Q3 2024 Deutsche Bank AG Earnings Call

Ladies and gentlemen, welcome to the Q3 'twenty 'twenty four analyst conference call and live webcast I'm, a what's the chorus call operator, I would like to remind you that all participants will be in a listen only mode and the conference is being recorded the presentation will be followed by a question answer session you can read.

Several questions at any time by pressing star one on your telephone.

Speaker Change: Alright assistance, Please press star and zero the conference must not be recorded for publication or broadcast at this time, it's my pleasure to hand over to you on our popular <unk> head of Investor Relations. Please go ahead.

Ioana Patriniche: Thank you for joining us through the course of 2020 full 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 on the Investor Relations section of our website DB com before we get started let me.

Ioana Patriniche: Remind you that the presentation contains forward looking statements, which may not develop as a currently expect we that's all I'll ask you to take notice of the propulsion warning at the end of our materials with that let me hand over to Christian.

Christian Saving: Thank you your honour and a warm welcome from me I'm delighted to be discussing our third quarter and nine month results with you today. These show our ongoing strong operating performance.

Christian Saving: Further reinforcing our confidence in our 2024 ambitions in 2025 financial targets.

Christian Saving: I'm, particularly pleased that our continued intense client engagement has supported momentum in all businesses. This has enabled us to generate revenues of $22 9 billion euros in the first nine months.

Christian Saving: Putting us well on track towards our goal of 30 billion euros for the year.

Christian Saving: We recorded the.

Christian Saving: Third successive quarter of adjusted costs at 5 billion Europe in line with our 2024 guidance underpinning our forward trajectory.

Christian Saving: We are pleased with the settlements we achieved in August and September in the Postbank takeover litigation matter equivalent to around 60% of the total claims by value.

Christian Saving: This resulted in a litigation release that supported our reported pre tax profit of $2 3 billion euros.

Christian Saving: Over 500 million euros year on year, and our reported post tax return on tangible equity of 10, 2% in the third quarter.

Christian Saving: For the first nine months, our reported <unk> stood at 6%, excluding the Postbank takeover litigation related impact.

Christian Saving: <unk> was seven 8% up from 7% in the prior year period.

Christian Saving: Asset quality remained stable despite the sequential increase in our provision for credit losses, which James will go through in more detail.

Christian Saving: Importantly, we expect provisions to reduce towards more normalized levels going forward particular in expectation of improvement in commercial real estate over the next quarters.

Our CET one ratio of 13, 8% reflects our strong organic capital generation.

Christian Sewing: This puts us on a clear path to distribute capital to our shareholders as planned, and we have now sought authorization from the ECB for our next share buy-back.

Christian Saving: This puts us on a clear path to distribute capital to our shareholders as planned and we have now sort authorization from the ECB for our next share buyback.

Christian Sewing: Let me now discuss in more detail some of the drivers of our nine months results on Slide 3.

Christian Saving: Let me now discuss in more detail some of the drivers of our nine month results on slide three.

Christian Saving: Disciplined execution of our global <unk> strategy is driving steadily improving performance and operating leverage.

Christian Sewing: Disciplined execution of our global housing strategy is driving steadily improving performance and operating leverage. Pre-provision profit grew by 17% year and year to 7 billion euros in the first nine months, with operating leverage of 5%.

Christian Saving: Pre provision profit grew by 17% year on year to <unk> 7 billion in the first nine months with operating leverage of 5% both excluding the Postbank takeover litigation related impact.

Christian Sewing: Both excluding the postponed takeover litigation-related impact. Gross was driven by both revenue momentum and cost discipline. Nine months revenues grew 3% year and year, with around 75% of revenues coming from more predictable income streams. Reported non-interest revenues were up 14% year and year, with continued strong gross and commissions and fee income of 9%.

Christian Saving: Growth was driven by both revenue momentum and cost discipline.

Christian Saving: Nine months revenues grew 3% year on year with around 75% of revenues coming from more predictable income streams.

Christian Saving: Reported non interest revenues were up 14% year on year.

With continued strong growth in commissions and fee income over 9%.

Christian Sewing: This demonstrates that our strategy of growing our capital-life business is paying off. At the same time, net interest income in our key banking book segments remains stable and better than anticipated at the beginning of the year. We remain focused on expense discipline, keeping our adjusted costs to 15.1 billion euros, or 5 billion per quarter. As we continue to offset inflation while allowing for investments by delivering savings from our operational efficiency program. Our cost income ratio excluding postponed litigation related impacts improved to 69% from 73% year and year.

Christian Saving: This demonstrates that our strategy of growing our capital light business is paying off.

Christian Saving: At the same time net interest income in our key banking book segments remained stable.

And better than anticipated at the beginning of the year.

Christian Saving: We remain focused on expense discipline, keeping our adjusted cost of $15 1 billion euros of $5 billion per quarter, as we continue to offset inflation, while allowing for investments by delivering savings from our operational efficiency program.

Christian Saving: Our cost to income ratio, excluding postbank litigation related impacts improved to 69% from 73% year on year.

Christian Saving: Now, let's look at the franchise achievements across our business on slide four.

Christian Sewing: Now let's look at the franchise achievements across our business on Slide 4. The corporate banking increased the number of deals one with multinational clients by 18% compared to the first nine months of the prior year. We also had strong momentum in commissions and fee income, which grew by 5% across all regions. At the same time, NII remained resilient, supported by continued pricing discipline and deposit gross of 8% year and year. In the investment bank, we increased activity so far this year with our priority institutional clients by 11%. Demonstrating the ongoing commitment and focus of our business and coverage teams in supporting our clients.

The corporate bank increased the number of deals one with multinational clients by 18% compared to the first nine months of the prior year.

Christian Saving: We also had strong momentum in commissions and fee income, which grew by 5% across all regions.

Christian Saving: At the same time NII remained resilient supported by continued pricing discipline and deposit growth of 8% year on year.

Christian Saving: In the investment bank, we increased activity so far this year.

Christian Saving: With our priority institutional clients by 11% demonstrating the ongoing commitment and focus of our business and coverage teams and supporting our clients.

Christian Saving: Nine months revenues in fixed income and currencies were up.

Christian Sewing: 9 months revenues in fixed income and currencies were up 5% year and year, supported by a 5% increase in financing revenues, even compared to a strong prior year. Looking at the third quarter, thick demonstrated a strong performance and was up by 11% year and year. Origination and advisory grew revenues by 58% and increased its global market share year-to-date compared to the full year 2023. While we maintained our number one ranking in our home market. The private bank sees further momentum with 27 billion euros of net inflows and grew non-interest revenues by 5% year and year.

Christian Saving: 5% year on year supported by a 5% increase in financing revenues.

Christian Saving: Compared to a strong prior year.

Christian Saving: Looking at the third quarter FIC demonstrated a strong performance and was up by 11% year on year.

Christian Saving: Origination and advisory grew revenues by 58% and increased its global market share year to date compared to the full year 2023, while we maintained our number one ranking in our home market.

Christian Saving: The private bank sees further momentum with 27 billion of net inflows and grew non interest revenues by 5% year on year, driven by higher margin products and volumes across both client segments.

Christian Sewing: Driven by higher margin products and volumes across both clients.

Christian Sewing: The division continues to transform its personal banking unit with around 50 branch closures year to date and more to come. The business also announced to further optimization of our Deutsche Bank branch network in the quarter, which will start next year. This was boosted by continued strong inflows into our diverse product suite, which should support future revenues.

Christian Saving: The division continues to transform its personal banking unit.

Christian Saving: Was around 50 branch closures year to date and more to come the business also announced two.

Christian Saving: Further optimization of our Deutsche Bank branch network in the quarter, which will start next year.

Christian Saving: Asset management grew assets under management by 687 billion year to date to 963 billion.

Christian Saving: This was boosted by continued strong inflows into our diverse product suite.

Christian Saving: Which should support future revenues.

Christian Sewing: The group also made progress on its sustainability strategy, including ESG rating upgrades. In October, S&P's corporate sustainability assessment was upgraded to 66 and is now within the top tensile of the financial industry. The MSCI rating was upgraded to double A from single A.

Christian Saving: The group also made progress on our sustainability strategy, including ESG rating upgrades.

Christian Saving: Tober S&P's corporate sustainability assessment was upgraded to <unk> 66, and is now within the top decile of the financial industry.

Christian Saving: The MSCI rating was upgraded to double AA from singular.

Christian Sewing: Let me turn to our progress against our strategic objectives on slide 5. Our third quarter results demonstrate our continued progress across all three pillars of our global housing strategy. Starting with revenue growth, our well diversified and complementary business mix delivered a compound annual growth rate of 5.6% since 2021, in line with our upgraded target range, and we expect it to increase from here. For the remainder of the year, we anticipate continued momentum in commissions and fee income driven by ongoing high client engagement and our franchise strengths, while NII remains stable.

Christian Saving: Let me turn to our progress against our strategic objectives on slide five.

Christian Saving: Our third quarter results demonstrates our continued progress across all three pillars of our global <unk> strategy.

Christian Saving: Starting with revenue growth are well diversified and complementary business mix delivered a compound annual growth rate of five 6% since 2021 in.

Christian Saving: In line with our upgraded target range and we expect it to increase from here.

Christian Saving: For the remainder of the year, we anticipate continued momentum in commissions and fee income driven by ongoing high client engagement and our franchise strengths, while NII remained stable.

Christian Sewing: This gives us full confidence in reaching our revenue ambition of 30 billion euros for the full year 2024, providing a strong step of into 2025. Moving to costs, we continue to deliver on our operational efficiency program, having completed measures with delivered or expected growth savings of 1.7 billion euros, almost 70% of our target, with around 1.5 billion euros in savings already realized. We have made further progress on workforce reductions, including 600 FTEs in the third quarter, bringing the total number to more than 90% of the 2024 year-end target. The achieved progress today and efficiency still in the pipeline will support our adjusted cost run rate for the remainder of 2024 and further reductions in 2025 to meet our objective of around 20 billion euros in non-interest expenses while continuing to invest in business growth, technology, and controls.

Christian Saving: This gives us full confidence in reaching our revenue ambition of 30 billion for the full year 2020 for providing a strong step off into 2025.

Christian Saving: Moving to costs, we continue to deliver on our operational efficiency program, having completed measures with delivered our expected gross savings of $1 7 billion.

Christian Saving: Almost 70% of our target with around $1 5 billion in savings already realized.

We have made further progress on workforce reductions, including 600 Ftes in the third quarter, bringing the total number to more than 90% of the 2024 yearend target.

Christian Saving: They achieve progress to date and efficiencies still in the pipeline will support our adjusted cost run rate for the remainder of 2024 and further reductions in 2025 to meet our objective of around 20 billion in non interest expenses.

Christian Saving: While continuing to invest in business growth technology and controls.

Christian Sewing: Lastly, we delivered a further benefit of 3 billion euros of RWA equivalent reductions in the third quarter, driven by data and process improvements. This brings total RWA equivalent reductions from capital efficiency measures to 22 billion euros, which puts us inside of our end 2025 target range of 20 to 30 billion euros, more than one year early. We expect to achieve further reductions from sectoralizations, as well as data and process enhancements, and we continue to work on finding further incremental optimization opportunities to exceed our target.

Christian Saving: Lastly.

Christian Saving: We delivered a further benefit of 3 billion euros of <unk> equivalent reductions in the third quarter.

Christian Saving: Driven by data and process improvements.

Christian Saving: <unk> total <unk> equivalent reductions from capital efficiency measures to 22 billion euros.

Christian Saving: Which puts us inside of our and 2025 target range of 20 to 30 billion euros more than one year early.

Christian Saving: We expect to achieve further reductions from secretary <unk> as well as the data and process enhancements and we continue to work on finding further incremental optimization opportunities to exceed our target.

Christian Sewing: Let me conclude with a few words on our strategy on slide six. Our operating performance in the first nine months shows that our global house bank strategy positions us well to serve our clients. Our clients' needs and continues to deliver growth and profitability. We have firm confidence in reaching a R O T E of at least 10% next year.

Let me conclude with a few words on our strategy on slide six.

Christian Saving: Our operating performance in the first nine months shows that our global <unk> strategy positions us well to serve our clients' needs and continues to deliver growth and profitability.

Christian Saving: We have firm confidence in reaching our Iot of at least 10% next year.

Christian Sewing: To be clear, our focus remains on us, our strategy and financial targets, unlocking further value for shareholders through the measures we have underway. Looking at revenues into 2025, we expect continued franchise momentum and our capital-wide businesses to drive further growth, harvesting investments we have made and are still making. In the corporate bank, we expect further growth in commissions and fee income from our investments in our fee-based institutional business as well as our payment platforms. Thick is expected to show further improvements into next year, benefiting from our investments into the franchise in both existing and adjacent businesses, as well as continued strength in financing.

