DWS Group GmbH & Co. KGaA

Ladies and gentlemen, welcome to the DWS Q1 2026 results with investor and analyst conference call. I am Shari, the course call operator. I would like to remind you that all participants will be in listen-only mode and the conference is being recorded. The presentation will be followed by Q&A session. You can register for questions at any time by pressing star and one on your telephone. For operator 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 Oliver Flade. Please go ahead.

Thank you very much, operator, and good morning from sunny Frankfurt. This is Oliver Flade from Investor Relations, and I would like to welcome everybody to our earnings call for the first quarter of 2026. Now, before we start, I would like to remind you, as usual, that the upcoming Deutsche Bank analyst call will outline the asset management segments results, which have a different parameter basis to the DWS results that we are presenting now. I'm joined also, as usual, by Stefan Hobbs, our CEO, and Markus Kobler, our CFO. And Stefan will start with some opening remarks as well as some closing remarks, and Markus will take you through the main part of the presentation. And for the Q&A afterwards, please could you limit yourself to the two most important questions so that we can give as many people a chance to participate as possible. And I would also like to remind you that the presentation may contain forward-looking statements which may not develop as we currently expect. I therefore ask you to take note of the disclaimer and the precautionary warning on the forward-looking statements at the end of our materials. And with that, I will now pass on to Stefan. Thank you, Oliver.

So for the second time in a row, our head of investor relations muted me just after my thank you, Oliver. So thank you, Oliver. Good morning, ladies and gentlemen, and welcome to our Q1 2026 earnings call. It is not easy to describe the environment we are in right now. It is clearly a difficult environment for the world and an unpredictable one. I mean, who would have thought a couple of months ago that the U.S. would block the Strait of Hormuz? The best description I've heard was this. It feels like we're currently living through what will be the toughest part of the history exam for the class of 2085. Now, for asset managers, this environment is highly relevant for two reasons. First, it is fertile ground for active asset management. The more volatile and dispersed markets become, the stronger and more opposing views tend to be. And honestly, if you cannot create alpha in this environment, then when? That is why I'm pleased with our investment performance over the last few months, particularly across our large retail funds. Our top dividend fund, for example, was up 8.46% as of 31st of March, which is ahead of major indices. That has supported nice inflows and higher management fees through above-market growth in assets under management in this fund. Other flexural funds like Accumula and Vermögensbildungsfonds E have also performed well, while concept Kalde Morgen has managed volatility effectively and has moved into performance-free territory in Q2. Second, in an environment like this, it is critical to operate at a low cost-income ratio. This is exactly the kind of environment we have prepared for and work towards. As I said, when I walked you through the logic two years ago, the cost income ratio for an asset manager is similar to the leverage ratio for banks. It is a measure of how well you are prepared for a weaker environment. A high earnings per share with a high cost income ratio is dangerous because volatility can impact the bottom line very quickly. That is why we focused on maximizing earnings with a binding constraint of a low cost income ratio. Operating at a comparatively low cost-income ratio leads to more earnings stability and allows us to keep investing in growth, organically and potentially inorganically. Markus will come back to that in more detail. Against the backdrop, we delivered a solid first quarter. Earnings per share came in at €1.32 and above consensus, although this was largely driven by the timing of our P2 performance fees. Revenues were 821 million euros, up 9% year-on-year, while net income increased to 265 million euros, up 33% year-on-year. Our reported cost-income ratio improved to 54.1%, down 8.1 percentage points year-on-year, and our cost base of 444 million euros was encouraging, underlining that cost discipline remains firmly in place. To summarize, costs were a bit better, flows were a bit weaker given a tough March, and performance fees came in earlier than expected. Markus will go through that in more detail. For the full year, we reconfirm our target. Markets have shown a V-shaped recovery over the course of April. This means that our assets under management are now back at broadly the same level we were at the end of February. At the same time, there's still a revenue impact from the interim volatility. The AUM dent in March and April amounted to around 40 billion euros, which translates into a revenue gap of about 20 million euros. And of course, we need to remain mindful of the current environment. The level of uncertainty remains elevated, warranting a degree of caution. Fortunately, If you recall our last quarterly earnings call, we had full focus on additional cost levers, and that has now paid off very nicely. We are ahead of plan, following the actions we took earlier in the year, allowing us to tighten our cost guidance to around 1.80 billion euros for the year, helping to offset the revenue gap. At the same time, performance fees have already been delivered on a large part of PIV2, giving us confidence that we will be at the upper end of our 4% to 8% of revenues guidance range. So taken together, we reconfirm our target of 10% to 15% EPS growth for the full year, assuming markets remain constructive. Now, before I hand over to Markus, I'm pleased to tell you that Markus has just extended his contract at DWS and will be my partner for at least another three years. Now with that, over to Markus. Thank you, Stefan. It's a privilege.

