no cost plan, where this has included because for the time being we assume that this is not coming our way but of course, we need to reviewed from a legal point of view.

Christian Sewing: But also, they are very promising, and that's what we wanted to achieve is coming through. On the cost side... Look, I, James just said it, and he will give you more details, but, a We have a full focus after Q4 showing you already in Q1 that we hit a 5 billion run rate in Q1. This has daily management, daily monitoring, and weekly meetings on the management board.

Speaker Change: Our capital plan for that matter.

Speaker Change: And then tax I would use a 30% rate in your modeling for 24.

Speaker Change: Obviously, you've always uncertainties and things that can change.

Speaker Change: That can change one thing that we are now at the end of his the DTA valuation adjustments, we've essentially written back the tax attributes.

Speaker Change: Actually three jurisdictions now of the United States, the U K and Italy.

Speaker Change: And therefore, we're you should see a normalized level of taxation.

James von Moltke: And so the adjusted cost print could be in kind of the 20 billion range for 2024. Obviously, the reported number might be higher, but I'm thinking about adjusted costs only at this stage. Thank you. So I can start; Christian may want to add something. So on revenues, Adam, first of all, we provided the additional disclosure on net interest revenues or Net Interest Income to try to sort of put that to one side. Unknown Speaker, Microsoft Office Word Document, MSWordDoc Word

Speaker Change: In the coming periods.

Speaker Change: Thank you very much thank.

Christian Sewing: And I'm very confident that we will achieve that number of around 5.0 billion in Q1. Now, why am I overall so confident on that? Because of what James said.

Speaker Change: Thank you Andre.

Speaker Change: Next question comes from Giulia Aurora <unk> from Morgan Stanley. Please go ahead.

Giulia Aurora: Hi, good morning, and thank you for all the new disclosure on particular on NII and costs.

Christian Sewing: I mean, if you take the $21.7 billion cost and we need to come to $20 billion, we will expect non-operating costs to decrease by around 700 million. We will expect approximately a reduction in bank levies in the amount of 350 to 400 million in 24 versus 23. That would bring us roughly to 20 and a half billion euros. And now we are looking at that what we are constantly managing with the front office and with the back offices under Rebecca's leadership. And that means we expect that we have another $400 million net reduction from all that is still coming out of our operational efficiency program. You know the $2.5 billion in gross reductions. We have delivered savings or expected savings of $1.3 billion, of which $900 million have been realized up to now.

Giulia Aurora: I want to ask you hi, there a.

Giulia Aurora: A question on capital.

Giulia Aurora: Typically there has been some headlines on potential M&A, which is something that you also looked at that.

Giulia Aurora: Domestic M&A, if you years ago, but that seems to be at odds with what we hear today.

James von Moltke: Document.8, Conservative, we think we're being on, for example, beta assumptions and growth in volumes. But set that to one side, and then that allows you to focus on the non-interest revenue. To give you a sense, we think all of the businesses are poised to grow their revenues on the non-interest side pretty considerably. When you just think of all the sources of non-interest revenues we have, I mean, start with the corporate bank, custody, transactions, payments, the merchant acquiring business, the documentary custody business, we earn fees across that business in lots of different ways.

Giulia Aurora: A big commitment to capital distribution, so how do we square these two and what it would take you to pursue some big M&A.

Giulia Aurora: So that's the first question and then the second question is more of a numbers question, sorry going back to the costs again I hear a lot of conviction on 20 billion by 'twenty five underlying.

Giulia Aurora: And the one off.

Giulia Aurora: But are you seeing so what is it.

Giulia Aurora: I'll wait for restructuring costs do you expect it to be $400 million 24, and then down to 200 and yeah any anything a comment on other potential one offs.

James von Moltke: They do cohere with the overall sort of performance and level of activity in the marketplace. In asset management and private banking, obviously, the assets under management are the key driver, and therefore, our inflows, you know, are encouraging to us. It means our step off into 24 is higher than the average considerably in both businesses that we ran at in 23. And we also think, in general, investor behavior, particularly in the international private bank wealth management business, has been relatively muted.

Speaker Change: Well, let me start and I'll have a quick thing to say, yes. It is at odds and what you hear from US is a commitment to distribution.

Okay.

Speaker Change: On costs.

Speaker Change: It's hard to say with with perfect accuracy.

Speaker Change: What it is that these litigation and restructuring and severance obviously, the latter is more in our control.

Christian Sewing: And the remainder comes from €600 million in Germany for the optimization Claudia is doing, in particular on the business side, with all the rationalization on the brand side, with all the investments which have been made into unity, and now we are getting the fruits out of this. We have $700 million in technology and infrastructure, which we will reduce, application decommissioning, and so on. And then you know that we have invested a lot of money in our core processes, and we will do this also going forward in the front-to-back process redesign, where we think we will get another $300 million out. Now, against that, there is obviously some inflation, some business growth, but that makes us highly, highly confident that we can get the next $400 million to $500 million of operational efficiency net out, and that brings us to $20 billion. The good thing is that is the long-term plan for 2024 and 2025, but if you see the bottom-up plan for the first quarter, we will achieve the 5.0 on a rounded basis this quarter. So Kian, I've entirely endorsed what Christian just went through, and it's just to put a couple of numbers behind it as well.

Speaker Change: If I look to 2025, I think 400 collectively for the two would be a reasonable planning assumption.

Speaker Change: And and we'd like to do better than that clear.

Speaker Change: Clearly one of the things that we're working to do is put the remaining restructuring items behind us now in 2024.

James von Moltke: So we think there's growth opportunity as well. And that then leads you to the investment bank. We've talked about where we see as a recovery and origination advisory, coupled with potentially market share expansion, given the investments that we've made. And that's encouraging to us. And we think there's also runway runway in FIC as we've continued to put, you know, investments in place across, I won't call them the adjacencies, so within our footprint, areas where we think we're underperforming our potential, and Ram and his team have been very deliberate in executing on those investments. We think that that also will provide a strong backdrop. In terms of to give you orders of magnitude, you know, obviously, But it's also the market, in our view, that has been most muted in the past couple of years. So there, we think of it less as growth from a foundation rather than recovery. And that's something we see the preconditions as clearly in place. I just want to add one thing.

Speaker Change: I've given you an estimate of what that looks like.

Speaker Change: And as I said earlier when does.

Speaker Change: Looking at our litigation sort of portfolio when does feel that.

Speaker Change: Sure.

It's changing in terms of kind of number and size of events.

Speaker Change: It's never a perfect.

Speaker Change: <unk> forecast, but.

Speaker Change: It's certainly something that we're hoping to work down to a more normalized level. So.

Speaker Change: I'll give you $3 to $400 million is probably a good planning assumption across the two.

Speaker Change: Angela I just want to emphasize that would put a James said on.

Speaker Change: On the M&A Theres nothing we can do about headlines we focus on ourselves and distributions to shareholders.

Speaker Change: At the heart of what we are doing.

Speaker Change: That's good thank you.

Speaker Change: Okay.

Speaker Change: Next question comes from Jeremy <unk> from BNP. Please go ahead.

Jeremy: Thank you just a couple of number detailed things. Please firstly on the capital returns can I just clarify what has been deducted from capital already is it 45 cents on the 675% buyback, but no extra have those both been deducted.

Jeremy: And linked to that is the constraint when you talked about the 50% payout.

Jeremy: So the returns done over the course of this year and in particular in the second half of this year is the constraint 50% of this year's earnings 2024, or constraint being 50% of last year's earnings which is a lot of it was accrued out of.

James von Moltke: And FIC, I would draw your attention to page 47 of the analyst deck, where we tried to give you a little bit more color on how the FIC franchise performs on a daily basis and relative to its VAR. And so it gives you a good kind of comparison as to what, you know, so far this quarter might look like compared to last year's first quarter. I think the second thing to add, you know, in the corporate finance wallet. If you look at some of the external sort of providers of data on that marketplace, I think those providers would say that the wallet will grow sort of 15 to 20 percent this year. As Christian just outlined, that obviously still needs to happen, but we think the conditions are there.

James von Moltke: And just to give you a little bit of a feel, Adam, also how stable the revenues, for instance, in the corporate bank have performed over the last six months. Of course, we have already seen in the corporate bank on a monthly basis some kind of normalization on the NII, but that was always fully compensated already by fee income given the investments that we have made. And we feel that this is also happening in 24, given the mandates which we have won.

Speaker Change: And then the last question was just on the costs I know, we've talked a lot about it but.

Speaker Change: In the divisions, both CIB and the corporate bank were about 100 million heavier in the quarter and I wasn't very clear I Wonder if you could just talk a bit more about how much of that was specific items or sort of year end.

Speaker Change: Xtra.

Speaker Change: Much of that falls away that'd be very helpful. Thank you.

Speaker Change: Sure Jeremy I think I got both of your questions but.

Speaker Change: Feel free to follow up.