To be clear our focus remains on us our strategy and financial targets.

Christian Saving: Unlocking further value for shareholders through the measures we have underway.

Christian Saving: Looking at revenues into 2025, we expect continued franchise momentum and our capital light businesses to drive further growth harvesting investments, we have made and are still making.

Christian Saving: And the corporate bank, we expect further growth in commissions and fee income from our investments in our fee based institutional business as well as our payment platforms.

Christian Saving: <unk> is expected to show further improvement into next year benefiting from our investments into the franchise in both existing and adjacent businesses as well as continued strength in financing.

Christian Sewing: In ONA, we have a clear value proposition to our clients, supported by our investments, which should help us to further increase our market share in what we expect to be a growing market environment, with further benefit of new hires still to come. At the same time, the private bank anticipates growing non-interest income, mainly from investment products, predominantly in wealth management and private banking, further supported by NII. Within our asset management business, we expect to benefit from higher assets under management levels this year, which should lead to an increase in management fees in 2025. Additionally, we anticipate positive flows into the alternatives business and continued growth and passes, including extractors.

Christian Saving: In <unk>, we have a clear value proposition to our clients supported by our investments, which should help us to further increase our market share in what we expect to be a growing market environment with further benefit of new hires still to come.

Christian Saving: At the same time, the private bank anticipates growing non interest income mainly from investment products predominantly in wealth management and private banking.

Christian Saving: Further supported by NII.

Christian Saving: Within our asset management business, we expect to benefit from higher assets under management levels. This year, which should lead to an increase in management fees in 2025.

Christian Saving: Additionally, we anticipate positive flows into the alternatives business and continued growth in passive including X strikers.

Christian Sewing: These drivers underline our confidence in achieving our revenue goal of 32 billion euros in 2025.

Christian Saving: These drivers underlying our confidence in achieving our revenue goal of 32 billion in 2025.

Christian Sewing: Turning to costs, we have taken this size of action to put legacy items behind us, substantially reducing our risk profile and driving restructuring measures in order to clear the path to 2025. And we continue to focus on controls to future-proof the franchise, which will help us reduce non-operating costs. The delivery of operational efficiencies is expected to further reduce the adjusted costs over the coming quarters. Together, we are confident these measures will bring us on a path to around 20 billion euros of non-interest expenses in 2025, which will also support the delivery of robust operating leverage.

Christian Saving: Turning to costs, we have taken decisive action.

Christian Saving: To put legacy items behind Us <unk>.

Christian Saving: Substantially reducing our risk profile and driving restructuring measures in order to clear the path to 2025, and we continue to focus on controls to future proof the franchise.

Christian Saving: Which will help us reduce non operating costs.

Christian Saving: The delivery of operational efficiencies is expected to further reduce adjusted costs over the coming quarters.

Christian Saving: Together, we are confident these measures will bring us on a path to around 20 billion of non interest expenses in 2025, which will also support delivery of robust operating leverage.

Christian Sewing: We expect radicals to reduce towards more normalized levels than 2025, largely driven by the expected continuation of the positive development of theory provisions and the benefits of interest rate reductions flowing through into the economy, providing us with a much cleaner slate into 2025.

Christian Saving: We expect credit costs to reduce towards more normalized levels in 2025.

Christian Saving: Largely driven by.

Christian Saving: By the expected continuation of the positive development of CRA provisions and the benefits of interest rate reductions flowing through into the economy.

Christian Saving: <unk> us with a much cleaner slate into 2025.

Christian Sewing: We remain dedicated to creating values for shareholders and confident that with achieving our financial targets, we can also maintain our trajectory to increase distributions beyond our original goal of 8 billion euros in respect of the financial years 2021 to 2025.

Christian Saving: We remain dedicated to creating values for our shareholders.

Christian Saving: And confident.

Christian Saving: That with achieving our financial targets. We can also maintain our trajectory to increase distributions beyond our original goal of 8 billion euros in respect of the financial years, 2021% to 2025.

Christian Sewing: Given this continued progress, we have now thought of the resation from the ECB for our next share-by-back. To sum up, we remain focused on our global housing strategy and, with our business momentum and all the progress made, we have clear line of sight on our target of our RTE of greater than 10% for 2025.

Given the continued progress we have now thought authorization from the ECB for our next share buyback to sum up we remain.

Christian Saving: Focused on our global <unk> strategy and with our business momentum and all the progress made we have clear line of sight on our target of an <unk> of greater than 10% for 2025.

James Moltke: With that, let me hand over to James. Thank you, Christian, and good morning. As usual, let me start with a few key performance indicators on slide 8 and place them in the context of our 2025 targets. As Christian mentioned before, we are on track towards our objectives, and we expect further improvements over the coming quarters. Our liquidity metrics also remains strong. The liquidity coverage ratio was 135% above our target of around 130%. And the net stable funding ratio was 122%. In short, our performance in the period reaffirms our franchise strength and our confidence in reaching the 2025 targets.

Speaker Change: With that let me handover to James.

James: Thank you Christian and good morning.

James: As usual, let me start with a few key performance indicators on slide eight and place them in the context of our 2025 targets.

James: As Christian mentioned before we are on track towards our objectives, and we expect further improvements over the coming quarters.

James: Our liquidity metrics also remained strong liquidity coverage ratio was 135% above our target of around 130% and the net stable funding ratio was 122% in short our performance in the period reaffirms our franchise strengths and our confidence in reaching the 2025 targets.

James von Moltke: With that, let me turn to the third quarter highlights on Slide 9. Group revenues were 7.5 billion euros, up 5% on the prior year quarter. Non-interest expenses were 4.7 billion euros, down 8%, benefiting from a partial release of the post bank takeover litigation provision, following the settlements in the third quarter.

James: With that let me turn to the third quarter highlights on slide nine.

James: Group revenues were $7 5 billion euros up 5% on the prior year quarter noninterest.

James: <unk> expenses were $4 7 billion euros down 8% benefiting from a partial release of the Postbank takeover litigation provision following the settlements in the third quarter.

James Moltke: A provision of 547 million euros remains in place for the outstanding plaintiff claims. The settlements achieved in August and September enabled us to release around 440 million euros of post-bank related provisions in the quarter, which were partially offset by charges of around 90 million euros, related to other legacy litigation items. Non-operating costs were positive 302 million euros in the quarter, including a net litigation release of 344 million euros, and restructuring charges of 42 million euros. We generated a profit before tax of 2.3 billion euros, up 31%, and a net profit of 1.7 billion euros, up 39%, to the prior year quarter.

James: A vision of 547 million euros remains in place for the outstanding plaintiffs claims.

James: The settlements achieved in August and September enabled us to release around 440 million euros of Postbank related provisions in the quarter, which were partially offset by charges of around 90 million euros related to other legacy litigation items.

James: Nonoperating costs were positive 302 million euros in the quarter, including a net litigation release of 344 million euros, and restructuring and severance charges of 42 million euros.

James: We generated a profit before tax of $2 3 billion euros up 31% and a net profit of $1 7 billion euros up 39% to the prior year quarter.

James Moltke: Our tax rate in the quarter of 26% was impacted by the aforementioned litigation effects. In the third quarter, deluded earnings per share was 81 cents, and tangible book value per share was 29 euros in 34 cents, up 6% year on year.

James: Our tax rate in the quarter were up 26% was impacted by the aforementioned litigation effects.

James: In the third quarter diluted earnings per share was <unk> 81 and tangible.

James: Book value per share was 29 euros 34.

James: Up 6% year on year.

James von Moltke: Let me now turn to some of the drivers of these results. We remain well positioned to continue delivering strong net interest income over the coming years, so let me start with a review of our NII on slide 10. And I, I across key banking book segments was 3.2 billion euros, and our trajectory continues to outperform our guidance from earlier in the year. Compared to the prior quarter, higher deposit volumes and loan margin expansion offset expected data convergence in the corporate bank, although reported and I, I, includes lower levels of CLO recoveries than in the prior quarter.

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

We remain well positioned to continue delivering strong net interest income over the coming years. So let me start with a review of our NII on slide 10.

James: NII across key banking book segments was $3 2 billion euros, and our trajectory continues to outperform our guidance from earlier in the year.

James: Compared to the prior quarter higher deposit volumes and loan margin expansion offset expected data convergence in the corporate bank, Although reported NII includes lower levels of CLO recoveries than in the prior quarter.

James von Moltke: Private bank was stable sequentially, reflecting ongoing strengths in deposit revenues.

James: Private bank was stable sequentially, reflecting ongoing strength in deposit revenues.

James Moltke: Our base case remains that our quarterly NII run rate will continue to be broadly stable, and we reiterate that we expect full year banking book NII to remain in line with the 13.1 billion euros reported in 2023, despite absorbing a headwind of around 150 million euros versus 2023 from the discontinuation of the minimum reserve remuneration. Our hedging strategy has positioned us well for a declining rate environment, as outlined on page 32 in the appendix. Our hedge portfolio stabilizes our income by extending the tenor of interest rate risk, but it also protects us against a drop in interest rates.

James: Our base case remains that our quarterly NII run rate will continue to be broadly stable and we reiterate that we expect full year banking book NII to remain in line with the $13 1 billion euros reported in 2023, despite absorbing a headwind of around 150 million euros versus 2023 from the discontinuation.

James: <unk> of the minimum reserve remuneration.

James: Our hedging strategy has positioned us well for a declining rate environment as outlined on page 32 in the appendix.

James: Our hedged portfolio stabilizes, our income by extending the tenor of interest rate risk, but it also protects us against the drop in interest rates and to that end, we've increased the notional of our hedge portfolio over the last 12 to 18 months in response to the slower than expected rise in deposit betas.

James Moltke: And to that end, we have increased the notion of our hedge portfolio over the last 12 to 18 months in response to the slower than expected rise into deposit basis. The weighted average maturity of our hedges is around five years. Based on current forward rates, we expect the income from the hedge book to grow by three to 400 million euros each year as we roll maturing hedges. As such, we expect the hedge portfolio to provide a long-term tailwind to our revenues at current forward rates. With respect to 2025, more than 90% of the income is locked in with existing positions already.

James: The weighted average maturity of our hedges is around five years.

James: Based on current forward rates, we expect the income from our hedge book to grow by three to 400 million euros, each year as we roll maturing hedges.

James: As such we expect our hedge portfolio to provide a long term tailwind to our revenues at current forward rates.

James: With respect to 2025 more than 90% of the income is locked in with existing positions already.

James Moltke: With that, let's turn to a Justin Cost development on slide 11. Adjusted costs were 5 billion euros in the quarter, in line with our guidance. Savings from streamlining our IT platform and lower spend for professional services were all set by higher costs for compensation and benefits, which increased by 4% year on year. The increased reflected wage growth as expected higher performance related compensation and increases in internal workforce after our targeted investments throughout 2023, partially offset by further workforce optimization.

James: With that let's turn to adjusted cost development on slide 11.

James: Adjusted costs were 5 billion euros in the quarter in line with our guidance savings.

James: Savings from streamlining our it platform and lower spend for professional services were offset by higher costs for compensation and benefits, which increased by 4% year on year.

James: The increase reflected wage growth as expected higher performance related compensation and increases in internal workforce. After our targeted investments throughout 2023, partially offset by further workforce optimization.

James Moltke: Let's now turn to provision for credit losses on slide 12.

James: Let's now turn to provision for credit losses on slide 12.

As Christian mentioned I will elaborate on the headwinds which have persisted this year, but let's start with this quarter's provision for credit losses, which was 494 million euros equivalent to 41 basis points of average loans.

James Moltke: As Christian mentioned, I will elaborate on the headwinds which have persisted this year, but let's start with this quarter's provision for credit losses, which was 494 million euros. A equivalent to 41 basis points of average loans. Stage one and two provisions were on a moderate level, as various portfolio effects largely offset increases from softer macroeconomic forecasts and overlay calibrations in the third quarter.

James: Stage, one and two provisions where on a moderate level as various portfolio effects, largely offset increases from softer macroeconomic forecasts and overlay calibrations in the third quarter.

James: Stage three provisions increased sequentially to 482 million euros, mainly driven by the private bank, including transitional Postbank integration effects.

James Moltke: Stage three provisions increased sequentially to 482 million euros, mainly driven by the private bank, including transitional plus bank integration effects. Provision's in the corporate bank remains stable and included the gross impact from a larger corporate restructuring event, which had already impacted the second quarter.

James: Provisions in the corporate bank remains stable and included the gross impact from a larger corporate restructuring event, which had already impacted the second quarter.

James: Investment Bank provisions were slightly lower sequentially, given the anticipated and substantial improvement in commercial real estate in the quarter, including a negative impact of 23 million euros from the expected CRE loan portfolio sale, which is underway and where we have gained pricing visibility.