It's one of the most exciting CFO positions in the industry. And I think we have a duty also as a European-based asset manager to succeed. More to come. Thank you. And good morning, ladies and gentlemen. Before I take you through our financial performance, let me start by saying that I hope you are all navigating this period well. As Stefan already mentioned, the environment we are in right now is clearly not an easy one. It is complex, volatile, and to a certain extent, unpredictable. With that, let me turn to our financial snapshot for the first quarter. Total assets under management increased by 8% year-on-year and flat quarter-on-quarter to 1 trillion and 93 billion euros. Total revenues stood at 821 million euros, representing a 9% increase year-on-year and 9% decrease quarter-on-quarter. Our total costs decreased 5% year-on-year and 9% quarter-on-quarter and totaled €444 million. This resulted in a reported cost-income ratio of 54.1% for the first quarter of 2026. As a consequence of our strong operating leverage, our net income increased by 33% year-on-year and decreased 10% quarter-on-quarter, reaching €265 million. Moving to our client dynamics during Q1. Whereas we saw a solid start into Q1 with a healthy flow momentum during January and February, overall activity slowed down in March, following the geopolitical developments and the resulting market uncertainty. Clients remain cautious with the focus on liquidity and defensive positioning. Overall, we reported net flows of 11 billion euros and long-term net flows of 6.6 billion euros. Total retail flows stood out with 12.9 billion euros of net flows marking the 13th consecutive quarter of positive flows, demonstrating the resilience of our franchise despite elevated volatility. Client demand remains supported by our digital distribution channels. On the institutional side, we reported net outflows of 1.9 billion euros. Client activity in the institutional space was more restrained in March amid heightened market uncertainty. This was less the question of underlying demand and more one of timing, with clients taking a more cautious and selective approach to new commitments while prioritizing capital preservation. Looking at regions, in the Americas, we saw net outflows of 5.1 billion euros, mainly impacted by institutional cash outflows at the end of March. These were driven by seasonal tax payment defects. However, we already see a reversal of these flows in April. Total net flows into our whole market Germany amounted to 7.9 billion euros, driven by an ongoing demand for passive, including X-trackers. EMEA excluding Germany saw 7.7 billion euros of net flows, demonstrating strong client engagement across the region. as clients are increasingly receptive to European investment opportunities as well as for our high-margin retail products. APEC reported €0.5 billion of net flows in the first quarter and saw continued asset rotation to higher-margin alternative products. Moving to the quarterly highlights within our active business. The first quarter reflects a more volatile market backdrop, which impacted overall active flows. While underlying client demand remains strong across selected areas of our active platform. Active assets under management stood at 458 billion euros, broadly stable quarter on quarter. Active equity reported net outflows of 1.2 billion euros, primarily reflecting client de-risking in response to heightened market volatility. Multi-asset reported positive net flows of 0.3 billion euros across both retail and institutional channels, including continued demand for our flagship fund concept Kaldemorgan. was a clear beneficiary of the current market environment with continued positive momentum, reporting 1.6 billion euros of net flows. This was mainly driven by white-labeled partnerships as well as inflows into quantitative strategies, including a significant mandate in the Middle East region. Fixed income flows were impacted by specific institutional mandate losses in the US and APEC. At the same time, retail demand remained positive, particularly for DWS floating rate notes. Product innovation remained supportive for our active franchise. Recent launches include our DWS Invest Focus Europe and two new active X-Trackers usage ETFs. Moving to our X-Trackers business. Passives, including X-Trackers, faced a demanding quarter and delivered net flows of €6.5 billion, marking the 13th consecutive quarter of positive flows. Asset under management increased to €396 billion stable quarter-on-quarter. Overall, our X-Tracker's flow momentum was considerably weakened in March after a solid start to the first quarter. The main flow contributor was our usage business, which delivered net flows of 3.8 billion euros. We saw clients rotating away from traditional benchmarks, which are heavily skewed towards the so-called magnificent seven stocks, resulting in positive flows into strategies with benchmarks such as Ecoweight and World X US. Our mandates and solutions business recorded sizable net flows of €2.9 billion into existing mandates and new fundings, alongside continuous momentum in our partnership products, including via digital channels. Our US domiciled ETFs saw outflows of €0.2 billion in the first quarter, mainly driven by outflows in high-yield ETFs. However, we successfully launched the X-Trackers Europe Defense Technologies ETF, further broadening our thematic offering. We also continue to expand our strategic footprint through two new digital distribution partnerships in EMEA, driving further expansion across key European markets. As mentioned in the previous quarter, the contribution of these digital partnerships to our overall X-Trackers flows continues to increase. Let me turn to our Q1 highlights for our alternatives platform. In Q1, assets under management totaled 112 billion euros, up 4% quarter on quarter. Our alternatives business delivered overall net flows of 0.2 billion euros in the quarter, supported primarily by demand for liquid real assets. Infrastructure contributed 0.1 billion euros of net flows and saw sustained investor interest in our