Speaker Change: Aye.

We would like to stick to the 50%.

James von Moltke: You may remember that, potentially, in October on the earnings call, we talked about the increase in one mandate with multinational corporates. Well, that is continuing, and obviously, this is helping us now a lot also to go against the NII normalization in the corporate bank. So it is actually a healthy distribution going forward, and if I then think from a starting point of view that we have, as James was just saying, 57 billion of additional assets under management in the private bank and in asset management and what that brings us at the start of the year, which we already sort of say captured, that makes us highly confident that we will come to that number which you just quoted, the 30 billion for 2024. And just briefly on the run

Speaker Change: We think thats prudent.

James von Moltke: And as Christian just outlined, through Numis and the other hires, we've invested to participate in that. And then lastly, on expenses, to give you a sense of what we would think is a range of outcomes, 1% rather than 4%, you know. We have the discipline, and for us to miss by 1% or 50 million would be a disappointment. And that gives you a sense of how we're managing the whole thing. Thank you. Thank you. Thank you.

Speaker Change: And.

Speaker Change: Ideally not go beyond.

Speaker Change: By putting out the dividend guidance that we have I think the indication is management's confidence of its ability to grow earnings from here.

Speaker Change: If you think about <unk>.

Speaker Change: 50% of our net income to common for 2023.

Speaker Change: That actually gives us still a fair amount of room against the $1 six that we've talked about today.

Speaker Change: The your question about what is if you like disregarded in the ratio based on interim profit recognition. The answer is the $900 million of 45.

Operator: Very clear, thank you. Our next question is from Adam Terelak from Mediobanker. Please go ahead. Good morning.

Speaker Change: As disregarded in the in the December ratio.

Speaker Change: The 675 is not removed from that.

Speaker Change: <unk> hundred 75, we see as part of a discretionary program rather than the 50% payout ratio assumption, which in essence wasn't in place for 2020 in respect of 2023.

James von Moltke: Thank you for the questions. One on revenues and one on costs. On the revenue side, you've given a lot of detail on NII and NII trajectory. You've given us 32 billion for 2025, hinted at 30 billion still for this year. But could you put a little bit more meat on the bones, please?

Speaker Change: That 675 would represent about 20 basis points.

Speaker Change: And so in the rounding we'd be at 13 and a half maybe 13 six.

James von Moltke: Look, we've got to continue working it back down. As you saw, in 2023, it crept up a little bit. It was basically 4.9 for much of the year, and then it could creep up to 5 billion, as we'd advertised. It did kind of go further than we expected. But we'd like to bring it back to five and, if possible, below.

Speaker Change: Pro forma for the for the second buyback.

Speaker Change: In IV and <unk> costs I do want to just remind that CB took the lion's share of the FDIC assessment, So theres noise.

James von Moltke: That would be by division and expectations by division, but also on the non-NII growth in terms of what you see in terms of sea momentum and beyond the ONA piece, but also on loan growth as well, which clearly is baked into your NII assumptions. So some more color around revenue and revenue expectations and why we should be as bullish as you guys are would be great. And secondly, on cost and cost trajectory, you're talking about five billion for Q1. Clearly, the run rate for next year is going to be below that if we're going to get to 20 billion. So what does that adjusted cost look like this year? Do we actually end up kind of below five billion by the end of the year?

Speaker Change: This quarter on that as well as last year in the fourth quarter there was a.

Speaker Change: What I'll call a true up in the internal service cost allocations. So that's been a bigger feature.

James von Moltke: What that depends on is strong execution of our initiatives, controlling, if you like the throttling of investments, so that we line them up with the crystallization of savings. And to Chris's point at the outset, the absence of surprise. But we feel like we've got the tools in our hands to achieve that, and a lot of hard work lies ahead, but we've got it clear. I do want to say, as a proviso, all of that. One of the things we always found difficult in talking about absolute expense numbers is FX, you know, can move it around. So you have to, you know, keep that in mind, but, in general, we're managing to stick to that XFX run rate. [inaudible] Yeah, yes, I think so.

Speaker Change: For CB than the others in an IV of course, we've seen a fair amount of the investment in 2023, including obviously numerous in the fourth quarter. So so noise in both.

Speaker Change: And as we strip away now in Q1, you should see what I'll call as a cleaner run rate in both of those businesses.

Speaker Change: Thank you and just to be clear both of those things are in the adjusted costs. So the FDIC is in the adjusted costs its not been stripped out I was wondering if FDIC.

FDIC was not stripped out as one off so the only thing.

Speaker Change: Of all of that the only thing that's not an adjusted cost is the is the numerous impairment.

Speaker Change: Perfect. Thank you very much I appreciate it hey, Jeremy.

Speaker Change: Next question is from Andrew Coombs from Citi. Please go ahead.

James von Moltke: So on revenues, Adam, first of all, we provided the additional disclosure on net interest revenues, or net interest income, to try to sort of put that to one side. Hopefully, that's helpful disclosure and indicates the relatively high degree of confidence we have in delivering against that, whether that's by hedging out the remaining curve or also indicating how conservative we think we are on, for example, beta assumptions and growth in volumes. But set that to one side, and then that allows you to focus on the non-interest revenues. To give you a sense, we think all of the businesses are poised to grow their revenues on the non-interest side pretty considerably. When you just think of all the sources of non-interest revenues we have, I mean, start with the corporate bank, custody, transactions, payments, the merchant acquiring business, the documentary custody business, I mean, we earn fees across that business in lots of different ways that do cohere with the overall sort of performance and level of activity in the marketplace.

Good morning, two questions. Please firstly, thank you for the net interest income walk in.

Andrew Coombs: In the guidance or the decline that you gave for 2024, you talked about moving to Debbie.

Andrew Coombs: Leather on deposit pricing.

Andrew Coombs: If you could just elaborate on what your steady state deposit beta assumption is I think you paid or 40%, but perhaps you could elaborate that.

Stuart Graham: Thank you. The next question comes from Stuart Graham. Please go ahead with your question. Oh, hi. Thank you for taking my question. I had two, please.

Andrew Coombs: Secondly, coming back to the non net interest income right.

Andrew Coombs: It looks like you're targeting at one 6 billion a year and by 24 and 25, 9% 10%.

Andrew Coombs: Great.

Andrew Coombs: Youre guiding to.

Stuart Graham: The first is on return on tangible book value. As an aside, I didn't see the 10% group target for 25. But I guess that's still in place.

Andrew Coombs: Within that you've mentioned the four different comparison.

Andrew Coombs: Fixed income origination advisory wealth and asset management, and you said that origination and advisory.

Andrew Coombs: Component within that Pat talked about two things number one.

Andrew Coombs: Without the great between Expo.

James von Moltke: But my question was on the return on tangible book for the investment bank. It was only 4% in 2023 after 8.4 in 22 and 9.4 in 21. So what's your target return on tangible book for the investment bank in 25, please? And the second is a geeky question on USCRE.

Andrew Coombs: And secondly, how much of it is driven by industry wallet that is how much is market share gains. Thank you.

Speaker Change: So I'll speak to the beta look we've.

We sort of made a policy decision. If you if you like not to talk about betas in specific terms externally.

Speaker Change: What what we have seen and I think we've talked about this before.

Christian Sewing: In asset management and private banking, obviously, the assets under management are the key driver, and therefore, our inflows, you know, are encouraging to us. It means our step off into 24 is higher than the average considerably in both businesses that we ran at in 23. And we also think, in general, investor behavior, particularly in the international private bank wealth management business, has been relatively muted.

Speaker Change: Our portfolios are quite varied.

Speaker Change: By that I mean.

Speaker Change: The deposit portfolio breaks out between private bank and corporate Bank and then in each of those businesses really euros and.

James von Moltke: At the Q3 stage, you said there was just 3 billion USCRE loans to be modified in the next 15 months, but you did 2.3 already in Q4. So what's your revised expectation for the next 12 months in terms of modifications? And do you have an update on the 0.9 billion stressed lost estimate you gave at the Q3 stage, please? Thank you.

Speaker Change: And dollars and then of course, there's a there's a dynamic around what is site and what is termed so so theres theres different behaviors across those things.

Speaker Change: What we are.

James von Moltke: So we think there's growth opportunity as well. And that then leads you to the investment bank. We've talked about where we see as a recovery and origination advisory coupled with potentially market share expansion, given the investments that we've made. And that's encouraging to us. And we think there's also a runway in FIC as we've continued to put, you know, investments in place across sort of. I won't call them the adjacencies, so within our footprint, areas where we think we're underperforming our potential, and Rahm and his team have been very deliberate in executing on those investments. We think that that also will provide a strong backdrop. In terms of giving you orders of magnitude, you know, obviously, the origination advisory piece is the largest in terms of our expectations in absolute terms. But it's also the market, in our view, that has been most muted in the past couple of years. So there, we think of it less as growth from a foundation rather than recovery, and that's something we see the preconditions as clearly in place.

