Deutsche Bank AG

Ladies and gentlemen, thank you for standing by. I'm Hayley, your Chorus Call Operator. Welcome and thank you for joining the Deutsche Bank Q3 2021 Analyst Call. Throughout today's recorded presentation, all participants will be in a listen-only mode. The presentation will be followed by a question and answer session. If you would like to ask a question, you may press star followed by one on your touchtone telephone. Please press the star key followed by zero for operator assistance. And I would now like to turn the conference over to Ioana Patronich, Head of Investor Relations. Please go ahead.

Thank you for joining us for our third quarter 2021 Results Call. As usual, our Chief Executive Officer, Christian Saving, will speak first, followed by our Chief Financial Officer, James von Malka. The presentation, as always, is available to download in the Investor Relations section of our website, db.com. Before we get started, let me just remind you that the presentation contains forward-looking statements, which may not develop as we currently expect. We therefore ask you to take notice of the precautionary warning at the end of our materials. With that, let me hand over to Christian.

Thank you, Ioana. A warm welcome from me as well. It's a pleasure to be discussing our third quarter 2021 results with you today. We are now two-thirds through our transformation journey, and we have continued to deliver against our milestones. We see clear evidence of progress in our businesses. The first basis of this progress is our disciplined execution. We continue to be absolutely focused on cost-saving measures. Adjusted costs, excluding transformation charges, are once again down year on year. These transformation charges will help drive reductions in our expenses in future quarters. And we have now recognized 90 percent of our total anticipated transformation-related effects of almost 8 billion euros since we began this journey. This has resulted in significant progress in our transformation. We promised to self-finance this, and we have delivered. These efforts are being recognized by our stakeholders in the third quarter. Both Moody's and Fitch upgraded our credit ratings and retained our positive outlook. We have maintained a strong capital ratio, a strong balance sheet, and sound liquidity despite certain challenges such as regulatory inflation and the of a global pandemic. Our capital release unit is outperforming against our 2022 goals, which we outlined at our last investor deep dive. Risk-weighted assets are down to 30 billion euros, and the unit continues to reduce costs. And finally, the result is profitability. In all three quarters of this year, we have delivered significant -on-year profit growth, while simultaneously keeping up the pace of transformation. Refocusing on core business is paying off. Revenues have grown as broad-based business performance offsets the effect of normalizing capital markets. And we saw that in the third quarter. Pre-tax profit of 554 million euros grew by 15 percent despite transformation charges of nearly 600 million euros. And on an adjusted basis, profit before tax would have been up by 39 percent to 1.2 billion euros. Now let me take you through the highlights of what we have achieved in the nine months of this year on slide two. Our performance over these past nine months shows that 2022 targets and ambitions are well within reach. Revenues of 19.5 billion euros for the first nine months of 2021 fully support our trajectory to our 2022 revenue goals. We have reduced the adjusted costs, excluding transformation charges, by roughly 4 percent -on-year to 14.4 billion euros, despite 2021 being an investment year. This means we delivered positive operating leverage at both the group and core bank level over the past nine months. We reduced our cost-income ratio from 87 percent to 82 percent -on-year despite the additional transformation charges recognized in the third quarter. Provisions for credit losses declined 83 percent -on-year to 261 million euros or eight basis points of average loans. Return on tangible equity for the core bank is seven and a half percent for the past nine months and above nine percent on an adjusted basis already in line with next year's target. This sets us on a clear path to our group target of eight percent return on tangible equity in 2022. Now let me turn to the progress we have made executing on our strategy across our core business on slide three. The corporate bank continues to execute on its growth strategies as evidenced by increasing loans and new partnerships, including MasterCard, Pfizer, and better payments. 94 billion euros of deposits are within the scope of charging agreements and contributed 96 million euros in revenues to our third quarter results. The investment bank is focused on -to-back efficiency process improvements such as the FIC reengineering program. The results in this quarter again confirm our decision to refocus our investment bank on its core strengths and we delivered a strong performance despite the fact that we have seen a significant increase in revenue growth and a significant increase in normalization in the market. We have now seen -on-year revenue growth in origination and advisory for seven consecutive quarters and our third quarter FIC results demonstrate our market share gains are sustainable. The private bank continued to grow net new business across under management and loans. This -to-date business growth substantially outperform our full year target of 30 billion euros. In the third quarter we announced the sale of DB financial advisors in Italy which supports our international private bank divisional strategy as well as our regional strategy. In asset management, assets under management stand at a record level of 880 billion euros driven by strong net inflows of 12 billion euros this quarter with more than 40 coming from ESG products where we continue to work towards leadership in the field. We continue to undertake investments in growth initiatives and platform transformation to support our performance. In short, the dynamics in all four core businesses show that our clients are supportive of our business model and belief in our capabilities. All four core businesses grew return on tangible equity and