James Moltke: Investment bank provisions were slightly lower sequentially given the anticipated and substantial improvement in commercial real estate in the quarter, including a negative impact of 23 million euros from the expected CRE loan portfolio sale, which is underway and where we have gained pricing visit.

James Moltke: Odie, let me now take you through some additional detail on our provisions on slide 13. This year we faced several headwinds, which negatively impacted provisions and our full year guidance, but which we do not expect to persist into 2025 at all, or in the same magnitude, depending on the item. First, the transitional effects from the Postbank integration led to longer-than-expected impacts across our internal collection and recovery processes. But we expect these to fade over the coming quarters. Second, we've been dealing with two relatively fast-paced larger corporate events, impacting year-to-date provisions at a level unusual compared to historical standards.

James: Let me now take you through some additional detail on our provisions on slide 13.

James: This year, we faced several headwinds, which negatively impacted provisions and our full year guidance, but which we do not expect to persist into 2025 at all or in the same magnitude depending on the item.

James: First the transitional effects from the Postbank integration led to longer than expected impacts across our internal collection and recovery processes, but we expect these to fade over the coming quarters.

James: Second we've been dealing with two relatively fast paced larger corporate events impacting year to date provisions at a level unusual compared to historical standards how.

James von Moltke: However, the pretext impact was mitigated by around 70% as these loans benefited from credit concentration hedging. And lastly, our full year CRA provision run rate has been at a sickly higher level, but has now substantially declined quarter-on-quarter as envisaged. We continue to see more signs of stabilization, which supports our confidence in a gradual reduction in the future provisions. In general, we maintain tight underwriting standards and continue to conservatively manage our loan book, which includes managing single-name concentration risks through comprehensive hedging programs, including our recently issued significant risk transfer transactions, which bring the total notion of volume of hedges to 41 billion euros.

James: However, the pretax impact was mitigated by around 70% as these loans benefited from credit concentration hedging.

James: And lastly, our full year CRA provision run rate has been at a cyclically higher level, but has now substantially declined quarter on quarter as envisaged.

James: We continue to see more signs of stabilization, which supports our confidence in a gradual reduction in the future provisions.

James: In general we maintain tight underwriting standards and continue to conservatively manage our loan book, which includes managing single name concentration risks through comprehensive comprehensive hedging programs, including our recently issued significant risk transfer transactions, which bring the total total notional volume of hedges to 41 billion euros.

James Moltke: Our regular and comprehensive portfolio reviews, including close assessment of trends at the sub-segment level, and deeper dives and dives into more vulnerable sectors, show that overall credit quality remains stable. Forward-looking indicators, such as rating migration and trends in our non-investment grade portfolio and watch list ratios, do not suggest a note where they deterioration in asset quality. We also see broadly stable developments in our domestic market, as outlined on page 38 of the appendix. Our 220 billion euro, German loan book is low-risk and well-diversified across businesses, and 70% of the portfolio is either collateralized or supported by financial guarantees.

James: Our regular and comprehensive portfolio reviews, including close assessment of trends at the subsegment level and deeper dies and dives into more vulnerable sectors show that overall credit quality remained stable.

James: Looking indicators, such as rating migration and trends in our non investment grade portfolio and watchlist ratios do not suggest a noteworthy deterioration in asset quality.

We also see broadly stable development in our domestic market as outlined on page 38 of the appendix.

James: Our 220 billion Euro German loan book is low risk and well diversified across businesses and 70% of the portfolio is either collateralized or supported by financial guarantees.

James von Moltke: We also have more than 12 billion euros in hedges. More than three-quarters of the book is in the private bank, of which around 90% consists of low-risk, German retail mortgages. Our corporate loan book is well-diversified and of high quality. Exposure is predominantly to multinational corporates and mid-caps, with almost 70% of loans rated investment grade. Importantly, early-warning indicators in Germany remain robust. The number of limits subject to our watch list remains largely unchanged since the end of last year, and we do not observe any significant broad-based rating deterioration across the portfolio. In summary, our portfolio is holding up well and adjusting our reported gross provisions for offsetting effects from recoveries through hedging, which are captured as revenues. Our pro-forma year-to-date net provisions would have been around 34 basis points.

James: We also have more than 12 billion euros and hedges.

James: More than three quarters of the book is in the private bank of which around 90% consists of low risk German retail mortgages.

James: Our corporate loan book is well diversified and of high quality exposure is predominantly to multinational corporates and mid caps with almost 70% of loans rated investment grade.

James: Importantly, early warning indicators in Germany remain robust the number of limit subject to our watch list remains largely unchanged since the end of last year, and we did not observe any significant broad based rating deterioration across the portfolio.

James: In summary, our portfolio is holding up well and adjusting our reported gross provisions for offsetting effects from recoveries through hedging which are captured as revenues are pro forma year to date net provisions would have been around 34 basis points.

James Moltke: We continue to expect a sequential reduction in provisions towards more normalized levels as we go into 2025.

We continue to expect a sequential reduction in provisions towards more normalized levels as we go into 2025.

James: Before we move to performance in our businesses, let me turn to capital on Slide 14.

James Moltke: Before we move to performance in our businesses, let me turn to capital on slide four. Team, our third quarter Common Equity Tier 1 ratio came in at 13.8%, 30 basis points higher compared to the previous quarter. The increase was largely driven by CET-1 capital, reflecting strong earnings net of deduction, and an approximately 790 million euro, or 22 basis point, positive effect from the adoption of the article 468 CRR transitional rule for unrealized gains and losses.

James: Our third quarter common equity tier one ratio came in at 13, 8% 30 basis points higher compared to the previous quarter.

James: The increase was largely driven by CET, one capital, reflecting strong earnings net of deduction.

And in approximately $790 million or 22 basis point positive effect from the adoption of the article 468, CR are transitional rule for unrealized gains and losses.

James von Moltke: Resquated assets increased for market risk and credit risk. The credit risk RRWA increased was driven by model impacts and business growth, mostly offset by reductions from capital efficiency measures. Lower operational risk RWA were driven by the partial release of the post-bank takeover litigation provision. At the end of the third quarter, our leverage ratio was 4.6% flat sequentially, as higher leverage exposure driven by securities financing transactions and trading assets offset an increase in tier 1 capital in line with the CET-1 capital development.

James: Risk weighted assets increased for market risk and credit risk.

James: Credit risk <unk> increase was driven by model impacts and business growth, mostly offset by reductions from capital efficiency measures.

James: Lower operational risk <unk> were driven by the partial release of the Postbank takeover litigation provisions.

James: At the end of the third quarter, our leverage ratio was four 6% flat sequentially as higher leverage exposure driven by securities financing transactions and trading assets offset an increase in tier one capital in line with the CET one capital development.

James: With that let's now turn to performance in our businesses starting with the corporate bank on slide 16.

James Moltke: With that, let's now turn to performance in our businesses, starting with the corporate bank on slide 16. Corporate bank revenues in the third quarter were 1.8 billion euros, essentially flat year on year, as normalization of deposit margins was mostly offset by higher deposit volumes, growth in commissions in fee income, and increased loan and II. The 5% increase in commissions in fee income in the first nine months reflects the impact of our growth initiatives and shows good progress to offset the normalization of deposit revenues. In the third quarter, commissions in fee income was 4% higher year on year, reflecting growth in our institutional client services business, and essentially flat compared to the seasonally strong second quarter.

James: Corporate bank revenues in the third quarter were $1 8 billion euros, essentially flat year on year as normalization of deposit margins was mostly offset by higher deposit volumes growth in commissions and fee income and increased loan NII.

James: The 5% increase in commissions and fee income in the first nine months reflects the impact of our growth initiatives and shows good progress to offset the normalization of deposit revenues.

James: In the third quarter commissions and fee income was 4% higher year on year, reflecting growth in our institutional client services business and essentially flat compared to the seasonally strong second quarter.

James: Deposits increased by 7 billion euros in the quarter, and our 23 billion euros higher year on year, driven by higher term and sight deposit across currencies.

James Moltke: Deposits increased by 7 billion euros in the quarter, and our 23 billion euros higher year on year, driven by higher term and site deposit across currencies. This growth was partially driven by a certain client accommodation activities, which we expected normalized in the fourth quarter.

James: This growth was partially driven by a certain client accommodation activities, which we expect to normalize in the fourth quarter <unk>.

James von Moltke: Provision for credit losses was at 126 billion euros in line with the previous quarter, and increased the current significantly year on year, driven by higher stage view provisions and a non-recurrents of a one-off model chart change in stage 1 and 2 in the prior year. Higher stage 3 provisions included a larger corporate restructuring event, which had already impacted the second quarter and was partially covered by risk mitigation measures. Non-interest expenses were slightly higher year on year, driven by front office investments and higher internal service cost allocations.

James: Provision for credit losses was 126 million euros in line with the previous quarter and increased significantly year on year, driven by higher stage three provisions and the non recurrence of a one off model chart change in stage, one and two in the prior year.

James: Higher stage three provisions included a larger corporate restructuring event, which had already impacted the second quarter and was partially covered by risk mitigation measures.

James: Noninterest expenses were slightly higher year on year, driven by front office investments and higher internal service cost allocations.

James von Moltke: This resulted in a post-tax return on equity, tangible equity of 13.1% and a cost-income ratio of 64%.

James: This resulted in a post tax return on equity tangible equity of 13, 1% and a cost income ratio of 64%.

James Moltke: I'll now turn to the investment bank on slide 17. Revenue used for the third quarter were 11% higher year on year on a reported basis, driven by improvements across both thick and ONA. Revenue's in fixing common currencies also increased by 11%, driven by significantly higher credit trading and emerging markets and supported by stable performance in financing. Credit trading showed strength in the distress business and continued performance in flow, reflecting investments made into the franchise. Emerging markets demonstrated year-on-year growth across re- for an exchange. Revenues were higher with continued strength and spot, while revenues in rates were lower in a market environment that continues to be uncertain.

Speaker Change: I'll now turn to the investment bank on slide 17.

Speaker Change: Revenues for the third quarter were 11% higher year on year on a reported basis driven by improvements across both FIC and M&A.

Revenues in fixed income and currencies also increased by 11% driven by significantly higher credit trading in emerging markets revenues and supported by stable performance in financing.

Speaker Change: Credit trading showed strength in the distress business and continued performance in flow, reflecting investments made into the franchise.

Speaker Change: Emerging markets demonstrated year on year growth across regions Foreign exchange revenues were higher with continued strength in spot while revenues in rates were lower in a market environment that continues to be uncertain.

Speaker Change: Moving to <unk> revenues were significantly higher than in the prior year with increases across business lines, reflecting a growing industry fee pool.

James Moltke: Moving to O&A, revenues were significantly higher than in the prior year, with increases across business lines reflecting a growing industry fee pool. Dead origination revenues were higher, driven by increased industry activities across investment grade and leverage debt. Advisory revenues were strong and materially higher year-on-year, with the business benefiting from prior period investments. Non-interest expenses and adjusted costs were both essentially flat year-on-year, with the impact of strategic investments offset by lower infrastructure allocations. Revision for credit losses was 135 million euros, or 52 basis points of average loans.

Speaker Change: Debt origination revenues were higher driven by increased industry activities across investment grade and leveraged debt.

Speaker Change: Advisory revenues were strong in materially higher year on year with the business benefiting from prior period investments.

Speaker Change: Noninterest expenses and adjusted costs were both essentially flat year on year with the impact of strategic investments offset by lower infrastructure allocations.

Speaker Change: Provision for credit losses was 135 million euros, or 52 basis points of average loans.

James von Moltke: The previous year-quarter materially benefited from a provision released from model changes.

Speaker Change: The previous year quarter materially benefited from a provision release from model changes.

Speaker Change: Turning to the private bank on slide 18.

James von Moltke: Turning to the private bank on slide 18, revenues in the quarter were 2.3 billion euros, essentially flat, with non-interest revenue growth of 7% year-on-year. The decline in NII was driven by continued higher funding costs from the impact of minimum reserves, the group neutral impact of certain hedging costs, as well as a negative episodic effect from our lending books, mainly in personal banking. Excluding these effects, third quarter revenues in the private bank would have been up to 4% year-on-year. Personal banking continues to record higher deposit revenues in Germany, which were more than offset by the aforementioned impacts weighing on the net interest income.

Speaker Change: Revenues in the quarter were $2 3 billion euros, essentially flat with noninterest revenue growth of 7% year on year.

Speaker Change: The decline in NII was driven by continued higher funding costs from the impact of minimum reserves the group neutral impact of searching certain hedging costs as well as a negative episodic effect from our lending books, mainly in personal banking.

Speaker Change: Excluding these effects third quarter revenues in the private bank would have been up 4% year on year.

Speaker Change: Personal banking continues to record higher deposit revenues in Germany, which were more than offset by the aforementioned impacts weighing on the net interest income.