Speaker Change: Thinking could happen is that with the expectation of the market now that policy rates will start to go down that long term interest rates have gone down you may see a peak in terms of pass through while we may have in fact seen a peak in terms of pass through because now banks are reacting and our clients are reacting to to a changed interest rate environment.

Speaker Change: And hence we we could you can't say this was certainly that we could be near a peak of the pass through associated with the <unk>.

James von Moltke: Look, the IB needs to be above 10% in 2025, very simply because it's a kind of law of averages that we have, and What gives us real comfort there is that we've been going through some amount of transition as well in the mix of business, where as we shift to more capital-light revenue sources, you should be able to see that strong lift, And the investment bank will also benefit from some of the cost-saving initiatives that are there So we think their path to that, you know, 10%, well above 10%, is reasonably clear. On USCRE, Actually, I don't have a number to hand.

Speaker Change: The rate increase cycle, we've just been through.

Speaker Change: And now the question will flip to how sticky will customer rates be on the way down so a completely different dynamic.

Speaker Change: As I've said.

Speaker Change: Our.

Speaker Change: And we said this in Q3 and I guess I'd reiterate this.

Speaker Change: Our beta assumptions assume a continued convergence towards the models.

Speaker Change: As though that the trend was still upwards. Although there is a possibility as I say that we've peaked in may run flat for a period of time.

Speaker Change: Before before things start to move down so an interesting dynamic around around the betas.

Christian Sewing: We are continuing to work through it, but I just want to make one distinction clear. There are maturities and extensions of loans and then modifications, and so we think there's about 10 billion of either extension or maturity events to work through this year, some of which will lead to modifications of various sorts, and then applying the percentage that we show you of four, four and a half percent, you'd expect some of that to obviously translate into credit loss provisions, so hopefully that gives you a sense of both of those. Can I just add, Stuart, because your question on the investment bank is obviously important and rightly answered by James. He went to the composition of revenues and our investments we did in the capital light business, which will obviously help. Secondly, our focus in bringing the cost down is on the infrastructure, and he said that.

Speaker Change: In terms of the split.

Speaker Change: Don't want to go into too much detail, but I would say.

Speaker Change: Relatively evenly split.

Speaker Change: Between.

Speaker Change: Private Bank Corp.

Speaker Change: Corporate bank and the fixed income and currencies business. So it's so producing.

Speaker Change: Let's just say about half of the rise if I would put it in rough terms.

Christian Sewing: I just want to add one item and give you a little bit of a feel, Adam, for how stable the revenues, for instance, in the corporate bank have performed over the last six months. Of course, we have already seen in the corporate bank on a monthly basis some kind of normalization on the NII, but that was always fully compensated already by fee income, given the investments which we have made. And we feel that this is also happening in 24, given the mandates which we have won.

Speaker Change: And about the other half.

Speaker Change: And as I've as I've mentioned, we see <unk> as a recovery rather than a than at growth from a kind of a steady state level and in that number.

You might see two thirds of it would be the market and a third would be market share.

Speaker Change: But again those are those are very rough estimates that we're sort of looking at in our planning lots of things can move.

Speaker Change: But I hope what you take away from that is is how broad based the sources that we're looking at our and as we've talked about.

Speaker Change: Much of the.

Speaker Change: Revenue base, becoming predictable around input drivers an output revenues that it produces.

Christian Sewing: I would also like to mention that if you simply look at the market comparison of Deutsche Bank versus other peers and you look at revenues over RWA, the investment bank is doing an excellent job. So it's now very much about the composition and the balance of revenues, which we are starting and started to address last year with our investments. And I can see that the O&A business is obviously coming back in 24 and so are the infrastructure costs. So I think the investment bank on the top line versus RWA is actually already doing an excellent job.

Speaker Change: Alongside as we as we show you know relatively predictable net interest income stream, including incidentally the breakout now of what we're calling the banking book businesses, which include.

James von Moltke: And if I then think from a starting point of view that we have, as James was just saying, 57 billion of additional assets under management in the private bank and in asset management, and what that brings us at the start of the year, which we already sort of say captured, that makes us highly confident that we will come to that number, which you just quoted, the 30 billion for 24. And just briefly on the run rate, look, we've got to continue working it back down. As you saw in 2023, it crept up a little bit. It was basically four point nine for much of the year, and then it could have crept up to five billion as we'd advertised.

Speaker Change: The financing in FIC.

Speaker Change: So.

Speaker Change: Hopefully that's some good color on what we're seeing and it is driving that.

Speaker Change: The the raised guidance.

Speaker Change: Helpful. Thank you.

Speaker Change: Thanks, Andrew.

Speaker Change: Next question is from Andrew Lim. Please go ahead with your question.

Andrew Lim: Hi morning, Thanks for taking my question so Adam.

Andrew Lim: Firstly.

Andrew Lim: On a non NII guidance that you've lifted.

Andrew Lim: That's in large part of that is based on self help and investments.

Andrew Lim: But I got somehow also based on our market.

Christian Sewing: And obviously, we expect that to be maintained. And last but not least, just for clarification, you indicated it at the start. It's a full confirmation. Yes, we clearly confirm the larger 10% ROTE for the year 2025. There is no doubt.

Andrew Lim: Market growth.

Speaker Change: So I guess my question here is.

Speaker Change: What's your assumption for.

Speaker Change: With GDP growth.

Speaker Change: Backing your guidance, yet and in particular, Germany.

James von Moltke: It did kind of go further than we expected, but we'd like to bring it back to five and, if possible, below. What that depends on is strong execution of our initiatives, controlling, if you like, the throttling of of investments so that we line them up with the crystallization of savings. And to Chris's point at the outset, the absence of surprise.

Speaker Change: And then my second question is.

Speaker Change: As a black on your cost guidance.

Speaker Change: <unk> two 5 billion for <unk>.

Nicolas Payen: Okay, thank you. Thanks for taking my question. The next question comes from Nicolas Payen from Kepler.

Speaker Change: And I guess about 20 billion for the year, but typically you've had about $5 three flight with full bidding for the <unk> and then a bit less than 5 billion for the remaining quarters too.

Nicolas Payen: Please go ahead with your question. Yes, thanks for taking my question. I have two, please.

Speaker Change: To set the seasonality of a stronger revenues in the first quarter. So just wondering how youre thinking about what's happening with the seasonality through the year.

Speaker Change: Yeah, So Andrew thanks for the questions. So the bigger driver of the Q1 numbers as being the bank Levy and we've had to go through the adjustment sort of hoops on that and we think it was still to be finalized and determined but we think that noise will be removed.

James von Moltke: The first one will be on the litigation right back that you had; it was quite significant. So if you could have a bit more color on what it is related to, And the second question is coming back on your US CRE TLP. It doubled in Q4 versus Q3. So I'd like to know what kind of assumption you have backed in regarding US CRE TLP in 2024. And how does it fit into your cost of risk assumption of 2025? Sure, Nicolas, James, I'm happy to take the questions.

James von Moltke: But we feel like we've got the tools in our hands to achieve that, and a lot of hard work lies ahead, but we've got it clear. I do want to say, as a proviso, all of that, you know, one of the things we always found difficult in talking about absolute expense numbers is that FX, you know, can move it around. So, you have to, you know, keep that in mind. But, but in general, we're managing to stick to that XFX run rate. Okay, so all else equal, five billion is ideally the peak as we look out. Yeah, yeah, I think.

Speaker Change: And also Ironically, we've had to book some bank Levy in Q4.

Speaker Change: As of the way the dynamic works between the UK and the European Bank levies.

Speaker Change: So in a sense brought forward some some bank levy from 'twenty.

Speaker Change: 2024 into into 'twenty three.

Speaker Change: Youre right that there is some seasonality, especially with variable compensation bookings, but on a on a relative basis to a big number like $5 billion that that is not a massive driver.

Speaker Change: But something we'd look at and manage carefully given given the importance of it to our business.

James von Moltke: Unfortunately, as you know, we don't give detailed information about what goes in and out of the litigation provisions. Your point is, it's a large one, and that is fair. I can't say more, really, other than it's a longstanding provision that we've held and now taken the view there isn't any more basis to retain it. On CRE, look, I could imagine that the next couple of quarters, Q1, Q2, could remain elevated. But I can also, and my own expectation is that it would begin to sort of improve towards the second half of the year and into 2025. You know, you wouldn't be surprised if it were in line with 23 as a sort of baseline expectation. And in an ideal world, it might be a little bit better than 23.

Operator: Thank you. The next question comes from Stuart Graham. Please go ahead with your question. Oh, hi. Thank you for taking my question. I had two, please.

Speaker Change: On the assumptions of GDP growth, we just use a consensus view that consensus view.

Speaker Change: Obviously already reflects pretty muted.

Speaker Change: GDP growth performance, especially in Germany.