flagship infrastructure strategies. Infrastructure flows in Q1 were impacted by a significant capital repayment to the fund investors related to two P2 asset sales. Capital repayments to fund holders are a usual part within our infrastructure business. They result from investments and realizations which generate corresponding performance fees at the end of a fund's life cycle and therefore are in the best interest of our clients and shareholders. In Q2, we expect another capital return to PEEF investors of around 1 billion euros which will be accounted as outflows, but are beneficial for our clients as just outlined. We further continue to benefit from strong investor appetite for Europe's structural transformation. In liquid real assets, flows remained positive in the quarter, recording 0.6 billion euros. We saw a momentum shift inclined sentiment with increasing levels of renewed interest in core tailored strategies, particularly in listed real estate and infrastructure. The sentiment for real estate remains mixed, reporting 0.6 billion euros of net outflows. European retail appetite continues to be subdued while institutional client interest in both Europe and the US stayed resilient. Private credit remains a strategic growth priority for DWS with several marketing initiatives progressing during the quarter. And product innovation continued with the launch of three new LRA mandates across infrastructure securities. We also expanded our LRA offering in the growing US retail market. Let me move now on to our Q1 revenue development. Total revenues reached €821 million, up 9% year-on-year and down 9% quarter-on-quarter. Management fees were stable quarter-on-quarter, marking €673 million. Performance and transaction fees totaled €109 million and include a substantial performance fee contribution from our PIEF II fund as a result of further asset sales in Q1. We do not anticipate further asset sales before the fourth quarter of 2026. And as Stefan mentioned, we reiterate that we will be at the upper end of our 4% to 8% of revenue guidance range. However, we anticipate that the vast majority of remaining performance fees to be booked in Q4 2026. Other revenues amounted to 39 million euros, which reflect an 18 million euro net interest income contribution, as well as a 15 million euro contribution from harvest. Let me move on to our cost development. We are particularly proud that our total costs have continued to decrease. which is the result of decisive action and a clear testament to the strength of our sustained and proactive cost management approach. We identified early on that managing our resources and cost base, especially our discipline-based cost, would be essential to our long-term success. Particularly in times like these, the benefits of this approach become even more crucial. In Q1, total costs stood at €444 million, down 9% quarter-on-quarter, and down 5% year-on-year. Compensation and benefits decreased to €239 million, down 4% versus the previous quarter, mainly driven by lower severance costs, and despite one-off carry costs linked to PF2 performance fees of €16 million. General and administrative expenses total €205 million, a 14% reduction quarter-on-quarter, reflecting seasonal adjustments, which typically occur in the fourth quarter. This translates into a reported cost-income ratio of 54.1%, reflecting higher revenues and continued efficiency gains resulting from our disciplined cost management approach. Before handing back to Stefan, let me provide an update on the focused measures which we outlined in the previous quarter to support our financial targets. As Stefan outlined earlier, our strategic direction remains unchanged. and we continue to execute our strategy with discipline in order to reach our medium-term financial targets. Let me briefly recap our achievements as well as current progress on the cost side. As discussed in previous quarters, we continue to distinguish between two categories of costs, volume-based costs which naturally rise alongside organic growth, and discipline-based costs, which we are constantly optimizing as they remain in our control. While a flat cost base may look similar across companies, the substance can be fundamentally different. A company can deliver flat costs by simply doing nothing, particularly by not investing into growth. That is not our approach. Our approach focuses on targeted investments through active reallocation of resources in the context of rising volume-based costs, which reflect the ongoing growth of our business. By counterbalancing these good costs with reductions in discipline cost categories, we maintain strict cost discipline while continuing to invest into growth. We thereby focus on three core levers to further reduce our discipline cost base. First, human capital management. People remain our key differentiator. We are further enhancing our human capital management through limited external hires promoting internal mobility, which has already realized financial and non-financial efficiency gains. Second, target operating model adjustments. Following a comprehensive review of structures and processes, we have moved decisively from assessment into execution. We continue to simplify organizational setups, streamline selected teams, and sharpen accountability across functions. This supports a leaner and more effective operating model fully aligned with our strategic priorities. And third, IT and operations optimization. We are progressing a range of initiatives focused on automation, artificial intelligence, and process simplification. In parallel, we continue to leverage offshoring and nearshoring capabilities, helping us to improve efficiency, resilience, and service quality across our operations. Overall, these measures continue to strengthen our operating platform and provide us with further efficiency gains. Those create even more capacity for continued investment into growth initiatives, which is particularly important in a volatile and uncertain market environment as we currently have. Let me hand over to Stefan to elaborate on our growth initiatives.