James von Moltke: Well, if management and private banking grew revenues by 5% to 1 billion euros, driven by higher lending and investment revenues, partially offset by lower deposit revenues. We continue to see good business momentum, with net inflows into asset under management of 8 billion euros in the quarter, mainly in wealth management and private banking.

Speaker Change: Wealth management and private banking grew revenues by 5% to 1 billion euros, driven by higher lending and investment revenues, partially offset by lower deposit revenues.

Speaker Change: We continue to see good business momentum with net inflows into assets under management of 8 billion euros in the quarter, mainly in wealth management and private banking.

Speaker Change: The private bank continues the transformation of the personal banking business in Germany with around 50 branch closures and further workforce reductions in the first nine months of the year.

James Moltke: The private bank continues the transformation of the personal banking business in Germany with around 50 branch closers and further workforce reductions in the first nine months of the year. Savings have been offset this quarter by higher infrastructure cost allocations and higher compensation expenses, including wage inflation, as well as continued residual expenses for service remediation. As announced in the fourth quarter of 2022, the refinement of our methodology to allocate infrastructure costs resulted in group-neutral year-on-year expenditures between the businesses, noticeable this quarter in the private bank. However, even including the allocations, adjusted costs were down 2% in the first nine months compared to the prior year period.

Speaker Change: Savings have been offset this quarter by higher infrastructure cost allocations and higher compensation expenses, including wage inflation as well as continued residual expenses for service remediation.

Speaker Change: As announced in the fourth quarter of 2022, the refinement of our methodology to allocate infrastructure costs resulted in group neutral year on year expense shifts between the businesses noticeable this quarter and the private bank, however, even including the allocations adjusted costs were down 2% in the first nine months compared to the prior year.

Speaker Change: Period.

James Moltke: Looking ahead, we foresee the private bank to resume the cost reduction path next quarter, with residual cost for service remediation to continue to taper and further benefits from ongoing transformation, including from the integration of the IT platform and further branch closers. As I outlined earlier, the credit quality of our domestic and international portfolios remains high.

Speaker Change: Looking ahead, we foresee the private bank to resume the cost reduction path next quarter with resilient residual cost for service remediation to continue to taper and further benefits from ongoing transformation, including from the integration of the it platform and further branch closures.

Speaker Change: As I outlined earlier credit quality of our domestic and international portfolios remains high.

James von Moltke: Will most provisions this quarter still included 40 million euros of transitional post bank integration effects which should seat cease.

Speaker Change: Loan loss provisions this quarter still included 40 million euros of transitional Postbank integration effects, which should she sees.

Speaker Change: Let me continue with asset management on slide 19.

James von Moltke: Let me continue with asset management on slide 19.

James Moltke: My usual reminder: the asset management segments include certain items that are not part of the DWS standalone finance. Profit before tax improved by 54% from the prior year period, reflecting operating leverage from higher revenues and stable non-interest expenses. Revenues increased by 11%, driven by management fees of 626 million euros. This growth from both active and passive products reflected increasing average assets under management for market development and net inflows. Performance and transaction fees were significantly lower, driven by the impact of real estate valuations and lower transaction volumes in alternatives. Non-interest expenses were 1% lower, while adjusted costs were essentially flat compared to the prior year.

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

Speaker Change: Profit before tax improved by 54% from the prior year period, reflecting operating leverage from higher revenues and stable noninterest expenses.

Speaker Change: Revenues increased by 11% driven by management fees of 626 million euros.

Speaker Change: This growth from both active and passive products reflected increasing average assets under management for market development and net inflows.

Speaker Change: Performance and transaction fees were significantly lower driven by the impact of real estate valuations and lower transaction volumes and alternatives.

Speaker Change: Noninterest expenses were 1% lower while adjusted costs were essentially flat compared to the prior year.

James Moltke: Lower non-compensation costs, particularly in IT, offset slightly higher compensation and benefits costs. Assets under management increased by 30 billion euros to 963 billion euros, resulting in record high assets under management levels. The increase was attributable to positive market appreciation and net inflows. The positive net inflow trend for passive continues, with a further 10 billion euros gathered in the quarter, resulting in over 27 billion euros of net inflows year to date. Active fixed income contributed with net inflows of 10 billion in the quarter, more than offsetting net outflows in active equity, multi asset, and alternatives products.

Speaker Change: Lower non compensation costs, particularly in.

Speaker Change: Offset slightly higher compensation and benefits costs.

Speaker Change: Assets under management increased by 30 billion euros to 963 billion euros, resulting in record high assets under management levels.

Speaker Change: The increase was attributable to positive market appreciation and net inflows.

Speaker Change: The positive net inflow trend for passive continues with a further 10 billion euros gathered in the quarter, resulting in over 27 billion euros of net inflows year to date.

Speaker Change: Active fixed income contributed with net inflows of 10 billion in the quarter more than offsetting net outflows and active equity multi asset and alternatives products.

James von Moltke: The cost income ratio for the quarter declined to 67%, and return on tangible equity was 18.9%, both improving from the third quarter last year.

Speaker Change: The cost income ratio for the quarter declined to 67% and return on tangible equity was 18, 9% both improving from the third quarter last year.

James Moltke: Moving to corporate another on slide 20.

Speaker Change: Moving to corporate and other on slide 20.

James Moltke: Corporate another reported a pre-tax profit of 424 million euros compared to a pre-tax loss of 202 million euros in the third quarter of 2023, primarily driven by a provision release in the post bank takeover litigation matter of around 440 million euros. Revenues were positive 157 million euros; this compares to a positive 35 million euros in the prior year quarter. The increase was driven by evaluation and timing differences, which were positive 295 million euros, reflecting partial reversion of prior period losses and impacts from market moves. The pre-tax losses associated with legacy portfolios were 142 million euros, driven primarily by provisions for legacy litigation items. The end of the quarter, risk weighted assets stood at 34 billion euros, including 13 billion euros of operational risk RWA.

Speaker Change: Corporate and other reported a pretax profit of 424 million euros compared to a pretax loss of 202 million euros in the third quarter of 2023, primarily driven by a provision release in the Postbank takeover litigation matter of around 440 million euros.

Revenues were positive 157 million euros. This compares to a positive 35 million euros in the prior year quarter.

Speaker Change: The increase was driven by valuation and timing differences, which were positive 295 million euros, reflecting partial reversion of prior period losses and impacts from market moves.

Speaker Change: The pretax losses associated with legacy portfolios were 142 million euros, driven primarily by provisions for litigation legacy litigation items.

Speaker Change: At the end of the quarter risk weighted assets stood at 34 billion euros, including 13 billion euros of operational risk <unk>.

James von Moltke: In aggregate, RWA's have reduced by 8 billion euros year on year, mainly reflecting a change in the allocation of operational risk RWA. Leverage exposure was 36 billion euros at the end of the quarter, slightly lower than the prior year quarter.

Speaker Change: In aggregate <unk> of reduced by 8 billion euros year on year, mainly reflecting a change in the allocation of operational risk <unk>.

Speaker Change: Leverage exposure was 36 billion euros at the end of the quarter slightly lower than the prior year quarter.

James von Moltke: Finally, let me turn to the group outlook on slide 21.

Speaker Change: Finally, let me turn to the group outlook on slide 21.

James Moltke: Our ongoing performance demonstrates the successful execution of our strategy. Our revenue trajectory remains on track to 30 billion euros for this year, on the path to our goal for 32 billion euros in 2025. Looking at the fourth quarter and starting with the corporate bank, we expect revenues to remain essentially flat sequentially as growth in non-interest revenues compensates for lower deposit income. In the investment bank, we expect a strong performance across our businesses in FIC, compared to the fourth quarter of 2023. We are encouraged by our fourth quarter pipeline in origination and advisory, which is higher year on year and suggests positive momentum for the remainder of 2024, both sequentially and year on year.

Our ongoing performance demonstrates the successful execution of our strategy.

Speaker Change: Our revenue trajectory remains on track to 30 billion euros for this year on the path to our goal for 32 billion euros in 2025.

Speaker Change: Looking at the fourth quarter and starting with the corporate Bank, we expect revenues to remain essentially flat sequentially as growth in noninterest revenues compensates for lower deposit income.

Speaker Change: And the investment bank, we expect a strong performance across our businesses in FIC compared to the fourth quarter of 2023.

Speaker Change: We are encouraged by our fourth quarter pipeline and origination and advisory which is higher year on year and suggest positive momentum for the remainder of 2024, both sequentially and year on year.

James Moltke: The private bank is expected to grow revenues sequentially, driven by higher NII. Finally, we expect asset management to grow revenues as the momentum of the last six months carries over and further accelerates into the fourth quarter, with potential upside from performance fees.

Speaker Change: The private bank is expected to grow revenues sequentially driven by higher NII.

Speaker Change: Finally, we expect asset management to grow revenues as the momentum of the last six months carries over and further accelerates into the fourth quarter with potential upside from performance fees.

James Moltke: We expect to further reduce our adjusted cost run rate close to 4.9 billion euros in the coming quarters to allow us to achieve around 20 billion euros of non-interest expenses in 2025. The reduction should come through a combination of ongoing cost discipline and benefits from our efficiency and tactical measures.

Speaker Change: We expect to further reduce our adjusted cost run rate closer to $4 9 billion euros in the coming quarters to allow us to achieve around 20 billion euros of noninterest expenses in 2025.

Speaker Change: The reduction should come through a combination of ongoing cost discipline and benefits from our efficiency and tactical measures.

James von Moltke: We expect reported provision for credit losses for 2024 to land at around 1.8 billion euros higher than our prior guidance, but we continue to expect an amelioration will follow next year as the transitory headwinds we called out will pass, leading to a reduction towards more normalized levels. Our robust operating performance in the third quarter, including the ongoing work putting legacy litigation items behind us, helps us lay the foundation for delivery in 2025. Furthermore, our strong capital position gives us a good step off for our 25 and 26 distribution objectives. And as Christian said, our full focus remains on the execution of our own strategy.

We expect reported provision for credit losses for 2024 to land at around $1 8 billion euros higher than our prior guidance, but we continue to expect an amelioration will follow next year as the transitory headwind headwinds, we called out will pass leading to a reduction towards more normalized levels.

Speaker Change: Our robust operating performance in the third quarter, including the ongoing work, putting legacy litigation items behind US helps us lay the foundation for delivery in 2025.

Speaker Change: Furthermore, our strong capital position gives us a good step off for our 25 and 26 distribution objectives.

Speaker Change: And as Christian said, our full focus remains on the execution of our own strategy.

Unknown Executive: With that, let me hand back to Johanna, and we look forward to your questions. If you wish to remove yourself from the question queue, you may press star and two. Questions on the phone are requested to use only hand sets and eventually turn off the volume from the webcast.

Speaker Change: With that let me hand back to you on them and we look forward to your questions.

Speaker Change: Thank you James.

Speaker Change: So we are now ready to take your questions.

Ladies and gentlemen, we will now begin the question and answer session anyone who wishes to ask a question you May press star and one on the Touchtone telephone you will hear a tone to confirm that you have in the queue. If you wish to remove yourself from the question queue. You May press star and two questions on the phone a request.

Speaker Change: Handsets and eventually turn off the volume from the webcast in the interest of time, please limit yourself.

Unknown Executive: In the interest of time, please limit yourself. No, and anyone who has a question may press star and one at this time. One moment for the first question, please.

And anyone who has a question press star one at this time.

Speaker Change: Moment for the first question please.

Anke Reingen: And the first question comes from Anker Eingen from RBC. Please go ahead. Thank you very much for taking my questions. The first is on our loan losses. When you talk about 2025 and towards more normalized level, is that closer to 30 basis points? And then what do that give us the confidence that the loan losses can come down and P4 and 2025? I mean, you show us Slide 13. Should the post bank integration and the large corporate events almost drop out or drop out in 2025?

Speaker Change: And the first question comes from <unk> <unk> from RBC. Please go ahead.

Speaker Change: Thank you very much for taking my questions.

Speaker Change: Yes.

Speaker Change: Donna.

Speaker Change: Let me talk about attentive to what's a more normalized level.

Speaker Change: That's closer to 40.

Speaker Change: Basis points.

Speaker Change: Once it does give us the confidence that the non muscle.

Speaker Change: <unk> come down in Q4, and plenty quantify from Alicia.

Speaker Change: Slide 13.

Speaker Change: The postbank integration on the large corporate events.

Speaker Change: Almost dropout at double that in 2025.

Anke Reingen: And when you gave us 24 guidance, and we've been looking for it to say about two quarters of upward revision, so what did you underestimate when you previously guided for 2024? And then, second on the buybacks, yeah, great to hear you applied for approval, but can you be more specific on the amount? Should we use the slide 24, where you talk about the 50%. In increase year over year as a potential indicator of year requested this time, and what does it mean for potential additional buybacks in calendar year 2025 when do you think you can make a decision, and is that a function of the loan off charge guidance as well?