James von Moltke: The first is on return on tangible book value. As an aside, I didn't see the 10% group target for 2025, but I guess that's still in place. But my question was on the return on tangible assets in the investment bank. It was only 4% in 2023 after 8.4 in 2022 and 9.4 in 2021. So, what's your target return on tangible book for the investment bank in 2025, please? And the second is a geeky question about USCRE.

Speaker Change: So so zero to slightly negative relatively muted in Europe.

Speaker Change: But in the United States and.

Speaker Change: Asia, probably assumptions that right now a little bit behind what the consensus views.

Speaker Change: To be fair.

Speaker Change: GDP isn't necessarily the main driver of the the engines that we're talking about of the fee and commission income growth I'd.

Speaker Change: I'd say its more activity and.

Speaker Change: And by activity I mean, you know loan fees on trade finance, which has been relatively muted I mean.

Speaker Change:

Speaker Change: Transactions in terms of issuance, where we also in our trust and agency Securities get get business get fees on.

James von Moltke: We will publish a revised stress scenario in our annual report. I'd say that it's probably deteriorated a little bit given the circumstances we see in the marketplace, and as you can see, cumulatively, we're tracking closer to the level that we'd laid out in our Q2 and Q3 reporting. That said, and I think it's important to say, as you think about our forward guidance, If you take out the 450 across the various portfolios that we booked in commercial real estate in 23, and you know, take that out of the numbers, you can see a CLP level that is running actually in a relatively normalized range. And that's in a year in which we actually incurred some losses, particularly in the private bank, that went beyond what We had a couple of idiosyncratic cases in the first quarter.

James von Moltke: At the Q3 stage, you said there was just $3 billion of USCRE loans to be modified in the next 15 months, but you did $2.3 billion already in Q4. So what's your revised expectation for the next 12 months in terms of modifications? And do you have an update on the $0.9 billion stressed loss estimate you gave at the Q3 stage, please? Thank you.

On custody and also transfer agency and the like so.

Speaker Change: It is activity levels that that really are the driver and they co here more just with with corporate and household confidence then then specifically GDP growth assumptions.

Speaker Change: Many thanks for that thank you Andrew.

Speaker Change: Right.

Mate Nemes: Next question is from mate Nemes from UBS. Please go ahead.

Mate Nemes: Thank you.

Mate Nemes: Well done on the results.

James von Moltke: Look, IB needs to be above 10% in 2025, very simply because it's a kind of law of averages that we have. What gives us real comfort there is that we've been going through some amount of transition as well in the mix of business, where as we shift to more capital-light revenue sources, you should be able to see a strong lift. And the investment bank will also benefit from some of the cost-saving initiatives that are included in their allocated expenses.

Mate Nemes: Hey.

Mate Nemes: Couple of questions from my side.

Nemes: Just as a follow up you mentioned that the.

Nemes: Non.

<unk> growth could be perhaps coming maybe two thirds from from market growth and one third from market share growth.

Nemes: Looking at this.

Nemes: And the 32 billion.

Nemes: <unk> revenue target by.

Nemes: The 25.

Speaker Change: Could you give us a sense what.

Speaker Change: What degree of flexibility do you see on the cost side should perhaps.

Speaker Change: Some disappointment happen maybe from the market draw site.

Speaker Change: First you have to.

Speaker Change: Should there be a disappointment on revenues because clearly you're doing a whole lot.

James von Moltke: So we think their path to that, you know, 10 percent, well above 10 percent, is reasonably clear. On USCRE, actually, I don't have a number to hand, we are continuing to work through. I just want to make one distinction clear. There are maturities and extensions of loans and then modifications.

James von Moltke: And then in the third and fourth quarters, some amount of what I call, you know, excess provisioning associated with the operational backlog backlog issue. So, you know, we think that all gives us confidence that as this cycle in commercial real estate abates over the next six quarters, you should see a much more normalized credit loss provision emerge. Thank you very much.

Speaker Change: To hit that 20 billion adjusted cost target.

Speaker Change: The first question. The second one is on capital management and specifically M&A.

Speaker Change: Loud and clear that you are focused on the distribution mainly.

Speaker Change: But you're also looking at perhaps accelerating growth in some areas and invest the divisions.

Speaker Change: Do you see scope for perhaps bolt on acquisitions.

Anke Reingen: The next question. Our next question is from Anke Reingen from RBC. Please go ahead.

Speaker Change: Loomis here and there and if thats the case or do you see opportunities you can accelerate the organic growth and what would be your criteria. Thank you.

Anke Reingen: Thank you very much for taking my question. Just two small numbers questions. The first is just to clarify the payment from the resolution fund, which you didn't get in Q4. That's not included in any of your commentary about costs. 2425 and maybe you can give us a bit of an indication about the magnitude.

James von Moltke: And so we think there's, you know, about $10 billion of either extension or maturity events to work through this year, some of which will lead to modifications of various sorts, and then applying the percentage that we show you of 4, 4.5%, you'd expect some of that to obviously translate into credit loss provisions. So hopefully, that gives you a sense of both of those. Can I just add, Stuart, because your question on the investment bank is obviously important and rightly James went to the composition of revenues and our investments with it in the capital light business, which will obviously help. Secondly, our focus in bringing the cost down is on the infrastructure, and he said that I would also like to mention that if you simply look at the market comparison of Deutsche Bank versus other peers and you look at revenues over RWA, the investment bank is already doing an excellent job.

Thank you.

Speaker Change: Let me start with the last one.

Speaker Change: One cannot exclude that and if there is an opportunity in one of our core businesses that we have.

Speaker Change: And add on acquisition, which makes sense from a content point of view from a regional point of view from a client point of view and it fits into our culture I wouldn't exclude that but it's not it's not the main focus of our strategy and when we came to the previous questions and the headlines.

Christian Sewing: And then, lastly, sorry, just a numbers question. Given the many moving parts, can you help us a bit with your tax rate guidance? Thank you. Anke, thank you for your question. Yes, we... On the Altmittel, that's the German word for the payment from the German Resolution Fund, we clearly expected the repayment into the banks because we feel, from a legal analysis, that this is our money. We also made various proposals to the German government, together, by the way, with all banks, the saving banks, the cooperative banks, and the private banks, on how we could actually use that money nicely in order to fund the transformation in Germany. It seems to be that the German government is going another route, and obviously, we need to review that from all kinds of perspectives, as you can imagine, but to your clear question for guidance on 24 and 25, this is not part of our plan, i.e., there is no cost plan where this is included, because for the time being, we assume that this is not coming our way, but of course, we need to review it from a legal perspective, or Capital And then tax, I would use a 30% rate in your modeling for 24.

Speaker Change: I was referring to in particular, the big bigger M&A, which is not our priority.

Speaker Change: If we would to have an opportunity.

Speaker Change: I would always says we would potentially look at it but again, we feel that with the existing platform. We have with the existing franchise. We have we are really on a good path to achieve the goals or be it on the revenue side or on the cost side I like your questions on the cost side with regard to the flexibility.

Speaker Change: Yes, we have clearly an ambitious.

James von Moltke: So it's now very much about the composition and the balance of revenues, which we are starting and started to address last year with our investments. And I can see that the O&A business is obviously coming back in 2024, as are the infrastructure costs. I think the investment bank on the top line versus RWA is actually already doing an excellent job, and obviously, we expect that to be maintained. And last but not least, just for clarification, as you indicated at the start, it's a full confirmation. Yes, we clearly confirm the larger 10% ROTE for the year 2025. There is no doubt. Okay, thank you. Thanks for taking my question. The next question comes from Nicholas Payne from Kepler.

Speaker Change: Wrote on the on the non NII, but I can see already how in particular in the <unk> business our investments both in numerous by the way, which is running really well, but also the hiring of the people of which we have done.

Speaker Change: Adding it in terms of mandates and also revenues also when I look now at Q1.

Speaker Change: But clearly if it's not coming we have a dynamic process and that dominated processes that the business has to explain to the CFO, but also to me.

James von Moltke: Obviously, there are always uncertainties and things that can change. One thing that we are now at the end of is the DTA valuation adjustments. We've essentially written back the tax attributes in actually three jurisdictions now, the United States, the UK, and Italy. And therefore, you should see a normalized level of taxation in the coming period. Thank you very much.

Speaker Change: What they are doing if the revenues are not coming through now to be very honest, we build it for the long term and I think it's the right decision for us to expand in that business, but clearly if revenues would leg.

Speaker Change: Then obviously you have various levers be it in that area also the right comp we have other investments, which are part of our plan for those business, which we can reduce.

Ioana Patriniche: Thank you. The next question comes from Giulia Agoura on behalf of Morgan Stanley. Please go ahead.

Speaker Change: In this regard we would proactively obviously.

Operator: Please go ahead with your question. Yes, thanks for taking my question. I have two, please.