Thank you, Markus. As Markus outlined, we feel comfortable with our updated cost guidance and importantly with our ability to continue investing in our growth initiatives. Let me therefore briefly come back to what we said at our full year results and give you a quick update on our five growth priorities. Overall, we are fully focused on executing our growth plan, starting with our ambition to be top five in the top five. In the first quarter, we reached an important milestone in our strategic partnership with Nippon Life India Asset Management. We signed the agreement to invest in the alternatives platform, taking a 40% stake in formalizing our role as a strategic partner in building out India-focused alternatives capabilities. At the same time, we remain interested in increasing our stake in harvest fund management as part of our long-term growth strategy in China. Second, on gateway to Europe, we continue to see strong and sustained interest from international investors. Importantly, the geopolitical volatility we saw in the first quarter has not slowed that momentum. If anything, we continue to see interest deepen alongside a growing recognition that europe is coming together in a more coordinated way third on the future of finance we continue to make progress in building out our digital capabilities during the quarter our joint venture or unity issued a swiss franc stablecoin with further initiatives already in the pipeline fourth on bullish germany here We saw important regulatory clarity in the first quarter with the German Bundestag approving the private pension reform and expected publication of the new law in May. Our dedicated project team is set up to ensure we're well prepared and positioned to capture the opportunity as this develops, particularly as we move towards implementation in January next year. And finally, on our global house bank approach. Following our last earnings call, we announced the intention to expand our strategic collaboration with Deutsche Bank's private bank into the area of discretionary portfolio management. The aim is very clear, to combine the client reach and experience of Deutsche Bank's private bank with DWS's institutional-grade investment capabilities. We believe this is a natural extension of our partnership and an important step in strengthening our role in serving private wealth clients. So across all five priorities, we are making tangible progress while continuing to build for the long term. Stepping back, we feel that we are operating from a position of strength. In a more volatile environment, our investment performance is improving, our cost discipline is paying off, and we're continuing to invest in our long-term growth priorities. As we said at our full year results, managing costs requires discipline and consistency. Growing revenues sustainably is harder. It takes clarity on where we truly have an edge, disciplined resource allocation, and patience as platforms scale. We've laid that groundwork over the past few years, which is why even in a more volatile environment, we remain optimistic about the future, but uncompromising in execution. Taken together, alpha generation, cost control, and focused delivery is what differentiates us as an active asset manager and gives us the confidence to reconfirm our full year target of 10% to 15% EPS growth. Thank you. And back to Oliver for Q&A.