Speaker Change: And when you when you gave us plenty for guidance.

Speaker Change: Okay.

Speaker Change: Two quarters ago.

Speaker Change: So what did you.

Speaker Change: From you people.

Speaker Change: The guy that fall of 2012.

Speaker Change: Before.

Speaker Change: Second on the buybacks.

Speaker Change: Well glad to hear you.

Speaker Change: <unk> applied for approval, but can you be more specific on the amount will be used.

Speaker Change: Slide 24, where you talk about the 50%.

Speaker Change: And Keith increase year over year.

Speaker Change: Your question at this time.

Speaker Change: What does it mean for potential additional buybacks on calendar year 2025. When do you think you can make up a fulsome and the satisfaction of the loan loss charge guidance as well and maybe that's an opportunity.

Anke Reingen: And maybe that's not an opportunity to say something about the still outstanding settlements posed the post-Mong rule in today. Thank you very much.

Speaker Change: Thing about.

Speaker Change: Mr Outstanding settlements.

Speaker Change: Thank you very much.

Speaker Change: Yes.

Christian Sewing: Thank you, Anke. It's Christian. Let me start, and as usual, James Willet will add, obviously, to all your questions. So, let me start with the share buybacks because that also goes into the direction of, sort of say, the most recent ruling of the Cologne court. First of all, with the share buyback, as we always said, after the full provisioning of the post-bank litigation case in April, we always said we want to show to you two clean quarters, Q2, Q3, which we did. And even without the release which we recorded in the third quarter for post-bank, we have shown a record quarter for Deutsche Bank in the third quarter, and that gave us then obviously the conviction and the clear pass now to apply for a share buyback.

Speaker Change: Thank you Alan Good question, let me start and as usual James.

Speaker Change: We'll add obviously to all your questions.

Speaker Change: So let me start with.

Speaker Change: The share buybacks because that also goes into the direction of so to say the most.

Speaker Change: The most recent ruling of the Cologne Court first of all with the share buyback as we always said.

Speaker Change: After the fluid provisioning of the Postbank litigation case in April we always said, we want to show to you two clean quarters, Q2, Q3, which we did and even without without the release, which we recorded in the third quarter for Postbank, we've shown a record quarter for Deutsche Bank in the third quarter.

Speaker Change: And that gave US then and.

Speaker Change: Obviously, the conviction and the clear path now to apply for a share buyback by the way I think with the $13 eight core tier one.

Christian Sewing: By the way, I think with the 13.8 quarter one, this is also a nice step of which gives us the confidence for the application. With regard to amounts and timing, we always do it like in the past. We obviously keep that discussion with our regulator, but I can tell you that there is full confidence with James and myself and the management team. That based on the step of 30.8 percent, based on the trajectory of our operating results, we are convinced of our distribution of above a billion for the time for the time zone between 21 and 25, so nothing changed.

Speaker Change: <unk> is also a nice step off which gives us the confidence.

Speaker Change: For the application.

Speaker Change: With regard to amounts and timing.

Speaker Change: We always do it like in the past, we obviously keep that discussion with our regulator, but I can tell you that there is full confidence.

Speaker Change: With James and myself and the management team that based on the step up of 38% based on the trajectory of our operating results.

Speaker Change: We are convinced of our distribution of above 8 billion for the time for the time zone between 'twenty. One 'twenty five nothing changed also what I would like to emphasize is actually that two days ruling you have just seen that.

Christian Sewing: Also, what I would like to emphasize is actually that today's ruling you have just seen that is not actually affecting our share buyback because we provisioned that amount in full. And also in our capital plan going forward, we did actually not assume further releases in our capital plan. So, in this regard, of course, we don't like the ruling, and now we have to analyze it and think about potential next steps. But for the capital plan going forward and for the share buyback, this is no impact because we are fully provisioned. And in this regard, we remain convinced and confident that we can deliver about the $8 billion for us.

Speaker Change: Is not actually affecting our share buyback because we provisioned that amount in full.

Speaker Change: And also in our capital plan going forward, we did actually not assume further releases in our capital plan. So in this regard of course we.

Speaker Change: We don't like the ruling and now we have to analyze it and think about potential next steps, but for the capital plan going forward and for the share buyback. This has no impact because we are fully provisioned and in this regard we remain convinced and confident that we can deliver above the 8 billion for us It was <unk>.

Christian Sewing: It was important to show two good quarters and solid quarters in terms of operating performance, and I think we see that from a revenue point of view, from a cost point of view, and hence with the underlying result.

Speaker Change: Patent to show two good quarters.

Speaker Change: And solid quarters in terms of operating performance and I think we see that from a revenue point of view from a cost point of view and hence was the underlying result, let me briefly go over to the loan loss provision question because I understand.

Christian Sewing: And we briefly go over to the loners' provision question because I understand that that obviously raises some questions on your side. Look, I really think it's important that we look into the composition of the loners provision and what really drove the number 294 million this quarter. And yes, we said that we see in the second half of 2024 a decreasing trend. Let me explain why this did not happen. Number one, I know you are looking with concerns to Germany and the commercial real estate. With regards to both items, to be honest, I see a robust portfolio quality.

Speaker Change: That debt.

Speaker Change: Obviously raises some questions on your side.

Speaker Change: I really think it's important that we that we look into the composition of the loan loss provision and what really drove the number two $494 million this quarter.

Speaker Change: And yes, we said that we see in the second half of 2024.

Speaker Change: A decreasing trend let me explain why this did not happen number one.

Speaker Change: I know you are looking with concerns to Germany, and the commercial real estate.

Speaker Change: With regards to both the items to be honest.

Our robust portfolio quality in particular, if I look at the corporate side and the private banking side and the underlying loan loss provisions in Germany.

Christian Sewing: In particular, if I look at the corporate side and the private banking side and the underlying loners provision in Germany. We don't see any material change. We don't see any material change in the portfolio composition. If you look at indicators like up versus downgrades, if you look like additions to watch list, this is not a concerning trend. Now, what increased in the private bank is still the result of the backlog in the post bank operations that actually we thought that this comes earlier down. It will come down. We even will see some some bookings, IE in terms of that we will see releases of certain reserves in 2025.

We don't see any material change, we don't see any material change in the portfolio composition. If you look at indicators like up versus downgrades. If you looked like additions to watch list. This is not a concerning trend now what increased in the private bank.

Speaker Change: Still the result of the backlog in the Postbank operations that actually we thought that this comes early down it.

Speaker Change: It will come down we even we'll see some.

Speaker Change: Some are some bookings I E. In terms of that we will see releases of certain reserves in 2025. So the trend is coming down and we will see releases, but we hope to actually four.

Christian Sewing: So the trend is coming down, and we will see releases. But we hope to actually for a faster reduction in this regard during the year 2024. So that is one item.

And a faster reduction in this regard.

Speaker Change: During the year 2024, so that is one item the second item I think which is underlying positive is on the commercial real estate. If you actually looked at the underlying portfolio composition. The trend is coming down for the first time that commercial real estate provisions have come down sequentially quarter over quarter and it would have.

Christian Sewing: The second item I think which is underlying positive is on the commercial real estate. If you actually look at the underlying portfolio composition, the trend is coming down. It's for the first time that commercial real estate provisions have come down sequentially, quarter over quarter. And it would have come even more down if we wouldn't have done the portfolio sale, where we got the first mark and where actually we booked an additional provision from the portfolio sale in the low double-digit number. That is obviously capital accretive, but overall the commercial real estate provisions are coming down, and that is again something which we focused at the start of the year. But to be honest, we thought that this is already happening in Q2; now it is coming in Q3.

Speaker Change: Come even more down if we wouldn't have done the portfolio sale.

Where we got the first Mark and we're actually we booked an additional provision from the portfolio sale in the low double digit number.

Speaker Change: That is obviously capital accretive, but overall all of the commercial real estate provisions are coming down.

Speaker Change: And that is again, something which we forecast at the start of the year, but to be honest. We thought that this is already happening in Q2 now it is coming in in Q3.

Christian Sewing: Now, if I take all these items and the third item, sorry, I should have said that is one larger loan loss provision in the south of Germany for a corporate name, which is those significantly hedged. So, if you see the net loss position, which we are from that, it is obviously far less than the gross loan loss provision, which we have booked in Q3. That was also, by the way, a name where we already booked the first loan loss provision in Q2.

Now if I take all of these items and the third item sorry, I Should've said that is one larger loan loss provision in the south of Germany for our corporate name, which is those significantly hedged. So if you see the net loss position, which we have from that it is obviously far less than the gross loan loss provision, which we have booked in Q.

Speaker Change: Three that was also by the way a name that we already booked the first loan loss provision in Q2. So if you would take the three items.

Christian Sewing: So if you take these three items, the postbank item, which will come down and we even see reversals of bookings in 2025, if you see the underlying rate in the commercial real estate, and on top of that, if you look at the one name where we had gross loan loss provisions, but which was significantly hedged, actually we see, also with regard to 2025 and that was that what James was referring to in his cricket remarks, normalized run rate for loan loss provisions of 350 million euros, and that is actually where we see based on the portfolio quality we have, the trend going, and in this regard, I do think that we have seen now in this quarter, the peak of the loan loss provisions with that number coming down to approximately 350 million per quarter in the 2025 year.

Speaker Change: Postbank item, which will come down and we even see reversals of bookings in 2025, if you see the underlying rate in the commercial real estate and on top of that if you look at the.

Speaker Change: The one name, where we had gross loan loss provisions, but which was significantly hedged.

Speaker Change: We see also with regard to 2025 and that was that what James was referring to in his prepared remarks.

Speaker Change: Normalized run rate for loan loss provisions of 350 million euros and that is actually where we see based on the portfolio quality, we have the trend going and in this regard I do think that we have seen now in this quarter. The peak of the loan loss provisions with that number coming down to approximately $350 million per quarter.

Speaker Change: In the 2025 here.

Anke Reingen: Thank you, can you come back on the capital by on the buyback, so should we look at the 50% increase, and should we, is it planned to potentially top up in the course of 2025, thank you. So I can you refer to page three four in the appendix, and yes, that lays out the path that we've probably wished to follow to deliver on the promises we've made. As I say, the eight billion to us as a number that we think we're confident we'll exceed. We're not going to go into precise euro numbers at this point, but I think 24 lays out a good path as it relates to incremental buybacks next year. It's very early to make that determination.

Speaker Change: Thank you can you come back on the Capex on the buyback.

Speaker Change: So.

So when you look at the 50% increase and.

So is the plan still to potential top up in the course of 2025. Thank you.

Speaker Change: So you referred to page 34 in the appendix and yes that lays out the path that we've broadly wish to follow to deliver on the promises we've made as I say the $8 billion.

Speaker Change: <unk> is a number that we think we're confident will will exceed we're not going to go into precise euro numbers at this point, but I think 24 lays out.

Speaker Change: Good path.

Speaker Change: As it relates to incremental buybacks next year.

Speaker Change: Very early to make that determination as we've talked about there are lots of moving parts in our capital plan.

James Moltke: As we've talked about, there are lots of moving parts in a capital plan under the best of circumstances. Next year we'll have CR3 coming due in two phases, changes in the environment potential upside in areas like, for example, the sectoral buffer that's been applied in Germany to mortgages, so lots of moving parts at this point one doesn't want to get ahead of. So we'll we'll make that decision sort of much later in in in 25 then today's application.

Speaker Change: Under the best of circumstances next year, we'll have <unk> three coming coming due in two phases.

Speaker Change: Changes in the environment potential upside in areas like for example, the sector buffer that's been applied in Germany to mortgages. So lots of moving parts at this 0.1 doesn't want to get ahead of.

Speaker Change: So we'll we'll make that decision much later in 'twenty five than today's application.

Unknown Executive: Okay, thank you so much.

Speaker Change: Okay. Thank you very much thank you.

Unknown Executive: Thank you.

Speaker Change: And the next question will come from floor Apple code from Barclays. Please go ahead.

Flora Bocault: And the next question comes from Flora Bocault from Barclays. Please go ahead. Yes, thank you. Good morning. Thank you for taking my questions.

Speaker Change: Yes. Thank you good morning, Thank you for taking my question.

Flora Bocault: I have one on NIA and one on post this, so on NIA I would we come back to the job with so this quarter in the corporate bank. You know, it's led the banking book and I to be just three contributing this quarter, and I think the full year guidance you have implied it would be again about that level in into four. I mean when I look at the slide 32, and it's useful. Thank you very much for putting in that slide. I see you blocked a significant part of the hedging come already for the next two years, so that's very reassuring.

Speaker Change: I have one on NII and one on Posties. So.

Speaker Change: Could we collect leads to the drop we saw this quarter in the corporate bank.