Giulia Aurora Miotto: Hi, good morning, and thank you for all the new disclosures, in particular on NII and COST. I want to ask you, however, a question on capital. Specifically, there have been some headlines on potential M&A, which is something that you also looked at, [inaudible] reducing. So what is the sort of run rate for restructuring costs? Do you expect it to be 400 million in 24 and then down to 200? And yeah, any comment on other potential ones?

Speaker Change: Counter counter measure.

Speaker Change: And just a couple of things I may have just clean up a statement of the of the market share versus market growth first of all the focus there was an origination advisory and I may have inverted what I, what I meant to say is two thirds, we think comes from market and one third from market share.

James von Moltke: The first one will be on the litigation right back that you had. It was quite significant. So if you could have a bit more color on what it is related to, and the second question is coming back on your US CRE TLP. It doubled in Q4 versus Q3. So I'd like to know what kind of assumption you have backed into regarding US CRE TLP. 2024, and how does it fit into your cost of risk assumption of 25, Sure, Nikolaos, James; happy to take the questions. Unfortunately, as you know, we don't give detailed information about what goes in and out of the litigation provisions. Your point is that it's a large one, and that is fair.

Speaker Change: Growth.

Speaker Change: But again those are those are estimates.

Speaker Change: I guess the one other thing just to point out on your capital question Slide 17 of the of the deck. What we tried to indicate is in the last 25% block there of how we would apply the capital is instead of stuff.

Giulia Aurora Miotto: Thanks. Well, let me start with I'll have a quick thing to say, yes, it is at odds. And what you hear from us is a commitment to distribution and on cost. It's hard to say with perfect accuracy what it is that these litigation and restructuring and severance, obviously, the latter is more in our control. If I look to 2025, I think 400 collectively for the two would be a reasonable kind of planning assumption, and we'd like to do better than that. Clearly, one of the things that we're working to do is to put the remaining restructuring items behind us now, in 2024. I've given you an estimate of what that looks like, and as I said earlier, looking at our litigation portfolio, one does feel that we are, You know, Now, it's never a perfect forecast, but it's certainly something that we're hoping to work down to a more normalized level.

Speaker Change: Is whatever we're not able to offset a CR three through the through our capital management measures.

Speaker Change: Then either ratio build more distribution.

Speaker Change: Would be built into that and also some some leeway to pursue bolt on acquisitions or have the capital impact of bolt on acquisitions, if we find the right opportunities.

Speaker Change: We've talked in the past what those opportunities typically look like.

James von Moltke: I can't say more, really. It's a longstanding provision that we've held and now taken the view there isn't any more basis to retain it. On CRE, look, I could imagine that the next couple of quarters, Q1, Q2, could remain elevated. But I can also, and my own expectation is that it would begin to sort of ease towards the second half of the year and into 2025. You know, you wouldn't be surprised if it were in line with 23 as a sort of baseline expectation, and in an ideal world, it might be a little bit better than 23. We will publish a revised stress scenario in our annual report.

Speaker Change: We've been clear that dws, the asset management business has been seeking opportunities and we would put capital to work there.

Speaker Change: We've looked at other opportunities over time, but but we I guess the thing to point to is just we would be disciplined about.

Speaker Change: <unk> targeting investment opportunities that are relatively speaking capital light and strategically on point.

Speaker Change: As numerous was with our global House Bank strategy.

Speaker Change: That's very helpful. Thank you.

Speaker Change: Thank you.

Yeah.

That was our last question for today, which concludes our Q&A session I would like to turn the conference back to <unk> for any closing comments.

Speaker Change: Thank you and thank you for joining us today and for your questions. If you have any further questions. Please don't hesitate to contact the Investor relations team and with that we look forward to speaking to you at our first quarter results.

James von Moltke: I'd say that it's probably deteriorated a little bit given the circumstances we see in the marketplace. And as you can see, cumulatively, we're tracking, you know, closer to the level that we'd laid out in our Q2 and Q3 reporting. That said, and I think it's important to say, as you think about our forward guidance... If you take out the 450 across the various portfolios that we booked in commercial real estate in 23, and take that out of the numbers, you can see a CLP level that is running actually in a relatively normalized range. And that's in a year in which we actually incurred some losses, particularly in the private bank, that went beyond what we would normally see in the private bank.

James von Moltke: I give you three to four hundred million is probably a good planning assumption across. I just want to emphasize that what James said about the M&A, there is nothing we can do about headlines. We focus on ourselves and distribution to shareholders, at the heart of what we are doing. Okay. Thank you. The next question comes from Jeremy Sieg from BNP. Please go ahead.

Speaker Change: Ladies and gentlemen, the conference has now concluded and you may disconnect. Your telephone. Thank you very much for joining and have a pleasant day goodbye.

Speaker Change: [music].

Speaker Change: Yeah.

Speaker Change: Sure.

Jeremy Sigee: Thank you. Just a couple of number detail things, please. Firstly, on the capital returns, can I just clarify what has been deducted from capital already? Is it the 45 cents and the 675 buyback, but no extra? Have those both been deducted? And linked to that is the constraint when you talk about the 50% payout for the returns done over the course of this year. And in particular, in the second half of this year, is the constraint 50% of this year's earnings in 2024, or is it 50% of last year's earnings, which a lot of it was accrued out of? And then the last question was just on costs. I know we've talked a lot about it, but in the divisions, both the IB and the corporate bank were about 100 million heavier in the quarter. And I wasn't very clear, I wonder if you could just talk a bit more about how much of that was specific items or sort of year-end, extra, and how much of that falls away. That would be very helpful.

Speaker Change: [music].

James von Moltke: You'll recall a couple of idiosyncratic cases in the first quarter, and then in the third and fourth quarters, some amount of what I call excess provisioning associated with the operational backlog issue. So we think that all gives us confidence that as this cycle in commercial real estate abates over the next six quarters, you should see a much more normalized credit loss provision emerge. Thank you very much.

Speaker Change: Yeah.

Speaker Change: [music].

Operator: The next question. Our next question is from Anke Reingen from RBC. Please go ahead.

James von Moltke: Thank you very much for taking my question. Just two small numbers questions. The first is just to clarify the payment from the resolution fund, which you didn't get in Q4. That's not included in any of your commentary about costs, 24, 25, and maybe you can give us a bit of an indication about the magnitude.

Speaker Change: Yeah.

Speaker Change: [music].

Christian Sewing: And then, lastly, sorry, just a numbers question. Given the many moving parts, can you help us a bit with your tax rate guidance? Thank you.

Speaker Change: Yeah.

Speaker Change: [music].

James von Moltke: Anke, thank you for your question. On the Altmittel, that's the German word for the payment from the German Resolution Fund, we clearly expected the repayment into the banks because we feel, from a legal analysis, that this is our money. We also made various proposals to the German government, together, by the way, with all banks, the saving banks, the cooperative banks, and the private banks, on how we could actually use that money nicely in order to fund the transformation in Germany. It seems to be that the German government is going another route, and obviously, we need to review that from all kinds of perspectives, as you can imagine. But to your clear question for guidance on 24 and 25, this is not part of our plan, i.e., there is no cost plan where this is included, because for the time being, we assume that this is not coming our way, but of course, we need to review it from a legal perspective, or Capital Plan for that matter. And then tax, I would use a 30% rate in your modeling for 24.

Jeremy Sigee: Thank you. Sure, Jeremy. I think I have got both of your questions, but feel free to follow up. We would like to stick to 50%. We think that's prudent and, you know, ideally, shouldn't go beyond that. By putting out the dividend guidance that we have, I think the indication is that management is confident of its ability to grow earnings from here. If you think about 50% of our net income going to common for 2023, that actually gives us still a fair amount of room against the 1.6 that we've talked about today. The question about what is, if you like, disregarded in the ratio based on interim profit recognition, the answer is the 900 million, the 45 cents, is disregarded in the December ratio. The 675 is not removed from that.

Speaker Change: Yeah.

Speaker Change: [music].

Operator: Obviously, there are always uncertainties and things that can change. One thing that we are now at the end of is the DTA valuation adjustments. We've essentially written back the tax attributes in actually three jurisdictions now, the United States, the UK, and Italy. And therefore, you should see a normalized level of taxation in the coming period. Thank you very much.

Speaker Change: Yeah.

[music].

James von Moltke: The 675 we see is as part of a discretionary program rather than the 50 percent payout ratio assumption, which in essence wasn't in place for 2020 in respect of 2023. That 675 would represent about 20 basis points, and so in the rounding, we'd be at 13.5, maybe 13.6 pro forma for that second buyback. In IB and CB costs, I do want to just remind you that CB took the lion's share of the FDIC assessment. So there's some noise this quarter on that, as well as last year in the fourth quarter. There was what I'll call a true up in the internal service cost allocation. So that's been a bigger feature for CB than the others.

Operator: Thank you. The next question comes from Julia Agoura from Morgan Stanley. Please go ahead.