improved the cost income ratio over the first nine months of 2021. This relentless focus on transformation has driven a steady improvement in underlying profitability which can be seen on slide four. In the core bank we delivered a 70% -on-year increase in our adjusted profit before tax in the last 12 months. Once again all four core businesses contributed and are either in line with or ahead of their plans so far. In the capital release unit we reduced losses by nearly half compared to a year ago. As we reduce leverage exposure and risk weighted assets we continue to remain committed to minimizing the P&L impact of the portfolio reduction. As we steadily put transformation effects behind us and reduce the cost of the leveraging in the capital release unit more of the earnings power of our core business is reflected in the bottom line. This supports our aim to deliver stable and sustainable returns at the group level. A key driver for this is our sustainable revenue performance which I will now turn to on slide five. Revenues excluding specific items in the core bank for the third quarter stand at six billion euros up one percent -on-year. Business growth has offset the normalization of the capital markets environment which impacted fixed income trading as expected. This quarter still bears the impact of foregone revenues as a result of the BGH ruling of 96 million euros similar to the second quarter. We expect this impact to taper off considerably in the next quarter as we now have condense in place for two-thirds of the affected accounts. Revenues in the investment bank are 2.2 billion euros down only six percent from a very strong third quarter in 2020. Both our corporate bank and private bank continued to offset interest rate headwinds with continued depository pricing and business growth. We see continuing underlying momentum in these businesses. And we see strong underlying growth and lending. The loan portfolio is currently at 456 billion euros up five percent from the same quarter last year. With the period of post-pandemic market normalization behind us, we now expect the current growth rate to remain in the coming quarters. Asset management delivered revenue growth for yet another quarter driven by strong management fees. This is the sixth consecutive quarter of net inflows. Core bank revenues were 25 billion euros in the last 12 months, an 11 percent increase from 2019, which is in line with our current 2022 goal. This reflects the sustainability of our revenues as client engagement continues to improve, particularly following our recent rating upgrades. Now let me turn to costs on slide six. On a 12-month basis, we reduced non-interest expenses by 14 percent to 21 billion euros from 2019. This includes the higher than expected contributions to the Single Resolution Fund and the German Deposit Protection Scheme. We continue to focus on managing our controllable cost base to offset volume-driven expenses and investments in controls and have identified additional cost saving measures. These measures come with around 700 million euros of incremental transformation related effects, including technology related charges that we recognized in the third quarter. We are committed to putting almost all our anticipated transformation effects behind us by the end of 2021. And with that in mind, we reaffirm our 2022 target for a cost income ratio of 70 percent. Let me now update you on our progress on sustainability on slide seven. After nine months, we are already ahead of our full year 2021 target for total volumes of ESG financing and investment. Our volume since the start of 2020 now stand at 125 billion euros, versus a full year ambition of 100 billion euros excluding DWS. This puts us well on track to meet or exceed our year-end 2023 target of 200 billion euros. In addition, we were a book runner on four of the six largest ESG-related bond issues in the quarter. This month, we co-led the EU's inaugural Green Bond, raising 12 billion euros, the largest ever Green Bond today. We also completed our first ever Green Repo agreement, the first green Formosa bond, and built out our offering and sustainability linked loans to German middle-stand companies. ESG is the topic which continues to drive client engagement, allowing us not only to innovate products, but to also provide advisory services underlying our clear client-centric approach. At the Private Bank, we rolled out the ESG advisory concept to more than 100 branches, exceeding our 2021 ambitions, and our International Private Bank is enhancing product offering via new funds in growing green deposits and lending. We are pleased to participate in the COP26 summit in Glasgow next week, and we are looking forward to meeting clients and other stakeholders striving for change. Before I hand over to James, let me now summarize our progress this quarter on slide 8. As we said at the Investor Deep Dive in December, our focus remains on executing our transformation agenda while supporting our clients. We have executed on strategies within our refocused core businesses, and we saw material improvements in core bank profitability and returns.

We are

delivering resilient revenues as business growth offsets the normalization of markets which we anticipated. Our core businesses are performing in line with or ahead of our expectations, and that positions us to deliver on our revenue ambitions next year. We intensified our transformation efforts and took further steps to drive efficiencies. We aim to book most of the remaining transformation-related effects by the end of the year, which will help us to deliver on our 2022 cost-income ratio target. We are committed to technology and control investments and to maintain our momentum on regulatory and control matters. The hierarchy of our 2022 priority remains unchanged, and we are on track to meet our targets of an 8% post-tax return on tangible equity and 70% cost income ratio. We also remain committed to beginning the distribution of the 5 billion euros of capital from 2022 onwards. We are setting up a firm foundation to not only meet our 2022 ambitions, but to also position Deutsche Bank for future growth. And we look forward to discussing this with you at our next Investor Deep Dive in March. With that, let me now hand over to James.