Speaker Change: It's led the banking book NII to be just slip one 2 billion this quarter and I think the full year guidance you had implied it would be again about that level in that in.

Speaker Change: In Q4.

Speaker Change:

Speaker Change: I mean, when I look at the slide 32 entities. Thank you very much for putting in that slide I see you've lapped a significant part of the hedge income already for the next two years. So that's very reassuring I also see.

I also see that you've used a 10 years swap that would be 2.3 to 2.5% and that makes sense based on today's curve, but you know the least here is rather to the downside, so the question here is also. ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶

Speaker Change: That you've used 10 years swap that would be two 3% to 5% and that makes sense based on todays call.

Speaker Change: Sure.

Speaker Change: Why that was the downside. So the question here is also.

Speaker Change: The light blue color on the contribution from Deloitte other after hedges.

Speaker Change: You know the 10 year swap will go to let's say to two 2% where do we see you know the one other contribute positively in the next two years despite on top of.

Speaker Change: Got you blocked.

Speaker Change: So that's the NII and then the second question is on cost.

Speaker Change: And I think you were saying before James.

Speaker Change: To make your guidance for 2025 cost you would need to get adjusted cost quarterly run rate down to one stop one 9 billion.

Speaker Change: You just had sneak out.

Speaker Change: So while you have met the guidance for this year.

Speaker Change: So maybe could you talk a little bit too.

Speaker Change: The capacity for you to get that already in Q4.

Speaker Change: What gives you the confidence that you can get to other Falcon 9 billion quarterly run rate just because next year. Thank you.

Speaker Change: Thank you flora.

To answer those questions. So on the NII disclosure that we provide youre right Theres of course, some risk on the rollover of the hedges.

Speaker Change: We like that we've locked in 90% for next year and yes, we use the.

Speaker Change: The implied forward curve to look at what the what the future might be.

Speaker Change: The dark Blue is as I say, what's locked in for the next several years remember of course that the.

Speaker Change: The gap is against hedges that are rolling off that were essentially at zero or very very low. So so the idea that there may be a little bit of of of downside.

Speaker Change: The light blue bars.

Speaker Change: That's true, but it's a bit the quantum is against very low hedges put in put in many.

Speaker Change: Many years ago as much as 10 years ago and that rollover.

Speaker Change: And that actually goes to the first part of your question, which is the corporate bank. Yes, we had in the series sort of a low point in the corporate bank, but actually there are some hedges that now roll off in the fourth quarter.

Speaker Change: Into into chunks and that gives us some good visibility into.

Speaker Change: Two the trajectory for the corporate bank.

Speaker Change: Think about the two businesses separately.

No.

Speaker Change: We are we think we may have passed the low point in the trajectory for private bank already now in Q3.

Speaker Change: And we will be passing that that low point in Q4 for the corporate bank.

Speaker Change: It's obviously early to make that judgment and we'll see how everything plays out include including the the balance sheet growth deposit growth betas and what have you, but we think we're on a path now to be rising in 2025.

Speaker Change: Not just because of the benefit of the long term hedges. So overall quite encouraging picture as we see it.

Speaker Change: Going to costs.

Speaker Change: Yeah, absolutely we're focused every day on managing the run rate down.

Speaker Change: And I think we've said in the past towards $4 9 billion that is remains our objective here.

Speaker Change: The trajectory in the first three quarters of this year has been encouraging and even in the third quarter of I can point to some things that are that are of a nonrecurring nature.

Speaker Change: In the third quarter I think so I think we're close to our app.

Speaker Change: The 5 billion level.

Speaker Change: But we need to continue working it down from this point and that is the full focus of the firm we have the projects and the initiatives in place to do that so it's for US it's just about <unk>.

Speaker Change: Additional delivery of our operational efficiency program, we've talked about it in the past its optimization initiatives in Germany, We've announced some more actions on the distribution network in Germany, we have been investing in technology, and we're harvesting harvesting some of the benefits of that.

Speaker Change: We have a very successful track record now on worked workforce optimization.

Speaker Change: Because what you see in the overall head count as well as.

The compensation and benefits line is the.

Speaker Change: The impact of of reductions enforced that we've implemented reinvestments both in the front office in technology and controls all of which we've managed within the run rate and we think we've got a.

Speaker Change: Raft of initiatives.

Speaker Change: On the strategic nature underway to deliver further on those run rate improvements.

Speaker Change: As well as tactical steps that we've been taken throughout the year and we will continue to take to ensure we deliver on the objectives.

Speaker Change: I hope that all helps Lauren.

Speaker Change: Yes, that's very clear thank you very much.

Speaker Change: And the next question comes from Kian Apple Hussain from Jpmorgan. Please go ahead.

Speaker Change: Yes, hi.

Speaker Change: Two questions.

One is relating more specifically.

Speaker Change: Question on the article 468, this year of three <unk>.

Speaker Change: Using these transitional rules and just trying to understand.

Speaker Change: The dynamic on the OCI, it's about 20 basis points on your capital and why are you using it because it is transitional so at one point you will have to take the impact. So just to understand first of all the dynamic but also your decision process of why you've taken the benefit.

Speaker Change: And then second question is related to your 2025 revenues.

Speaker Change: You need to grow revenues, just under 7% from 30% to $32 billion, even if you adjust for the 300 million Delta on your hedges.

Speaker Change: Clearly, it's quite the opposite.

Speaker Change: Upward sloping curve in terms of revenue growth in a more difficult Germinant volume and then maybe you could just outline a bit how.

Speaker Change: How we should think about your assumptions in the more difficult German environment, and I'm not sure what the German environment outlook.

Speaker Change: In 'twenty five in terms of reaching that 32 billion.

Speaker Change: Especially again corporate Bank 25, and then private bank 25.

Speaker Change: Yes.

Speaker Change: Thank you Kian.

Speaker Change: Let me start with the revenues and.

Speaker Change: James is then going to the capital question.

Speaker Change: Look first of all before we talk about 2025 and fully understood. Your question.

Speaker Change: I think it's.

Speaker Change: Very encouraging that we are.

Speaker Change: <unk> foods side on the $30 billion for 2024, and again I think we have established a track record in achieving our revenue guidance for the last years and.

Speaker Change: And if I look at actually where we stand at the end of the third quarter are actually October started in particular on the trading side you just heard James talking about sort of the potential low point in the NII and the private bank.

Speaker Change: Then.

Speaker Change: Also where equity indices are and what that potentially means for performance fees in asset management.

Speaker Change: We are super confident that we can achieve the $30 billion of which is obviously the right jump off for your question regarding the 32.

Speaker Change: Now when we come to the 32.

Speaker Change: Look the first item is again, a continuation of that but James solid light on the NII side because.

Speaker Change: Everything what we can see from our forecast.

Speaker Change: Given our hedging profile, but also in particular looking at our deposit growth, which we see in the corporate bank, but also on the private bank.

Speaker Change: We do feel that actually just from an NII across the bank and in particular carried by the corporate banking by the private bank, we do see an upside of approximately $300 million to $400 million on the NII side by the way Kian that does not include the expected growth on the fine.

Speaker Change: Nancy volume in particular also in children's business and the investment bank.

Speaker Change: So that when I look at the forecast.

Speaker Change: Just from the financing part in that area and the NII part.

Speaker Change: Obviously my starting position is then.

Speaker Change: $500 million up I E 35, and now let's go through the businesses and in particular look at the investments, which we have done over the last 18 months to move the businesses in particular in the non NII area. There is of course, the investment bank and they have the <unk> business you have seen with the last quarters that we clearly.

Speaker Change: Outperformed the market, we have grown market share.

Speaker Change: <unk> not everybody so to say, which we hired.

Speaker Change: Over the last 18 months is yet obviously running at full speed. So this is still to come.

Speaker Change: So we actually expect <unk> business further market share gains and we also expect to actually the 2025 with all indications we have from our.

Speaker Change: From our mandates, which we see for Q4 and Q1 already.

Speaker Change: We'll be a year with actually higher fees.

Speaker Change: For the banks and that means if you have a higher market share, which we already increased by 60 or 70 basis points, which we will obviously benefit. So we do believe that just in the <unk> business.

Speaker Change: We see upside of another $500 million towards the number which we are printing for the year 2024.

Speaker Change: Then we have invested and you have also seen over the last year actually two complementary rum.

<unk>, we've seen constant increases in market share in the Fig business.

Speaker Change: I think we have done a terrific job over there now if you if you follow ramp ramp planning going forward.

Speaker Change: Obviously, we have an eye in certain areas such as their business areas like credit.

Speaker Change: But also from a regional point of view, we invested quite significantly over the last nine months into our U S franchise.

Speaker Change: So I would say with the market shares, which we definitely also one again in Q3 with the investments we have done in that business.

There is also further increases to come from the FIC business and the investment bank.

Speaker Change: Let's turn to the private bank, so I talked about the NII profile.

Speaker Change: But obviously the biggest lever, which we see at the private bank and there we see actually already a good momentum on the wealth management side, but if you look at the assets under management, which are increasing steadily I think we had year to date in the private bank approximately $27 29 billion assets under management, we will obviously benefit.

Speaker Change: From that next to the NII I described before similar by the way on the assets on assets under management in asset management and Stefan books, So that I also.

Speaker Change: Clearly expect a three digit million dollars increase in revenues in asset management and next year.

Speaker Change: And that leaves me with the corporate Bank I think the corporate bank in itself is a success story.

Speaker Change: In the meantime, so to say at the heart of the bank.

Speaker Change: Quarter by quarter, we are increasing the mandates we get from our corporate clients around the world. There is clearly clearly.

Trend of the corporates around the world to go for at least one I turn it to the U S banks, they would like to ask the European auto with the network, we have and the investments we have done in our platform payment platform business.

Speaker Change: Ed well into our digital offerings.

Speaker Change: We can see further increases in the fee business. There. So all in all starting actually at $30 35 billion with the hedging profile on the NII side.

Speaker Change: And looking at the track record I am very confident that the 32 billion is the number which we can achieve and last but not least if I really think about 2025. If you think about the work and the normalized costs. We have for the loan loss provision clearly reduce cost on the legal side James was just talking about all our efforts.

Speaker Change: And also progress we are doing on the <unk>.

Speaker Change: Operating cost side.

Speaker Change: And we will have less restructuring costs to be honest kian, but you know me personally.

Speaker Change: You don't even need $32 billion of revenues in order to go to the 10%, but that doesn't mean that I'm trying to.

Speaker Change: Put a soft touch on the $32 billion I think you've heard my absolute conviction that $32 billion is definitely achievable.

Speaker Change: And Ken.

Ken: Just to touch your OCI filter the Crs three rule that we're taking advantage of.

I think the short answer is because it's there.

Ken: <unk> value of capital in our ratio, especially as we're often measured against a distance to MDA appears to us to be valuable.

Ken: Hence the decision to take advantage of that transitional arrangement.

Ken: Remember that the the 22 basis points could be a lower number when the time comes that the transition benefit is is over.

Ken: So the passenger time in the book of Securities that are generating those unrealized losses we.

Ken: We will see some attrition and then the interest rate environment will change. So it's a number that may be considerably lower than 20 basis points win when that transition period ends and therefore, we think it's valuable for our shareholders.

Ken: To be able to redeploy that capital.

During that 18 month period.

Speaker Change: Thank you.

Speaker Change: And the next question will come from Chris <unk> from Goldman Sachs. Please go ahead.

Speaker Change: Yes. Good morning, everybody just two for me. So first on M&A does the current M&A situation in Germany impacts how you think about your banking strategy in the home markets the competitive landscape in Germany, or how you would prioritize organic versus inorganic growth.

Speaker Change: And then the second in M&A.

Speaker Change: It looks like you lost some share in the quarter. You said it was trending up 70 basis points from the first half and I think you are calling it up 50 bps versus 2023. So just what are the moving parts there or is that just mix and does that change at all how you think about the competition.

Speaker Change: Although <unk> revenues into next year, obviously, notwithstanding the answer you just gave Ken.

Speaker Change: Thank you, Chris Let me take the first one and James.

Speaker Change: Taking the second one.

Speaker Change: Okay.

Speaker Change: On the M&A side and on the specific potential situations, we were referring to in Germany that does not change our strategy at all.

Speaker Change: I think we have a very solid and a very good footprint in Germany, both in the private bank as well as in the corporate bank.

Speaker Change: We have worked on the Opex.

Speaker Change: Obviously on two sides in Germany to make that even more attractive a you'll see all the work which is done by Claudio in particular in the retail bank to make this business more efficient we know that there is work to be done, but I can see how our cloud you was actually focusing on debt to have an efficient platform to offer <unk>.

Speaker Change: <unk> products to our retail clients and honestly quarter by quarter also with the feedback we get from the clients, we see clear improvement on the corporate side.