Speaker Change: Yeah.

Speaker Change: Yes.

Operator: Hi, good morning, and thank you for all the new disclosure, in particular on NII and COST. I want to ask you, however, a question on capital. Specifically, there have been some headlines on potential M&A, which is something that you also looked at, domestic M&A, a few years ago. But that seems to be at odds with what we hear today, your big commitment to capital distribution. So how do we square these two

[music].

Speaker Change: Yeah.

Speaker Change:

Speaker Change: [music].

James von Moltke: And in IB, of course, we've seen a fair amount of investment in 2023, including obviously Numis in the fourth quarter. So, noise in both, and as we strip away now in Q1, you should see what I'll call a cleaner run rate in both. Thank you. And just to be clear, both of those things are in the adjusted costs. So the FDIC is in the adjusted costs. It's not been stripped out as a one-off.

Christian Sewing: And what would it take for you to pursue some big M&A? So that's the first question. And then the second question is more of a numbers question. Sorry, going back to the costs again, I hear a lot of conviction on 20 billion by 25 underlying and one of, you know, reducing. So what is the sort of run rate for restructuring costs? Do you expect it to be 400 million in 24 and then down to 200? And yeah, any similar comments on other potential ones of them?

James von Moltke: FDIC was not stripped out as a one-off. So the only thing that's different about all of that, the only thing that's not in the adjusted cost is the new misinvestment. Thank you very much indeed. The next question is from Andrew Coombs from Citi. Please go ahead.

Andrew Coombs: Good morning, two questions, please. Firstly, thank you for the net interest income walk. In the guidance for the decline that you gave for 2024, you talked about moving to a steady state level on deposit pricing. Perhaps you could just elaborate on what your steady state deposit beta assumption is. I think your peers are at 40%.

Andrew Coombs: But perhaps you could elaborate there. Within that, you mentioned the four different components, so fixed income, origination advisory, wealth, and asset management. And you said that origination advisory is the biggest component within that. But perhaps I could ask two things. Number one, can you split out the growth between those four? And secondly, how much of it is driven by industry wallet versus how much is market share gains? Thank you. I'll speak to the beta tester. Look, we've got it.

James von Moltke: Thanks. Well, let me start and I'll have a quick thing to say: yes, it is at odds. And what you hear from us is a commitment to distribution. And on cost... It's hard to say with perfect accuracy what it is that these litigation and restructuring and severance, obviously, the latter is more in our control. If I look to 2025. I think 400 collectively for the two would be a reasonable kind of planning assumption.

Speaker Change: Yeah.

Speaker Change: [music].

Speaker Change: Yeah.

Speaker Change: [music].

Christian Sewing: And we'd like to do better than that. Clearly, one of the things that we're working to do is put the remaining restructuring items behind us now in 2024. I've given you an estimate of what that looks like. And as I said earlier, you know, one does...

James von Moltke: We sort of made a policy decision, if you like, not to talk about betas in specific terms externally. What we have seen, and I think we've talked about this before, you know, our portfolios are quite varied, and by that I mean, the Deposit Portfolio breaks out between private bank and corporate bank, and then in each of those businesses, really euros and dollars. And then, of course, there's a dynamic around what is a site and what is a term. So there's different sorts of behaviors across those, and what we think could happen is that with the expectation of the market now that policy rates will start to go down, that long-term interest rates have gone down, you may see a peak in terms of pass-through, or we may have in fact seen a peak in terms of pass-through, because now banks are reacting, and our clients are reacting to a changed interest rate environment, and hence we can So it is a completely different dynamic.

James von Moltke: Looking at our litigation portfolio, one does feel that we're changing in terms of the kind of number and size of events. Now, it's never a perfect forecast, but it's certainly something that we're hoping to work down to a more normalized level. I give you $300 million to $400 million is probably a good planning assumption across the board. I just want to emphasize that what James said about the M&A, there is nothing we can do about headlines. We focus on ourselves and distribution to shareholders at the Hartford Weir.

Yeah.

Speaker Change: [music].

Speaker Change: Yeah.

Speaker Change: Okay.

[music].

Operator: Okay, thank you. The next question comes from Jeremy Sieg from BNP. Please go ahead.

Speaker Change: Yes.

Speaker Change: [music].

Operator: Thank you. Just a couple of number detail things, please. Firstly, on the capital returns, can I just clarify what has been deducted from capital already? Is it the 45 cents and the 675 buyback, but no extra? Have those both been deducted? And linked to that is the constraint: when you talk about the 50% payout, for the returns done over the course of this year, and in particular in the second half of this year, is the constraint 50% of this year's earnings, 2024, or is it 50% of last year's earnings, which a lot of it was accrued out of? And then the last question was just on costs. I know we've talked a lot about it, but in the divisions, both the IB and the corporate bank were about 100 million dollars heavier in the quarter. And I wasn't very clear; I wonder if you could just talk a bit more about how much of that was specific items or sort of year-end extra, and how much of that falls away. That would be very helpful.

Speaker Change: Yeah.

Speaker Change: [music].

James von Moltke: As I've said, you know, our beta assumptions assume a continued convergence. Towards the Model. As though the trend was still upwards, although there's a possibility, as I say, that we've peaked and may run flat for a period of time. Before things start to move down, so an interesting dynamic around around the beta. In terms of the split, you know, don't want to go into too much detail. But I would say it is relatively evenly split between Private Bank, Corporate Bank, and the Fixed Income and Currencies business. So producing, you know, let's just say about half of the rise, if I were to put it in rough terms, and about the other half in O&A, and as I've mentioned, we see O&A as a recovery rather than growth from a steady state level. And in that number, you might see two-thirds of it be the market and a third be market share. But again, those are just very rough estimates of what Lots of things can can move.

Speaker Change: Yeah.

Speaker Change: [music].

James von Moltke: Thank you. Sure, Jeremy, I think I have got both of your questions, but feel free to follow up. We would like to stick to 50%. We think that's prudent and, you know, ideally, shouldn't go beyond that. By putting out the dividend guidance that we have, I think the indication is that management is confident of its ability to grow earnings from here. If you think about 50% of our net income going to common for 2023, that actually gives us still a fair amount of room against the 1.6 that we've talked about today. The question about what is, if you like, disregarded in the ratio based on interim profit recognition, the answer is the 900 million, the 45 cents, is disregarded in the December ratio. The 675 is not removed from that.

Speaker Change: Okay.

Speaker Change: [music].

James von Moltke: But I hope what you take away from that is how broad-based the sources that we're looking at are. And as we've talked about, much of the revenue base is becoming predictable around input drivers and output revenues that it produces, alongside, as we show you now, a relatively predictable net interest income stream, including incidentally, the breakout now of what we're calling the banking book businesses, which include the financing and FIC. So.

Yes.

Speaker Change: [music].

Speaker Change: Yeah.

Speaker Change: [music].

James von Moltke: The 675 we see as part of a discretionary program rather than the 50% payout ratio assumption, which in essence wasn't in place in respect of 2023. That 675 would represent about 20 basis points. And so in the rounding, we'd be at 13.5, maybe 13.6 pro forma for that second buyback. On IB and CB costs, I do want to just remind you that CB took the lion's share of the FDIC assessment. So there's noise this quarter on that, as well as last year in the fourth quarter. There was a, what I'll call, true increase in the internal service cost allocation. So that's been a bigger feature for CB than the others.

Speaker Change: Yes.

James von Moltke: Hopefully, that's some good color on what we're seeing and is driving the raised guidance. Helpful, thank you. Thank you. Thanks, Andrew.

Andrew Lim: The next question is from Andrew Lim. Please go ahead with your question. Hi, morning.

Andrew Lim: Thanks for taking my questions. Firstly, on that non-NII guidance that you've left. It does seem a large part of that is based on self-help and investments.

Speaker Change: Yeah.

Speaker Change: [music].

James von Moltke: And in IB, of course, we've seen a fair amount of investment in 2023, including obviously Numis in the fourth quarter. So, there is noise in both, and as we strip away in Q1, you should see what I'll call a cleaner run rate in both of those. Thank you.

Andrew Lim: But I guess some part is also based on market growth. So I guess my question here is... What's your assumption? Your guidance, yeah, and in particular for Germany. And then my second question... is back on your cost guidance, your guidance of 5 billion for 1Q. I guess about 20 billion for the year, but typically, you've had about 5.3, 5.4 billion for the whole year and then a bit less than five billion for the remaining amount to reflect the seasonality or stronger revenues in the first quarter.

Speaker Change: Yeah.

Speaker Change: Okay.

Speaker Change: [music].

James von Moltke: And just to be clear, both of those things are in the adjusted costs. So the FDIC is in the adjusted costs. It's not been stripped out as a one-off.

Speaker Change: Yeah.

Speaker Change: [music].