Thank you very much, Stefan and operator. We're ready for Q&A now. If I just might remind everybody to limit yourself to the two most important questions, that would be very kind. Thank you very much.

We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their telephone. You will hear a tone to confirm that you have entered the queue. If you wish to remove yourself from the question queue, you may press star and two. Anyone who has a question may press star and one at this time. The first question comes from the line of Jacques-Henri Goulart. Caprio Chevro, please go ahead.

Yes, good morning. Thank you for taking my question, guys. Two, quite quickly from me. In Active Equity, you talked, Stefan, last quarter, if I remember well, of a turnaround here. Could we interpret the minus 1.2 as a blip, which is really risk adverse? And do you have the feeling that, you know, it was just something that is due to the circumstances, really, and not something that should impede, I would say, the turnaround trend that you identified then? And then the second point, because you spent just 10 seconds on it, which is more the bullish Germany pitch, which I would like to hear in a little bit more detail from you, because it's important for your investors, in light of the fact that, you know, it's been a little bit of a slow start. and to which extent you still have a high degree of confidence considering that the impact, when you look sector by sector, is far from being completely harmonized yet. And thank you very much.

Great. Thank you, Jacques-Henri. And I guess both questions are sort of related because the significant revenue upside we see from bullish Germany is active equity related, and I'll come to that in a second. now on your first one on active equity uh we remain optimistic that the momentum has maturely shifted uh into the positive territory now q4 versus q1 i understand if you just look at the numbers it looks like we select took a step back but i think you know that there's some seasonality in in that behavior so q4 has some advantages because of essentially the ability of people to reinvest um performance in or either upside in the funds, essentially dividends in the funds that otherwise they would be able to take out and they kept them in so it's slightly easier pitch than finding new clients. And now if you compare Q1 26 to 25, I think you see the positive momentum. And then underlyingly, and we don't disclose it, but I can try to give you some guidance. If we differentiate between essentially retail end buyers and fund buyers so dpm or let's say more professional investors then we looked very strong with the end clients with the retail clients and across europe with the exception of one country that interestingly houses a couple of very very large asset managers and it's like french speaking but with the exception of this one country we are positive in every country in europe in active equity so in in wealth in retail flows you look at some of the big flagship funds like top dividend that had positive inflows so overall we feel good about active equity and look i think in the past some of you have very fairly criticized our investment performance um which you know obviously is a leading indicator for for future inflows you see that over the last um so like 24 months we made a bunch of changes take some time right it's a it's the pumping heart of dws so you cannot really may do changes over time, sorry, instantaneously, but it needs to be over time. But with a new setup and with people like Andre Köttner and Thomas Schüssler fully focused on managing their funds as opposed to also managing the platform, I think the performance shows, right? So that's why we're also not just optimistic in what we see, but also the leading indicator of strong performance. Now, bullish Germany, If you recall, our definition was that we've always been optimistic about Germany, but we're now turning even more bullish because of a bunch of, to give credit where credit is due, to a bunch of changes that politicians in Berlin have really been driving. Now, the big infrastructure, big spending and so on, that's more something which you will see translate into flows and alternatives. But the pension reform is something which will offer significant upside to active funds, active equity, active multi-asset, I think also active alternative funds. I think given that there's a tight schedule today with Amundi's call starting the 11th, I'm probably not going to do a full teaching on the private pension reform in Germany. But now that it's clear what you can do, now it's clear what the fees could be, now that the structure is clear, I think the key punchline is that going forward, you can actually generate yield. So in the past, it was always capital protected, meaning also very low yield generating funds that were part of the Rista Rente. Going forward, there's going to be much more focus on allowing pensioners to also, with long-term investments, generate long-term yield and therefore wealth accumulation. And obviously, that's quite conducive to our strong performing equity funds. Thank you, Jacques-Henri.

The next question comes from Nicholas Herman from Citi. Please go ahead.

Yes, good morning, gentlemen. Thanks for the presentation, taking my questions. Two for me as well, please. Firstly, on your house bank ambition. So Deutsche Bank's private bank has said that they want to double DPM volumes in the next three years. I guess with that partnership, what proportion of those volumes would you expect to get? And how should we be thinking about the incremental revenues and or margins associated with that volume? That's the first one. And then on... your infrastructure funds and carried interest, could you please, I guess this is a two-part question here, but could you remind us what the total expected carried interest from P2 is and how much has been booked to date? And I guess somewhat related, what is the expected carried interest from P3 if you were to hit your target returns and any kind of indication on timing full recognition of that carried interest. Thank you.