Thank you, Christian. Let me start with a summary of our financial performance for the quarter compared to the prior year on slide 9. We generated a profit before tax of 554 million euros, or 1.2 billion euros, on an adjusted basis. Total revenues for the group were 6 billion euros, up 2% versus the third quarter 2020. Net interest income this quarter was roughly 2.8 billion euros, up approximately 114 million euros on the second quarter. The increase was driven by the growth in our loan book and higher revenues from our securities portfolio in the quarter, along with a decrease in the cost of our deposit funding. Net interest margin remains broadly flat at a rounded .2% as progress on deposit charging and reduced surplus liquidity offset the ongoing pressure from interest rates. As I've mentioned before, we see these interest rate pressures abating, with private bank headwinds set to halve next year and corporate bank headwinds being substantially eliminated. Recent interest rate moves provide a more favorable outlook for our businesses relative to the conservative baseline on which our previous plans were built. For 2022, we now see a tailwind in the region of 150 million euros relative to our earlier planning. As the moves are predominantly in the long end of the curve, the impacts become cumulatively larger in later years, reaching well over 500 million euros by 2025 from the current observable forward curve expectations relative to our plan baseline in the fourth quarter last year. Turning to costs, non-interest expenses were up 4% year on year. This quarter includes 583 million euros of transformation charges, up from 104 million euros in the prior year. Our provision for credit losses stood at 117 million euros, or 10 basis points of average loans for the quarter. We said at our second quarter results, and then again in September, that we see a relatively benign credit environment. These conditions have persisted, and we now see scope for improvement from our previous guidance of 15 basis points of loans for the full year 2021. In line with the guidance we provided with our second quarter results, we did see a reduction in our common equity tier one ratio to 13% in the quarter. Tangible book value per share was 24 euros and 46 cents, up 40 cents on the quarter, or 5% in the year to date. The tax rate for the quarter was 41%. Let's now turn to page 10 to briefly look at our nine month performance. Revenues for the first nine months were 19.5 billion euros, up 5% year on year. At the same time, we delivered a 4% reduction of our adjusted cost base, excluding transformation charges, to 14.6 billion euros, and reduced our cost income ratio from 87% to 82%. The improved macroeconomic environment led to an 83% reduction in provision for credit losses, and our profit before tax of 3.3 billion euros increased nearly fourfold compared to 2020. The tax rate for the first nine months was 34%. Let's now turn to the Core Bank's performance for the quarter and the first nine months of the year on slide 11. Core Bank revenues were 6.1 billion euros for the quarter, up 2% on the prior year quarter. Noninterest expenses were up 5% for the quarter, mainly driven by additional transformation charges, while adjusted costs excluding these charges were down 1%. This takes our profit before tax to 898 million euros, and the adjusted profit before tax to 1.5 billion euros, up 23% on the prior year. Our adjusted post-tax return on charitable equity for the quarter slightly increased by 60 basis points from last year to 7.3%. Looking at the results on a first nine month basis, our revenues in the Core Bank were 19.5 billion euros, up 4% compared to the same period in 2020. Noninterest expenses increased 2% year on year due to the additional transformation charges and adjusted costs excluding transformation charges were flat. Our cost income ratio was 76% for the first nine months, or 70% excluding transformation charges. And as Christian mentioned, our return on tangible equity for the Core Bank was .5% for the past nine months and .4% on an adjusted basis in line with our target for 2022. Let's now turn to costs on slide 12. In the third quarter, group adjusted costs, excluding transformation charges, continued to decrease year on year by 3%. We saw lower compensation and benefit costs year on year reflecting workforce changes as well as movements and variable compensation compared to the prior year. IT costs were broadly flat as a decrease in hardware expenses was offset by higher software and service costs. The decline in other costs was driven by lower operational losses, occupancy costs, and banking services. Our third quarter adjusted costs, excluding transformation charges and reimbursements for prime finance, were .5% and 6 billion euros. Transformation charges were 583 million euros, which I will come back to in a moment. As Christian mentioned earlier, we will continue to manage all the components we can control as we remain committed to the cost income ratio target of 70% for 2022. Let's now move to slide 13 to discuss transformation related effects. As mentioned in our recent guidance, further transformation measures will result in incremental effects of around 700 million euros, bringing the total expected impact of transformation related effects to 8.8 billion euros. This quarter, we booked 583 million euros of transformation charges. Roughly 450 million euros of these charges relate to a contract settlement and software impairments principally triggered by our migration to the cloud. We have now booked a total of 90% of transformation related charges, and we expect to book most of the remaining charges by the end of this year. Let's now turn to provision