James von Moltke: Yeah, FDIC was not stripped out as a one-off. So the only thing that's out of all of that, the only thing that's not in the adjusted cost is the new misinvestment. Thank you very much indeed. The next question is from Andrew Coombs from Citi. Please go ahead. Good morning.

James von Moltke: So just wondering how you were thinking about that and what was happening with the seasonality through the year. Yeah, so Andrew, thanks for the questions. So the bigger driver of the Q1 numbers has been the bank levy. And you know, we've had to go through the adjustment sort of hoops on that.

James von Moltke: Two questions, please. Firstly, thank you for the net interest income walk. In the guidance for the decline that you gave for 2024, you talked about moving to a steady state level on deposit pricing. Perhaps you could just elaborate on what your steady state deposit B2 assumption is. I think your peers are at 40%.

Yeah.

Speaker Change: [music].

James von Moltke: And we think it is still to be finalized and determined, but we think that noise will be removed, and also ironically, we've had to book some bank levy in Q4 because of the way the dynamic works between the UK and the European bank levies, so in a sense, we brought forward some bank levy from 2024 into 2023. You're right that there is some seasonality, especially with variable compensation bookings, but on But something we'd look at and manage, you know, carefully, given the importance of it to our business. On the assumptions of GDP, we just use a consensus view, and that consensus view obviously already reflects pretty muted. GDP growth performance, especially in Germany, so zero, slightly negative, relatively muted in Europe, but in the United States and Asia, probably assumptions that right now are a little bit behind what the consensus views, to be fair.

James von Moltke: But perhaps you could elaborate there. Secondly, coming back to the non-net interest income growth, it looks like you're targeting $1.6 billion a year in both 2024 and 2025, so 9% to 10%. It's a very healthy run rate that you're guiding to. Within that, you've mentioned the four different components, so fixed income, origination advisory, wealth, and asset management. You said that origination advisory is the biggest component within that. But perhaps I could ask two things. Number one, can you split out the growth between those four? Secondly, how much of it is driven by industry wallets versus how much is market share gains? Thank you for that. I'll speak to the beta tester. Look, we've got it.

Speaker Change: Yeah.

Speaker Change: [music].

James von Moltke: Its GDP isn't necessarily the main driver of of the engines that we're talking about in terms of fee and commission income growth. I'd say it's more activity. And by activity, I mean, you know, loan fees on trade finance, which has been relatively muted. I mean, you know, transactions in terms of issuance, where we also, in our trust and agency securities business, get business fees on, you know, on custody and also transfer agency and the like. So, you know, it's activity levels that really are the driver, and they cohere more just with corporate and household confidence than with, then specifically GDP growth. Many thanks for that. Thank you, Andrew. The next question is from Mate Nemes from UBS. Please go ahead.

Speaker Change: Yeah.

Speaker Change: Yes.

Speaker Change: [music].

James von Moltke: And then, of course, there's a dynamic around what is a site and what is a term. So there's different sorts of behaviors across those. What we think could happen is that with the expectation of the market now that policy rates will start to go down, that long-term interest rates have gone down, you may see a peak in terms of pass-through, or we may have in fact seen a peak in terms of pass-through because now banks are reacting, and our clients are reacting to a changed interest rate environment. And hence, we can't say this with certainty, but we could be near a peak of the pass-through associated with the... The rate increase cycle we've just been through... And now the question will flip to, how sticky will customer rates be on the way down? So it is a completely different dynamic. As I've said, you know, our, And we said this in Q3, and I guess I'd reiterate this. Our beta assumptions assume a continued convergence. Towards the Model

Speaker Change: Yeah.

Speaker Change: [music].

Speaker Change: Yeah.

James von Moltke: Thank you and well done on the results today. A couple of questions from my side. First as a follow up, you mentioned that the non-NII revenue growth could be perhaps coming maybe two thirds from market growth and one third from market share growth. Looking at this and the 32 billion implied revenue target by 2025 could you give us a sense what what what degree of flexibility do you see on the cost side should perhaps some disappointment happen maybe from the the market growth side well what levers do you have to pull should there be disappointment on revenues because clearly you are doing a lot to hit that 20 billion adjusted cost target that's the first question the second one is on capital management and specifically M&A I think we've heard you loud and clear that you're focused on the distribution mainly but you're also looking at perhaps accelerating growth and in some areas and investing in the divisions do you see scope for perhaps Bolton acquisitions along the lines of Numis here and there and if that's the case very very easy opportunities you can accelerate the organic growth and what would be your criteria thank you, Thank you. Let me start with the last one.

Speaker Change: [music].

James von Moltke: As though the trend was still upwards, although there's a possibility, as I say, that we've peaked and may run flat for a period of time before things start to move down. So an interesting dynamic around the beta. In terms of the split, you know, I don't want to go into too much detail, but I would say, relatively evenly split between private bank, corporate bank, and the fixed income and currencies business. So producing, you know, let's just say about half of the rise, if I were to put it in rough terms. And about the other half in O&A?

Speaker Change: Okay.

Christian Sewing: You know, one cannot exclude that. And if there is an opportunity in one of our core businesses for us to make an add-on acquisition, which makes sense from a content point of view, from a regional point of view, from a client point of view, and it fits into our culture, I wouldn't exclude that. But it's not the main focus of our strategy. And when we came to the previous questions and the headlines, I was referring, in particular, to bigger M&As, which are not our priority. But if we had an opportunity, I would always say we would potentially look at it. But again, we feel that with the existing platform we have, with the existing franchise we have, we are really on a good path to achieve the goals, be it on the revenue side or on the cost side. I like your questions on the cost side with regard to flexibility.

Speaker Change: Yeah.

Speaker Change: [music].

James von Moltke: And as I've mentioned, we see O&A as a recovery rather than growth from kind of a steady state level. And in that number, you might see two-thirds of it be the market, and a third be market share. But again, those are very rough estimates that we're sort of looking at in our planning. Lots of things can move.

James von Moltke: But I hope what you take away from that is how broad-based the sources that we're looking at are. And as we've talked about, much of the revenue base is becoming predictable around input drivers and output revenues that it produces, alongside, as we show you now, a relatively predictable net interest income stream, including incidentally the breakout now of what we're calling the banking book businesses, which include the financing and FIC. So hopefully, that's some good color on what we're seeing and is driving the raised guidance. Helpful, thank you.

Speaker Change: Yeah.

Speaker Change: Okay.

Speaker Change: [music].

James von Moltke: Thank you. The next question is from Andrew Lim. Please go ahead with your question. Hi, morning.

Yeah.

Speaker Change: Okay.

James von Moltke: Thanks for taking my questions. Firstly, on that non-NII guidance that you've lifted, it does seem a large part of that is based on self-help and investments.

Christian Sewing: I guess some part also based on market growth. So I guess my question here is... What's your assumption? Your guidance, yeah, and in particular for Germany. And then my second question... is back on your cost guidance, your guidance to 5 billion for 1Q. I guess about 20 billion for the year.

Speaker Change: Yeah.

Speaker Change: [music].

Christian Sewing: Yes, we clearly have an ambitious road ahead of us on the non-NII, but I can see already how, in particular, in the O&A business, our investments, both in Numis, which is running really well, but also in the hiring of people, which we have done, are adding in terms of mandates and also revenues. Also, when I look now at Q1, but clearly, if it's not coming, we have a dynamic process, and that dynamic process is that the business has to explain to the CFO, but also to me, what it is doing if the revenues are not coming through. Now, to be very honest, we are building it for the long term, and I think it's the right decision for us to expand that business. But clearly, if revenues lag, then obviously, you have various levers, be it in that area also as variable comp. We have other investments, which are part of our plan for those businesses, which we can reduce. In this regard, we would proactively, obviously, counter measures.

James von Moltke: But typically, you've had about 5.3, 5.4 billion for the first one, and then a bit less than five billion for the remaining, uh... to affect the seasonality of stronger revenues in the first quarter, so just wondering how you were thinking about that and what was happening with the seasonality. Yeah, so Andrew, thanks for the questions. The bigger driver of the Q1 numbers has been the bank levy. And, you know, we've had to go through some adjustment sort of hoops on that.

Speaker Change: Yes.

Speaker Change: Yeah.

James von Moltke: And we think it is still to be finalized and determined, but we think that noise will be removed. And also, ironically, we've had to book some bank levy in Q4 because of the way the dynamic works between the UK and the European bank levies. So, in a sense, it brought forward some bank levy from 2024 into 2023. You're right that there is some seasonality, especially with variable compensation bookings, but on a relative basis to a big number like $5 billion, that is not a massive driver. But something we'd look at and manage carefully given the importance of it to our business. On the assumptions of GDP growth, we just use a consensus view, and that consensus view obviously already reflects pretty muted, um, uh, GDP growth performance, especially in Germany, so zero, slightly negative, relatively muted in Europe but in the United States. Asia probably has assumptions that right now are a little bit behind what the consensus views, to be fair.

Speaker Change: [music].