Perfect. Thank you, Nicholas. I think I'm looking at Mark as probably taking both questions. So on house bank, when you look at the essential workflow between Deutsche Bank's private bank and us, so far they do the majority of steps. So obviously we're closely aligned and our CIOs align and so on. But right now I'm simplifying a little bit but they're essentially running their own asset management operation in the sense of having portfolio managers trading execution. They're covered. I mean, they do all the things that we would also be doing. Now, they're doing it very well, but Claudia and the team have the perspective that with the ambition to significantly grow in DPM, that their clients, who are very well covered by Deutsche Bank's private bank, sort of deserve institutional-grade asset management execution. It's so far so good. However, going forward, given that they want to grow, they want to move steps in that value chain over to DWS. Now we haven't, you know, some of that is going to be like country specific because in some countries you require client consent and some others, it's mostly a communication. Again, I think it's in the best interest of clients because it will continue to get the service from Deutsche Bank's private bank plus have the upside of, you know, our much larger, you know, you know, trading investment platform. But therefore, it's sort of difficult to break down how quickly that will move. However, I think the intention is that for the vast majority, wherever it's possible, for us to team up and partner. Now, how those revenues will be split, you know, even though we are great partners and Claudio and I are quite close, I suspect that he wants to have slightly more than 50% of those revenues, given that you know, arguably the value creation is more on their side. So you shouldn't expect us to get a lion's share of it. But it's definitely upside because right now we do not have any of those steps with the exception of, you know, when they buy ETF, they sometimes buy X trackers. But I think going forward, we will have some of the value chain and therefore also some of the fees associated. We will be more clear on that going forward. So we announced the partnership after the last earnings call. a lot of things are currently being worked through. I think that we will be quite soon giving you more guidance, clarity, but also specific KPIs that you can track essentially for Deutsche Bank, but also for DWS. Now on infra, that's more straightforward and specific to answer. So for PEEF 2, everything but one asset is sold. So they are for the performance fees you've seen in 2025. And, you know, the portion of PEEF 2 performance fees as a percentage of total performance fees booked in Q1 was huge. So just assume the vast majority of the 107 million was PEEF 2 related. And there's only one asset remaining that should generate, you know, another, let's call it 30 to 40 million of performance fees. Obviously depends on price that asset still needs to be sold. That will likely come in Q4 this year. But that's it, right? So then PEEF 2 is fully sold to the point Marcus made earlier. We returned half a billion of capital to the investors, to the LPs in Q1. Another 900 million will be returned in Q2. And then PEEF 2 is basically done. Now, PEEF 3 is doing really well. So the investments are doing really well. But I would not expect PEEF 3 related performances in 26 or 27. maybe at the tail end of 27, but I think this is more likely to be 28 business simply because of timing and how long it takes to really optimize or generate value for the investments. And then P4 is obviously currently we're finalizing the fundraising with final close either Q2 or Q3, but definitely in 2026. And that will then take a few years before that generates performance fees.

That's really helpful. Just one quick question, just one quick follow-up. So on P3, that's landing very clear. Just remind us, please, what the target returns are either in terms of IRR or MOEC. That would be helpful. Thank you.

Just so we can kind of estimate a quantum. Yeah, yeah. I'm just looking at my colleagues because we're currently in fundraising for P4, so I want to be careful in what I say and not say. So when you look at historical performance, Our PEAF funds are sort of a top decile, potentially even top percentile performer in mid-market infrastructure, so really strong performance. Now, the headline return, what we essentially promise, is low teens, 12%, 13%, I think is what we promise. But then we aim to outperform, and so far they have done a very good job in outperforming. Got it. Thank you. Thank you.

Next question comes from the line of Hubert Lam, Bank of America. Please go ahead.

Hi, good morning. I've got two questions. Firstly, again on PEEF, but on PEEF 4, did you book any inflows on PEEF 4 this quarter in Q1? And any update on the size and timing of the closing? I think you mentioned maybe it could go into Q3, particularly given the events in the Middle East, like any change because of this? Second question is on passive flows or X-trackers. You had good inflows of $6.5 billion in the quarter, but it seems like you're lagging some of your competitors now. Any reason you think for this, and how would you assess your passive growth here? Thank you.

Thank you, Hubert. So on P4, the target size is still $4 billion plus, and we feel very good about that. If you recall, we were 2.5 billion end of 25. We had some small inflows, a couple hundred million in Q1, and then the lion's share is expected in Q2, potentially Q3. Now, don't tell our sales folks. So we're still telling the sales folks it's end of Q2 to make sure everyone remains focused. But yes, you're right. With the events in the Middle East, there's a chance that it slips a little bit. I have to say there's actually admirable, if I can say that with respect, admirable focus from all of the big investors in the Middle East. So they seem to manage living through this and being very focused on business. So I wouldn't expect a massive change, but typically what you do is if there are a couple of investors which are very close and advanced stage, Then you inform the other investors that you may remain open for a few very specific names for a couple of weeks, and that may be the case. However, essentially the difference between the 2.5 billion we had N of 25 and the target of at least 4 billion that will be booked in the calendar year 2026. Now on extractors, and let me actually address flow momentum slightly broader, and I will know be specific on challenges in a second but look i'm a um you know loving caring father of three wonderful daughters and i love all my daughters the same now for us as a fiduciary with 1.1 trillion of assets we care about all every single euro dollar sterling of those assets with the same care now i suspect that you guys so analysts and shareholders you don't love all of our aum quite the same because they come with very different margins, very different cost income ratios, profitability, and so on. Now, when you look at and dissect our Q1 flows and look at X trackers, then I suspect you're actually quite happy about the strong inflows in S&P, Equal Weights, MSCI, XUS, some of those more bespoke thematic ETFs. Well, we had very nice inflows, and they are close to 20 basis points in fee. Now, if it had an extra 12 billion, 15 billion of, you know, two and a half, three basis points, pure index replication, the headlines in Bloomberg and Reuters would have been more favorable, but I don't think that you would have cared too much, right? So therefore, I want our folks to, you know, fight for every single inflow. However, fight slightly more for the high margin inflows. I'm quite happy with what I've seen in Q1. When you look at, and we just commented on active equity, I've actually, quite satisfied with the flow picture with positive inflows in top dividend concept, our big flagship funds. And again, I think the strong performance is a leading indicator for future flows. So I think when you dissect it, I think we've done fine, not amazingly, but fine in the higher margin parts of the various asset classes. Now, where we have a real issue, a real challenge, is in institutional. And that is something which I've been saying for a while now i appreciate that by just me saying it doesn't make it better uh and you are probably tired of me saying it um but we will make some changes uh around the whole value chain for institutional and value chain i really mean you know brand marketing uh sales how structuring set up how products are set up uh because we just you know we're just losing market share in institutional to really well run strong competitors