Speaker Change: I think again, what I said before was the right decision to establish our self.

Speaker Change: Within owned corporate bank and to make sure that we are so.

Speaker Change: So to say the bank.

Speaker Change: German Mittelstand family owned clients.

Speaker Change: And obviously the large clients.

Speaker Change: To support them domestically, but in particular when they go abroad.

Speaker Change: And in this regard we feel that we are rightly positioned and with all the efficiency programs, we can actually see that the profitability in the German business on both sides is further increasing and will further increase now whenever it comes to these kind of.

Speaker Change: Retention items.

Speaker Change: To be honest, Chris we shouldnt underestimate the opportunities for us because at the end of the day it creates uncertainty it creates uncertainty.

Speaker Change: With the other institutions, but in particular also with the clients and we are ready to act and this is what we established over the last three to four years, both in the corporate bank and the private bank and in this regard we have a clear strategy that is delivery of 2025% to 10% and in this regard whenever.

Speaker Change: There is an opportunity to gain market share domestically.

Speaker Change: We will do this.

Speaker Change: And Chris to your question about O&M market share you are correct that Q3 was a little lower than the year to date.

Speaker Change: And that was mostly mix.

Speaker Change: Particularly that leveraged debt capital markets was a smaller part of the of the wallet in Q3.

Speaker Change: I'm actually encouraged by by continued sort of year on year improvement in our M&A market share where some of the investments are beginning to bear fruit.

Speaker Change: And that's particularly on an announced basis rather than a book basis.

Speaker Change: If I look to the what we would estimate the market share to be in the fourth quarter based on on the forward look of our pipeline and estimates of <unk>.

Speaker Change: Next quarter, we think we'll be back in the kind of 2526 range, where we've been this year and that's an encouraging step off into next year.

Speaker Change: Okay. Thank you very helpful.

And the next question comes from Julian Oh on the auto from Morgan Stanley. Please go ahead.

Speaker Change: Yes, hi, good morning, Thank you for taking my questions I have two.

Speaker Change: Not any longer dated so the first one is on the Postbank.

Speaker Change: Integration, if we take a step back why why this cyclical peak.

Speaker Change: I mean by normally would have expected.

Speaker Change: The banks will be fully integrated the 80 to be merged so when can we essentially stopped talking about this and really see.

Speaker Change: Is that change in the cost.

Speaker Change: On the private Bank and then my second question is on private credit.

Speaker Change: This is becoming incrementally atopic U S investment banks, we're talking a lot about this in Q2 results.

Speaker Change: And how do you approach private credit do you see as a potential disruptor to some of your lending business do you see as an opportunity to grow these businesses by partnering yes, any any comment on the private credit side. Thank you.

James: Sure Julian it's James I'll take the both and Christian May want to add on the private credit side.

Okay.

Speaker Change: Bank the recovery from the operational disruption that took place in last year's third quarter has taken us longer than we expected.

Speaker Change: Among other things we were extremely focused on ensuring that we can close out the backlogs of processes that were adversely affecting our clients.

Speaker Change: That was our focus it was also the Boston focus as they looked at the problem set and hence collections was an area that that.

Speaker Change: We waited longer to to focus on improving.

Speaker Change: Now made those investments and we've hired the people we train the people and collections processes is getting closer to normal.

Speaker Change: That took us longer than we expected. This year no question No question, which is why it has had the impact on the on the <unk> guidance that it did.

Speaker Change: But given where we are right now and being up and running on that process. I think we feel much more comfortable that that we're at the end rather than that there is still risk. The other thing is a little bit in the details, but the last model conversion of a portfolio from postbank onto the DB cyst.

Speaker Change: <unk> and models on the risk side that took place in the third quarter that also influence that that number of $40 million. So why is it is a topic the sort of longer term impact of the operational disruptions that is coming to an end.

Speaker Change: As well as the models.

Speaker Change: On private credit.

Speaker Change: We see it more as an opportunity then is the threat, obviously, there's a degree to which.

The banks face the risk of disintermediation, but I think that is that that downside is more than offset by the upside of frankly, a growing market.

Speaker Change: Our growing ability to place risks in the marketplace, and thereby increase our origination sort of business model fees on origination and expand loan origination beyond what the capital on our balance sheet supports by itself. We also see opportunities.

Speaker Change: In collaboration with with private credit firms to do more.

Collaboration with our own asset manager Dws to do more as dws builds its strategies in private credit.

We aim to be here, a participant not just as an originator but also.

Speaker Change: As a partner and a participant and managing private credit.

Speaker Change: So it is a change in the market.

Speaker Change: It is a disruption to some extent, but one that we're strategically we have Deutsche bank feel we're actually well positioned on a relative basis globally, and particularly in Europe to be a beneficiary.

Speaker Change: Okay.

Speaker Change: Thank you can I just check on Postbank. So now the I T system is fully integrated and you have just one or are you still running.

Speaker Change: If I Miss one.

Speaker Change: At this point everything has moved over the remaining work is really archiving and what have you one system.

Speaker Change: Interestingly there are some future opportunities is actually one of the cost benefits that we see and revenue benefits going forward Postbank is actually jumped out ahead of Deutsche Bank in some of its digital properties.

Speaker Change: And the investments, we're making this year going into next year would actually help us catch up and accelerate further.

Deutsche Bank side of that equation. So so in a sense there is more opportunity to be serving customers in a.

Speaker Change: Leading way competitively in this marketplace in both brands.

Speaker Change: Now that we have the hard work behind us and by the way most of the synergy value captured a little bit more still to come in Q4 and Q1.

Speaker Change: Thank you.

Speaker Change: And the next question comes from Stefan <unk> from Autonomous. Please go ahead.

Speaker Change: Yes, good morning, Tim.

Speaker Change: Hum.

Speaker Change: Thank you very much for taking my questions.

Speaker Change: I wanted to ask please you mentioning that your clearing the path for 2025 targets acting decisively to address legacy items does.

Speaker Change: Attained at any elevated one offs potentially coming in the fourth quarter, let's say on restructuring expenses.

Speaker Change: The second question I wanted to ask is on this upcoming portfolio sale in the U S commercial real estate.

Speaker Change: Can you.

Speaker Change: Can you give us a rough sense of what the notion of that portfolio is and how those stage three loans. Please.

And if I if I may just a quick third question you mentioned these credit concentration hedges and the benefits from them.

Speaker Change: Let us know and which.

Speaker Change: P&L items, which revenue items, and which divisions, we would find these hedge benefits piece and how large they are thank you.

Speaker Change: Yes.

Speaker Change: Stefan Thanks for the questions I'll take all three.

Speaker Change: Chris you may want to add.

Speaker Change: I'd say, it's too early to tell on your on the on your question of is there anything sort of extraordinary that we that we may book in Q4, and the reason for that is when I think about litigation for example, whats in our control and not.

Speaker Change: Either analytically or in.

Speaker Change: In actual settlement activity is always hard to tell.

Speaker Change: But certainly and I think we've been consistent messaging on this we wanted to put ourselves in a place where we no longer have surprises like the postbank takeover little litigation item for shareholders.

Speaker Change: Equally we're in the planning process restructuring and severance were still working towards our 400 million budget.

Speaker Change: For the year Youll see <unk> seen that Q4 actually we did less than we than we expected in Q3 I'm sorry.

Speaker Change: And so there may be a bit of a catch up in Q4, if there additional tactical measures that we.

Speaker Change: Identify we may go a little bit further there.

Speaker Change: Other area I might point out is real estate, we always looking at our real estate portfolio and to see where we can optimize further in all of those areas too early to say what actions.

Speaker Change: We could find to take place, but but.

Speaker Change: I think it's a signal of a company always looking for ways to optimize and improve our run rates and and then deliver on promises growing in a sustainable way by the way deliver on our promises for next year.

Speaker Change: On the CRE portfolio.

Speaker Change: It was approaching but not quite 1 billion euros that we put in the market.

Speaker Change: Of that a little bit sort of approaching 40% with stage III.

Speaker Change: And then the rest of the mix of performing in stage two.

Speaker Change: We were encouraged frankly by the pricing that we saw.

Speaker Change: Remember that when Youre doing a portfolio of sale does it the $23 million. We book is it telling us our marks werent right or simply that we're placing somebody elses cost of capital for our own.

Speaker Change: More of the more of the ladder and given how close the marks on the stage three are too.

Speaker Change: On the streets three elements are to our our bookings we see that is encouraging and further evidence of our view that the commercial real estate is at least found a floor and is stabilizing.

Speaker Change: That transaction Incidentally I hope, we were clear, but we have not closed on that transaction, but we have.

We have now booked to where we think the.

Speaker Change: It leaves us in terms of marks so thats overall encouraging on the hedges.

Speaker Change: In both <unk> and IV.

Speaker Change: And a couple of them.

Of those exposures they were shared across the two.

Speaker Change: We call them sort of concentration of hedges, we have a programmatic.

Speaker Change: Sort of policy to.

To ensure that our concentration is don't exceed certain levels.

Speaker Change: When they do in terms of the underwriting we sell those kinds of those those exposures away into typically CLO structures.

Speaker Change: Sometimes other structures.

Speaker Change: The accounting has a an asymmetry.

Speaker Change: And produces revenue actually a net interest income.

Speaker Change: Was was smaller this quarter a little bit more in the first half.

Speaker Change: In total over the course of the year that amounted to about $200 million.

Only 30% of the of the of the losses actually sort of went to the capital given the benefit of the hedging.

Speaker Change: And I think it's a sign of.

Speaker Change: The prudence that goes into that programmatic hedging that we do and actually building going back to Julians question, It's an area where the growth of private credit is obviously helpful. Because we see improvements both in capacity and pricing in the market into which we sell away the risk that we're talking about.

Speaker Change: Bob.

I hope that all helps stephane.

Stephane: Very helpful. Thank you everyone shapes.

Speaker Change: And the next question comes from him Clark from Mediobanca. Please go ahead.

Speaker Change: Hi.

Speaker Change: Absolutely it's a similar question.

Speaker Change: On the hedges.

Speaker Change: The commentary from.

Speaker Change: Neutral headset and private banking revenues as a drag this quarter. So I'm, just wondering where within the group is the offsetting benefit.

Speaker Change: Thank you.

Speaker Change: Second sensitive division thanks.

Speaker Change: Uh huh.

Speaker Change: Thank you it's in Treasury was where our corporate and other where the offset last year was.

Speaker Change: So what we did was there was some what I would think of as hedging of the convexity of the mortgage portfolio.

Speaker Change: Which we.

Speaker Change: Historically had kept and treasury. This year the decision was to push that out to the business, where we think it appropriately belongs.

Speaker Change: And where by the way one of the reasons to do that was the hedge programs that we're able to implement have improved so that was the trigger for the change.

Speaker Change: That's meant that private bank.

Speaker Change: The surface has had.

Speaker Change: Year on year comparison.

Speaker Change: Worse, both on revenues by the way and on costs than than the.

Speaker Change: I'll use the word underlying performance.

Speaker Change: Would show so it's been a noisy quarter for PV, but in areas that at least two of which are our group neutral either on the cost side with other segments or in this case on the revenue side with with corporate and other.

Speaker Change: Thank you.

Speaker Change: And the next question comes from Jeremy <unk> from Dnb, probably by some please go ahead.

Speaker Change: Hi, Thank you a couple of follow ups, a lot sort of been talked about firstly on the U S. CRE I just wanted to check something that I think you implied but you're on slide 37, you've shown the quarterly <unk>. So now step back down to sort of $68 million I think youre, implying that thats, the new run rate we stay around that.

Speaker Change: Level going forward I, just wanted to make sure that I'm sort of understanding that right.

Speaker Change: And I guess, it's a positive really that youll modified loans are now $13 billion out of the 15, so it sort of implies.

Speaker Change: Through the pretty much the whole portfolio and I guess that supports that outlook. So.

Speaker Change: First question is really just as we now expect them to go forward at about 68% ish run rate.

Speaker Change: And then the second question I just wanted to press you a bit more on the M&A topic.

Speaker Change: You are commenting this morning on the newswires James about Deutsche Bank positioned to play a leading role in European consolidation the industrial logic makes sense.

But you're just not ready right now.

Speaker Change: And I just wanted to sort of how you view the scenario of someone like commerzbank, tying up with a different bank can effectively becoming all available what remaining Optionality would you have where else would you see opportunities for consolidation and for Deutsche Bank to play a leading role.

So Jeremy thanks for the questions.

Speaker Change: So more or less the answer is yes, we are.

Speaker Change: If we had printed in Q2, what we did in Q3 I think we would have been.

Speaker Change: Congratulated for the foresight.

Speaker Change: But we are we are absolutely seeing a trend here.

Speaker Change: It's based on the items that we've talked about for a while so relative stability in valuations would you see in the loan to value the interest rate environment.