for credit losses on slide 14. Our stage three provision at 199 million euros is down from 408 million euros in the previous year, reflecting an overall benign environment. On a quarterly basis, the stage three provision increase of 88 million euros was mainly driven by the implementation of EBA guidelines on definition of default, leading to ECL model refinements for IFRS 9, resulting in transfers to stage three, predominantly in the private bank. Stage three provisions remain stable across other businesses. Overall, stage three movements were offset by 82 million euros of net releases in our stage one and two provisions, including an adjustment of existing management overlays due to the stabilizing macroeconomic environment. As mentioned, we believe provisions will be below 15 basis points of average loans for 2021. Let me now turn to capital on slide 15. Our core equity tier one ratio decreased by 17 basis points from 13.2 to 13% over the quarter. In line with our earlier guidance, this reduction includes around 20 basis points of burden from regulatory changes, notably the implementation of the EBA guideline on definition of default, partly offset by a reduction in our regulatory multiplier in market risk RWA. A slight offsetting improvement of the CET1 ratio came from a reduction in operational risk RWA and the net impact of credit and market risk, reflecting client-related activity. With the 20 basis points RWA impact this quarter, we have now absorbed almost all regulatory driven RWA inflation until the expected implementation of the final framework of Basel III in 2025. In upcoming quarters, we expect to see business as usual model updates that cumulatively are expected to be capital ratio neutral. CET1 capital was fairly stable in the quarter and now includes a deduction for common share dividends of 641 million euros to date. We still expect to end the year with a CET1 ratio of around 13%. As always, our capital outlook is subject to timing of pending regulatory decisions. However, the expected net effect of these decisions in the next quarter is now positive. Our fully loaded leverage ratio was 4.8%, unchanged from the prior quarter. Leverage exposure, excluding FX effects, decreased by 6 billion euros quarter on quarter, reflecting continued deleveraging in our capital release unit, partially offset by growth in net loans and commitments. Our pro forma fully loaded leverage ratio, including certain ECB cash balances, was 4.4%, and on track to meet our 2022 goal based on the original definition by year end. With that, let's now turn to performance in our businesses, starting with the corporate bank on slide 17. Revenues in the third quarter were just over 1.25 billion euros, essentially flat year on year, but improved, excluding episodic items. In the current quarter, the impact of episodic items was approximately 60 million euros lower than in the prior year, excluding these effects, underlying corporate bank revenues grew slightly as business initiatives and deposit repricing more than offset interest rate headwinds of approximately 40 million euros year on year. At the end of the third quarter, charging agreements were in place on approximately 94 billion euros of deposits, which produced revenues of nearly 100 million euros in the quarter. The corporate bank grew loans by 5 billion euros year on year, mostly in trade finance within corporate treasury services. We continue to expect the combined effects of the moderation of interest rate headwinds based on current interest rate curves, the increasing quarterly contribution of deposit repricing, as well as business momentum and growth initiatives to support our revenue outlook for subsequent quarters. And as previously mentioned, we expect our 2021 revenues to remain essentially flat compared to the prior year. Non-interest expenses decreased by 5%, mainly driven by lower restructuring litigation charges, while adjusted costs, excluding transformation charges, improved moderately. Provision for credit losses was a 10 million euro release in the quarter, driven by continued low impairments compared to provisions of 41 million euros in the prior year quarter. Profit before tax in the corporate bank was 292 million euros, increasing by 57% year on year, while adjusted profit before tax rose by 33% to 317 million euros. This equates to a .8% reported and an .6% adjusted post-tax return on tangible equity, and is the highest quarterly profit before tax since the launch of Deutsche Bank's transformation in 2019. Turning to revenues by business segment in the third quarter on slide 18. Corporate treasury services revenues of 755 million euros grew by 1% year on year. Charging agreements and other business initiatives more than offset interest rate headwinds and lower episodic items. Institutional client services revenues of 326 million euros grew by 2%, as solid underlying business growth was partly offset by lower episodic items. Business banking revenues of 174 million euros were 6% lower year on year, as business growth and expanded charging agreements were more than offset by interest rate headwinds. We are continuing to progress the -by-client process of entering into charging agreements for the predominantly euro-denominated, lower ticket size deposits in this area and expect further positive effects in the coming quarters. I'll now turn to the investment bank on slide 19. Revenues for the third quarter of 2021 decreased by 6% or 5% excluding specific items. Favorable performance in our financing and origination and advisory businesses was more than offset by lower revenue in our trading businesses. Compared to the third quarter 2019, investment bank revenues are up 34% with both FIC