Great. Thank you. Thank you, Hubert.

Next question comes from the line of Mike Werner, UBS. Please go ahead.

Thank you very much. Just to follow up on your bullish Germany pitch, just when talking about the pension opportunities in particular and how that's going to translate into active equity, what's what in the regulations is going to, I guess, favor active equity versus passive equity? We have seen other pension reforms in the past ultimately drive flows, but they tend to skew somewhat passive. So I was just wondering what you see different here. Thank you so much.

Thank you, Mike. Just like we are listening in and reading the transcripts of the core reports of our competitors, I suspect they would be doing the same. So therefore, I don't want to give like a recipe to global competitors, but just a couple of highlights to me. So historically, the subsidy, so both the contribution by the government, but also any tax benefits went to products which were capital guaranteed. So therefore, Germans like subsidies, Germans like tax benefits, and those came for the Riester products, which were capital guaranteed. Now going forward, the same advantages go to not capital guaranteed products. So the government essentially said, you know, we want young folks to invest in the stock market and products have, you know, long-term wealth accumulation. And we provide the same subsidies and tax breaks to that versus capital guarantee products. Now, when you look at our, and by the way, one more thing to add, when you look at the overall fees that the politicians deemed appropriate, that is sort of 1% for standard, but can be more for more tailor-made, so more maybe more interesting, more yield-generating products. So therefore, that also suggests that it's not just ETF-focused, but really alpha-generating products. Now, when you look at our close competitors in Germany, so the Union and DECA, two very well-run, strong asset management companies, they are active only. They do not have ETFs. So I wouldn't imagine or expect their products to contain ETFs because they are active only. So therefore, when you think about the picture in Germany, the regulator, the government, wants alpha generation. That is offered by active. Our competitors are active only. So there's nothing that really leads me to believe that this is going to be mostly ETF. Now, obviously, we'll do whatever is in the best interest of the retail client and if there are strong ETF products, by all means. But I think over a long period of time, we aim to beat markets and therefore, bullish on those containing active equity, active multi-asset, active alternatives, and these types of long-term alpha-generating products.

Thanks, Stefan.

Thank you, Mike.

The next question comes from the line of Arnaud Gibla, BNP Paribas. Please go ahead.

Good morning, guys. Two questions, please. First on the 40% stake you've taken on Nippon Life India. I'm just wondering if you can quantify the amounts there and what growth or profitability could look like over the coming years. Second question is on private credit. I think that remains a strategic focus for you. I'm just wondering if you could flesh out a bit the progress you're making there. Thank you.