Speaker Change: Obviously, the external index.

Speaker Change: Indices that you've seen and now having tested the market with the with the loan sale also the results of that of that market check.

Speaker Change: As you also alluded to inside the 68 is 23 that is and you can also think of it as bringing forward.

Speaker Change: And so the underlying run rate was even better okay.

Speaker Change: I don't want to promise a number I think having having.

Speaker Change: Leaned out a little bit far in Q1 about Q2, but the direction of travel is there and all of the drivers that I referred to are they're invisible and as it relates to the modifications you are correct. I mean look some of this portfolio will have been.

Speaker Change: <unk> and then have its new maturity and come up for an extension of second time, so it's not impossible that it grows beyond the 15, but it is just as a metric.

Speaker Change: But it is the case that we've been through.

Speaker Change: The lions share of the maturity profile and potential for modification as we said last quarter. The the list of projects, where we see kind of scope for new defaults.

Speaker Change: <unk> is obviously.

Speaker Change: Declining sort of the number of loans, where we see a risk in that there are modifications or defaults in the next 12 months declining significantly so all of those things to us are encouraging.

Speaker Change: Given you referred to my comments I'll I'll I'll go quickly and Christian may want to add I think our language on the strategic environment in Europe has been consistent.

Speaker Change: Throughout.

Speaker Change: The Deutsche Bank.

Speaker Change: I don't think its a god given right, but given the business that we do our size our home market in our sort of global capabilities. We think we are well positioned to be to play a leading role in time.

Speaker Change: We've also been consistently clear that we didn't see that time as having come.

Speaker Change: And that remains the case today, we've been consistent in our messaging that as we look to 'twenty five executing on our strategies delivering profitability demonstrating its sustainability demonstrating the growth.

Speaker Change: We will do more for our shareholders considerably than anything Thats inorganic.

Speaker Change: And so I think.

Speaker Change: Want to just emphasize the consistency of our language.

But also overtime the ambitions, we have for the organization, but it's but it's all over time.

Speaker Change: One last note.

Speaker Change: <unk>.

Speaker Change: To your question our opportunity set changes no question.

Speaker Change: In fact, the combination that has muted does take place.

Speaker Change: But it's one of.

Speaker Change: A number of opportunities that one could consider I don't want to be drawn on what those look like or when but but as you can imagine we've given thought to the to the question you posed over the years.

Thank you.

Speaker Change: And the next question comes from Tom <unk> from K B W. Please go ahead.

Speaker Change: Hi, Thanks for taking my question.

Speaker Change: Firstly, when I look three or four quarters got it into the coal businesses I still seem to be coming out.

Speaker Change: Relative to your 30 billion guidance unless trading revenues come in well over double digits and the same for M&A. It sounds like you expect the corporate center.

Speaker Change: Continue to positively surprise is that a fair assessment and into next year, how does that.

Speaker Change: How does the $500 million.

Speaker Change: Elevation atomic differences, which we've seen year to date.

Speaker Change: In your guidance for next year, and then secondly.

Speaker Change: Technical question, but as a general consensus that as long as rates stay between two to three.

Speaker Change: Everything is fine right.

Speaker Change: <unk> is a different story.

Speaker Change: Okay.

Speaker Change: How would you feel ingest rate simply changing the blood.

Speaker Change: At 2%, we got it thank you.

Thanks, Tom.

Speaker Change: In Q4, I'd say, one thing that is new.

Speaker Change: Not built into the guidance, but we referred to as potential performance fees on the on the asset management side, which they are the way. They are accounted for then uncertain until until the year is done and final we do see as you say sequential growth in <unk>, that's encouraging and that that would help against the $7 one.

Speaker Change: That.

Speaker Change: We're looking at for Q4, and if I just kind of walk forward momentum we've had so far in FIC markets.

Speaker Change: This year that should also produce I think.

Speaker Change: A very solid quarter and contribute to the run rate. So we were encouraged there look the.

Speaker Change: Corporate and other lines are hard to predict just by their nature valuation and timing. The nice thing this year really in the third quarter remember in the first quarter, we had some some losses and valuation timing that were because of their short nature actually the pull to par happened very quickly there is some.

Speaker Change: Longer dated pull to par that we can already see going forward.

Not a big part of what we're planning for 25 million and overall I'd say 25 would probably be a reversal to some degree from.

Speaker Change: From 'twenty, four, but but it's always hard to predict what goes in those lines are very market dependent.

Speaker Change: Hope that helps kind of square the math.

Speaker Change: Yes.

Speaker Change: Yes.

Speaker Change: Okay. Thank you and then on the rate.

Speaker Change: Alright.

Speaker Change: Most of that change.

Speaker Change: Yes look.

It's always hard to predict but as I've said to the question earlier.

Speaker Change: Obviously, it would be we would like for our <unk>.

Speaker Change: These roles the hedge to roll it at 2% or more.

Speaker Change: To be fair, that's what the market expects in terms of a terminal rate in euros.

Remember, though that this is long term rates and so the scenarios.

Speaker Change: No.

Speaker Change: A steepening curve.

Speaker Change: Especially as you see less liquidity in the market, maybe higher fiscal deficits and other things.

Speaker Change: You could actually in the long end.

Speaker Change: Even in scenarios, where the short goes down further see higher long end rates. So it's not just the level, but also the shape of the curve and what we we look at this hard and treasury and are in our Alco and <unk> processes.

Speaker Change: How do we.

Speaker Change: Lock in as much of the future.

Speaker Change: Not just simply by by Rolling 10 years, which is a big part of it for sure but also by thinking about sort of option structures and other things that can protect specific sort of curve shapes over time. So I don't think it is.

Speaker Change: Don't think of it is totally linear in terms of our exposure to to that environment.

Speaker Change: And Tom just one addition to that I mean also think about.

Speaker Change: Outside the rate sensitivity.

Speaker Change: Actually what kind of investments, which we have done over the last 18 months actually in the non NII business and exactly for that reason in order to be really diversified from the revenue streams that was the reason why we invested into wealth management the fee business part of the corporate bank and obviously in the <unk> business. So I do believe that even if this would come.

Speaker Change: Is that a.

Speaker Change: I refer to James comments, but also the strength of the bank in the non ni business, which is which is clearly.

Speaker Change: Which is clearly significantly improving.

Speaker Change: Yeah.

Speaker Change: Okay. Thank you.

Speaker Change: And the next question comes from Piers Brown from HSBC. Please go ahead.

Piers Brown: Yes, good morning, everybody I've just got one final one is just a modeling question in terms of the some of the moving parts on capital into next year.

Piers Brown: Items that we discussed last quarter, but if you could just.

Piers Brown: Tell us whether there is any update to the Basel four guidance I think I had about $7 million.

Piers Brown: First the January 25, and then another.

Piers Brown: Similar amount with <unk> TB.

Piers Brown: 26, and then if there's anything to update on the.

Piers Brown: The leveraged finance reviews on the EPA Aviation Technical draft I think those are two other potential moving parts for next year that'd be helpful. Thank you.

Piers Brown: Thanks Pearce.

Piers Brown: Not much in the way of New news I still our estimate $15 billion in total split basically 50 50.

Piers Brown: Is still about right.

Piers Brown: So next the Q1 impact is operational risk related Q1, 'twenty six would be <unk> related the OCI filter item that I talked about with Ken would also be a feature then whatever that number is in 2026.

Piers Brown: So those are the those are the.

Piers Brown: Build items that are that are still left ahead of us.

Piers Brown: I think as I say there is also the possibility of of.

Piers Brown: Things are taking place that benefits against that future.

I mentioned the sector buffer against mortgages in Germany, conceivably a delay in <unk>. So it's the nature of the Beast here is that it's a bit of a moving target, but with all of the things that we can see right now we feel very comfortable.

Piers Brown: And our path.

Piers Brown: On the leverage.

Speaker Change: The Ava item, which I take to be the question. So the EPA Q&A on additional valuation adjustments.

Speaker Change: I'm not aware of any real any sort of movement. There I know there was an exposure draft as I might call. It a lot of feedback for the industry, but there hasnt been a re issuance of that we do obviously have very strong views about about the ideas that were.

Speaker Change: Laid out in the in the in the EMEA draft that would be.

Speaker Change: A headwind to our current expectations and capital plan, but we also think that those those ideas were.

Speaker Change: Excessively conservative.

Speaker Change: Argue.

Speaker Change: <unk> around that.

Speaker Change: Was your question, though.

Speaker Change: More broadly about the leveraged lending review with the ECB that there wasn't much really the update there either I have to say.

Speaker Change: Well, we should only state that we are still.

Speaker Change: We are still waiting for the final report.

Speaker Change: Given all of the discussions over the summer we can only tell you that the number came substantially down.

And to be honest, we feel very comfortable with the exposure we have.

Speaker Change: And now we have to wait for the further debate with DCP.

Speaker Change: That's fine Yeah, I was actually referring to I think we've mentioned in the past is a 15 basis point add onto your.

Speaker Change: CET one.

Speaker Change: The way I would model business Youre matters.

Speaker Change: Out in the form of <unk>.

Speaker Change: Some form of capital reduction.

Speaker Change: Okay.

Speaker Change: No change.

Speaker Change: Today to that as you know we were given five basis points back a year ago, which we took to be a good sign in terms of where we were on a relative basis, but no change to that.

Speaker Change: Okay. That's great. Thank you very much.

Speaker Change: As a reminder, thank you peers.

Speaker Change: If you wish to register for a question. Please press star and one on your telephone and the next question comes from Andrew Coombs from Citi. Please go ahead.

Andrew Coombs: Good afternoon, Firstly just.

Andrew Coombs: Quick clarification I think in the revenue walk from fetched fetched 2 billion, you talked about $300 million to $400 million incremental NII.

In P&C from deposit growth.

Andrew Coombs: I'll just confirm that that's the case.

The 300 million from the structural hedge Taiwanese then on top of that.

Speaker Change: So Andrew no.

Speaker Change: Just to be clear.

Speaker Change: We would expect.

Speaker Change: Ballpark $200 million in each of the the larger deposit businesses next year and that ties to the to the disclosure around the hedges that number is before any benefits of growth in.

Speaker Change: And the balance sheet, whether loans or deposits or spreads on either of those two things.

Speaker Change: So that's why I think in Christian's comments we.

Speaker Change: We see upside in NII, not just from the rollover and lets say thats $3 million to $400 million depends a little bit still on the interest rate environment, but then incremental NII benefit next year.

Speaker Change: All those other factors.

Speaker Change: So I hope that clarifies.

Speaker Change: Okay, and then as a follow up to that I always thought that hedge wasn't allocated evenly between <unk> and.

Speaker Change: Interesting anything you can say on on the hedge allocation and then more broadly just the deposit margin trends that youre seeing base currently but what you're also assuming going into next year as well.

Speaker Change: Yeah, So you're right that typically the longer term hedges, especially the euro hedge book is more in the private bank the corporate bank as it happens in this year on year comparison in the corporate bank had a larger dollar hedge on which is the same hedge I referred to earlier Thats rolling off in Q4.

Speaker Change: <unk>.

Speaker Change: So there is an unusual uplift from a from a three year dollar hedged U S dollar hedge that.

Speaker Change: But the corporate bank is benefiting from that evens out the mix next year.

On the.

Sorry, what was the second question just blanking for a second Andrew.

Andrew Coombs: Sorry, No I was just don't do that.

Speaker Change: Yes can you hear me Oh deposit margins. Thank you.

Andrew Coombs: We're watching it closely.

Andrew Coombs: Yes, sorry for the the blank.

Andrew Coombs: We still plan.

Andrew Coombs: Arguably with conservative views on deposit margins and beta beta behavior.

Andrew Coombs: Now.

Andrew Coombs: The scope for upside from conservative assumptions, there naturally has diminished.

Andrew Coombs: We've sort of gone through the upswing and now the beginning of the downswing of the cycle. We're.

Andrew Coombs: We're not seeing anything in terms of behavior today that would suggest more pressure on the banks in terms of in terms of pricing.

Andrew Coombs: And so that's encouraging.

Andrew Coombs: <unk>, but as I say the scope for four.

Andrew Coombs: Over earning at this point in the cycle is obviously less.

Andrew Coombs: I'm going to say in beta terms single digit percentages, rather than double digit percentages that we once had.

Andrew Coombs: Yes.

Speaker Change: So ladies and gentlemen, this was the last question.

Speaker Change: I'd now like to turn the conference back over to <unk> for any closing remarks.

Speaker Change: Thank you for joining us and thank you for your questions. If any follow up please come through to the Investor Relations team and we look forward to speaking to you on our fourth quarter call.

Speaker Change: Yes.

Speaker Change: Ladies and gentlemen, the conference is now over thank you for choosing chorus call and thank you for participating in the conference you May now disconnect your lines Goodbye.

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