Christian Sewing: And Mate, just a couple of things. I may have just cleaned up a statement of market share versus market growth. First of all, the focus there was on origination advisory. And I may have inverted what I meant to say is two thirds, we think, comes from the market and one third from market share growth. But again, those are just estimates. I guess the one other thing just to point out on your capital question, you know, slide 17 of the deck, what we tried to indicate is in the last 25% block there of how we would apply the capital is sort of stuff. It is whatever we're not able to offset in CRR3 through our capital management measures; then either a ratio build more distribution would be built into that, and also some leeway to pursue bolt-on acquisitions or have the capital impact of bolt-on acquisitions if we find the right opportunities.

Speaker Change: Yeah.

Speaker Change: [music].

Speaker Change: Yeah.

Speaker Change: Sure.

Speaker Change: Yeah.

James von Moltke: We've talked in the past about what those opportunities typically look like. You know, we've been clear that DWS, the asset management business, has been seeking opportunities, and we would put capital to work there. We've looked at other opportunities over time, but I guess the thing to point to is that we would be disciplined about targeting investment opportunities that are relatively capital light and strategically on point, as Numis was with our global house bank strategy.

Speaker Change: [music].

James von Moltke: GDP isn't necessarily the main driver of the engines that we're talking about in terms of fee and commission income growth. I'd say it's more activity, and by activity, I mean, you know, loan fees on trade finance, which is relatively muted. I mean, you know, transactions in terms of issuance, where we also, in our trust and agency securities, get business, get fees on, you know, on custody and also transfer agency and the like. So, you know, it is activity levels that really are the driver, and they correlate more just with corporate and household confidence than with, then specifically GDP growth. Many thanks for that. Thank you, Andrew. The next question is from Mate Nemes from UBS. Please go ahead.

James von Moltke: That's very helpful. Thank you. Thank you. That was our last question for today which concludes our Q&A session. I would like to turn the conference back to Ioana for any closing comments. Thank you and thank you for joining us today and for your questions. If you have any further questions, please don't hesitate to contact the Investor Relations team. And with that, we look forward to speaking to you at our first quarter results. Ladies and gentlemen, the conference is now concluded and you may disconnect your telephone. Thank you very much for joining and have a pleasant day. Goodbye. ??? [inaudible] [inaudible] ... ... ... ... ... ... ... ... ... [inaudible] www.microsoft.com.ca [inaudible] [inaudible] Unknown Speaker, Unknown Speaker, https://www.youtube.com.uk www.microsoft.com.ca Klaus Nieding, Alexandra Annecke, Klaus Nieding, ??? ??? ??? ??? ??? ??? www.microsoft.com.au [inaudible] www.microsoft.com.ca ??? ??? ??? ??? ??? ??? www.microsoft.com.ca ??? ??? ??? ??? ??? ??? www.microsoft.com.ca, Thank you for watching. Please subscribe to my channel. [inaudible]

Speaker Change: Yeah.

Speaker Change: [music].

Speaker Change: Yeah.

Speaker Change: Yes.

Speaker Change: [music].

James von Moltke: Thank you, and well done on the results today. There are a couple of questions from my side. First, as a follow-up, you mentioned that the non-NII revenue growth could be coming maybe two-thirds from market growth and one-third from market share growth. Looking at this and the 32 billion implied revenue target by 2025, could you give us a sense of the degree of flexibility do you see on the cost side? Should perhaps some disappointment happen, maybe from the market growth side? Well, what levers do you have to pull should there be a disappointment on revenues? Because clearly, you are doing a lot to hit that 20 billion adjusted cost target. That's the first question.

Speaker Change: Yes.

Speaker Change: Yeah.

Speaker Change: [music].

Speaker Change: Yeah.

Speaker Change: [music].

Yeah.

Christian Sewing: The second one is on capital management and specifically M&A. I think we've heard you loud and clear that you're focused on distribution mainly, but you're also looking at perhaps accelerating growth in some areas and investing in the divisions. Do you see scope for perhaps Bolton acquisitions along the lines of Numis here and there? And if that's the case, you can accelerate organic growth, and what would be your criteria?

Christian Sewing: Thank you. Thank you. Let me start with the last one.

James von Moltke: You know, one cannot exclude that. And if there is an opportunity in one of our core businesses for us to make an add-on acquisition, which makes sense from a content point of view, from a regional point of view, from a client point of view, and it fits into our culture, I wouldn't exclude that. But it's not the main focus of our strategy. And when we came to the previous questions and the headlines, I was referring, in particular, to bigger M&As, which are not our priority. But if we had an opportunity, I would always say we would potentially look at it. But again, we feel that with the existing platform we have, with the existing franchise we have, we are really on a good path to achieve the goals, be it on the revenue side or on the cost side.

James von Moltke: I like your questions on the cost side with regard to the flexibility. Yes, we have clearly an ambitious road ahead of us in the non-NII, but I can see already how, in particular, in the O&A business, our investments, both in Numis, which is running really well, but also in the hiring of the people, which we have done, are adding in terms of mandates and also revenues, also when I look now at Q1. But clearly, if it's not coming, we have a dynamic process, and that dynamic process is that the business has to explain to the CFO, but also to me, what they are doing if the revenues are not coming through. Now, to be very honest, we are building this for the long term, and I think it's the right decision for us to expand that business. But clearly, if revenues lag, then obviously, you have various levers, be it in that area also variable compensation; we have other investments which are part of our plan for those businesses, which we can reduce in this regard; we would proactively, obviously, counter measures.

James von Moltke: And Mate, just a couple of things. I may have just cleaned up a statement of market share versus market growth. First of all, the focus there was on origination advisory. And I may have inverted what I meant to say is 2 thirds, we think, come from the market and 1 third from market share growth. But again, those are estimates.

James von Moltke: I guess the one other thing just to point out on your capital question, you know, slide 17 of the deck, what we tried to indicate in the last 25% block there of how we would apply the capital is sort of stuff. It is whatever we're not able to offset in CRR3 through our capital management measures; then either a ratio build, more distribution would be built into that, and also some leeway to pursue bolt-on acquisitions or have the capital impact of bolt-on acquisitions if we find the right opportunities. We've talked in the past about what those opportunities typically look like. You know, we've been clear that DWS, the asset management business, has been seeking opportunities, and we would put capital to work there. We've looked at other opportunities over time, but I guess the thing to point to is that we would be disciplined about targeting investment opportunities that are relatively capital-like and strategically on point, as Numis was with our global house bank strategy.

James von Moltke: That's very helpful. Thank you. Thank you. That was our last question for today, which concludes our Q&A session. I would like to turn the conference back to Iona for any closing comments. Thank you, and thank you for joining us today and for your questions. If you have any further questions, please don't hesitate to contact the Investor Relations team.

And with that, we look forward to speaking to you at our first quarter results. Ladies and gentlemen, the conference is now concluded and you may disconnect your telephone. Thank you very much for joining and have a pleasant day. Goodbye. ♪♪♪ ♪♪♪ ♪♪♪ ♪♪ ♪♪ ♪♪ ♪♪ ♪♪ ♪♪ ♪♪ ♪♪ ♪♪ ♪♪ ♪♪ ♪♪ ♪♪ ♪♪ ♪♪ ♪♪ ♪♪ ♪♪ ♪♪ ♪♪ ♪♪ ♪♪ ♪♪ ♪♪ ♪♪ ♪♪ ♪♪ ♪♪ ♪♪ ♪♪ ♪♪ ♪♪ ♪♪ ♪♪ ♪♪ ♪♪ ♪♪ ♪♪ ♪♪ ♪♪ ♪♪ ♪♪ Thank you for watching! ♪♪ ♪♪ ♪♪ ♪♪ ♪♪ ♪♪ ♪♪ ♪♪ ♪♪ ♪♪ ♪♪ ♪♪ ♪♪ , , , , , , , , , , , , , , ♪♪ ♪♪ ♪♪ ♪♪ ♪♪ ♪♪ ♪♪ ♪♪ ♪♪ ♪♪ ♪♪ ♪♪ ♪♪ ♪♪ ♪♪ ♪♪ ♪♪ ♪♪ ♪♪ ♪♪ ♪♪ ♪♪ ♪♪ ♪♪ ♪♪ ♪♪ ♪♪ ♪♪ ♪♪ ♪♪ ♪♪ ♪♪ ♪♪ ♪♪ ♪♪ ♪♪ ♪♪ ♪♪ ♪♪ ♪♪ ♪♪ ♪♪ ♪♪ ♪♪ ♪♪ ♪♪ ♪♪ ♪♪ ♪♪ ♪♪ ♪♪ ♪♪ ♪♪ ♪♪ ♪♪ ♪♪ ♪♪ ♪♪ Shantanu Karkh morality, Shantanu Karkh друг CSIRO, Shantanu Karkh supernatural, Shantanu Karkh quarantine,

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