Thank you, Arnaud. So NAM India, so when you look at the AIF, which is owned by the publicly listed Nippon Asset Management India, that is roughly 1 billion euro of AUM. It's like a proper company that's money-making, has been around for 10 years. So we're buying a 40% stake in a well-run, living, profitable company. We didn't disclose how much we paid. They didn't disclose it. But think about it as a reasonably high double-digit million amount. That's probably the best way to think about it. So it's not one of those, we set up a JV and in 50 years it makes money. It's we actually bought a stake in a well-run company, which historically in India was more focused on essentially unconstrained fixed income and equity, which was already considered alternatives. And going forward, the focus is going to be much more on infrastructure. So India requires gigantic logistics investments, real estate, private credit, and so on. And that will be, frankly, our contribution, meaning as Deutsche Bank Group. Deutsche is very strong in India. So our partnership will also extend to that alternatives business. I will be over for three days, middle of May. So this is now, I mean, we're currently waiting for regulatory approval, but this is something we'll be quite bullish. There's nothing to believe that it shouldn't be one of the top three providers of alternatives in the medium to long run. and therefore also a decent contributor to revenues. I'd be probably starting in 27, not in 26. Private credit, you know, this could be like a one-hour conversation, but I will keep it brief. So I think what you currently see in terms of environment is sort of making the case for our approach, right? Our approach is European real economy lending as opposed to U.S. lending to financial sponsors. Now, Momentum probably isn't great because private credit is in the press and many questions are being asked, but we feel that the thesis for our product has sort of been confirmed by the current discussions in the market. Progress, a strong team is now complete. We brought in two more MDs in the course of Q1, so all of the senior folks are now complete across asset-based finance, direct lending, solutions, but again, mostly focused on Europe so far. We are in active fundraising. You know that in private credit it only constitutes AUM and essentially fee paying once capital is deployed, which is why you don't see it yet. But I'm pleased with the progress in private credit. Thank you, Arnaud.

The next question comes from the line of Pierre Chetville, CIC. Please go ahead.

Yes, good morning. I stick to one question because I have to move to EM&D Conf Call. I read recently a report from the Boston Consulting Group saying that IA could reduce asset managers' costs globally from 25% to 35% within the next five years. Not only in terms of improvement in middle office or reporting, but also in terms of better segmentation of customers, better distribution, etc. I don't know if you have read this report, but I wanted to know what do you think about this kind of improvement in the coming years. Thank you very much.

Thank you, Pierre. Look, what's funny is whatever I say now, in six months, we'll all look back and smile, right? Think about what we thought about, you know, how excited everyone was about Chet GPT, you know, 12 months ago, and now this sort of outdated. So who knows? Now, we are probably as excited as anyone else. I think overall, there's a significant difference between communicated progress and reality. So there's nothing that leads me to believe that we are ahead or behind any competitor, right? So everyone is looking at efficiency use cases. Everyone is looking essentially at the whole value chain and taking out or creating scale. Just like everyone, we're experimenting on what it means for investment management in terms of like challenging PMs, not just summarizing what the Fed said yesterday. So I think we're probably as excited as anyone, but we're also really, really focused to making sure that it's scalable, that there's something proper to be done. We spent a couple of years in getting our data in order. We spent a couple of years in getting our processes in order because you don't want to automate or AI anything that is actually improperly set up. And now we feel we are sort of ripe to properly leverage it. But I think it's too early to give you, unfortunately, to give you any specific indication of efficiency created by it, in all honesty.

Thank you very much.

As a reminder, for questions, please press star and one. The next question is from Jochen Schmidt from Metzler. Please go ahead.

Thank you. Good morning. I have one follow-up question on the politically backed Deutschlandfonds. Do you see any concrete opportunities arising from this in the alternatives asset space, say, with potential inflows over the next 12 to 18 months? That's my question. Thank you.

Hey, Jochen. Yes, I do, which I think would be the quick answer. But to be more specific on one, and I'm just describing what we're currently actively fundraising without giving the specific update, there's one part which is called a first-of-a-kind fund, which is providing growth capital to German corporates that are essentially industry leader. So they're not startups, but more advanced and now require growth capital. And we announced a few months ago that we are one of three asset managers selected to manage one of those KfW co-sponsored first-of-a-kind funds. In that case, KfW is providing, I think it was also disclosed, 100 million of equity and debt. We aim to raise another 400 million of equity and debt, and that is progressing very nicely. So that's one very specific aspect, which I think will translate into fees actually this year for this one specific component of the Deutschland Fund. But there are a variety of other parts. So we are quite, honestly, quite thankful for what the politicians have done. And now it's on private capital to be raised. Last week, the CEO of KfW, Stefan Winters, myself, we jointly ran a session for CIOs of major German or German-speaking insurance companies, CIOs. And there was a lot of interest in providing private capital to what KfW is sort of initiating. Thank you, Jochen.

Thank you very much.

There are no more questions at this time. I would now like to turn the conference back over to the moderator for the closing remarks.

Thank you very much, everybody, for listening in and for your good questions as usual. So please reach out to the IR team in case of any open questions that you might have. And otherwise, we wish you all a fantastic day and talk to you very soon.

Bye-bye. Thank you very much. Bye-bye.

Ladies and gentlemen, the conference is now over. Thank you for choosing Carlsgol and thank you for participating in the conference. You may now disconnect your lines. Goodbye.