and origination and advisory significantly higher. Non-interest expenses were essentially flat year over year as were adjusted costs excluding transformation charges producing a cost income ratio of 60%. The investment bank generated a pre-tax profit of 3.4 billion euros and a return on tangible equity of .5% in the increases on the prior year period. Our loan balances increased both quarter and quarter and year on year primarily driven by higher loan originations across the financing businesses. Leverage exposure was higher reflecting increased loan origination and lending commitments. The year on year increase in risk weighted assets predominantly reflects the impact of regulatory inflation. Provisions for credit losses of 37 million euros or 19 basis points of average loans were down year on year. The continued low level of provisions benefited from recovery of COVID-19 related impairments. Turning to revenues by business segment on slide 20, revenues in FIC sales and trading decreased by 12% year on year. Strong performance in financing was offset by lower revenue in the trading businesses. Credit trading, core rates and FX revenues saw solid client activity which was offset by a normalization of market conditions and low volatility. Revenues in emerging markets were higher across all regions with continued year on year growth in both Semea and Latin America. Revenues in origination advisory were significantly higher versus prior year with revenue growth across the franchise. Debt origination revenues were higher. Strong performance in leverage debt capital markets continued more than offsetting a reduction in investment grade related revenues as issuance levels normalized. ESG continues to be a focus area. We are top five on a fee basis in global ESG related debt products. A 60 basis point market share gain compared with the full year 2020 based on deal logic data in a market which continues to grow. Equity origination revenues were significantly higher year on year predominantly driven by DSPAC activity and market share gains in IPOs particularly in EMEA. Significantly higher advisory revenues reflected continued growth in M&A activity. Deutsche Bank advised on nearly twice the number of deals in the third quarter compared to the same period last year. Turning to the private bank on slide 21. Revenues excluding specific items were just under 2 billion euros in the quarter down 4% year on year but up 1% if adjusted for 94 million euros of foregone revenues from the BGH ruling we mentioned earlier. Continued revenue momentum in investment products and mortgages offset interest rate headwinds of approximately 90 million euros year on year. As indicated we expect these headwinds to be substantially lower next year. Adjusted costs excluding transformation charges were flat year on year. Cumulative savings of around 4% in the private bank direct cost base were partly offset by incremental costs for deposit protection schemes as well as increases in technology spend and internal service cost allocations. Provisions for credit losses were 15 basis points of average loans or 92 million euros and reduced by 47% year on year benefiting from a release of a management overlay for uncertainties related to moratoria in Italy and Spain, tight risk discipline and a high quality loan book. The aforementioned implementation of definition of default model refinements impacted staging but was neutral to CLPs in aggregate. With this the private bank reported a pre-tax profit of 158 million euros. Adjusted for the aforementioned impact from the BGH ruling, specific revenue items as well as transformation related effects of 64 million euros, the private bank would have achieved a profit before tax of 276 million euros in the quarter. On this basis adjusted post-tax return on tangible equity was 6% in the quarter and 7% in the first nine months of the year. Business volumes grew 9 billion euros in the quarter with 6 billion euros of inflows in assets under management and 3 billion euros of net new client loans. With this the private bank attracted 38 billion euros of net new business volumes after nine months, exceeding our full year target of more than 30 billion euros. Turning to revenues by segment on slide 22, revenues in the private bank Germany would have been up 1% year on year if adjusted for the temporary impact from the BGH ruling. Continued headwinds from deposit margin compression were compensated by growth in loan revenues and fee income from investment products. The business originated net new client loans of 3 billion euros in mortgages and net inflows in investment products of 2 billion euros in the quarter. In the international private bank, net revenues increased by 6% or 1% if adjusted for specific items. The business attracted net inflows in investment products of 3 billion euros. Growth was especially pronounced in Germany and Italy. Private banking and wealth management revenues increased by 9% or 2% excluding specific items and FX translation as investment products and loans grew supported by previous hiring of relationship managers. Personal banking revenues decreased by 2% year on year as business growth and investments only partly compensated for deposit margin compression. As you will have seen in their results, DWS had another successful recorder as shown on slide 23. To remind you, the asset management segment on this slide includes certain items that are not part of the DWS stand-alone financials. Revenues grew by 17% versus the prior year primarily due to a strong increase in management fees of 85 million euros from improvements in equity markets and six consecutive quarters of net inflows. Non-interest expenses increased by 58 million euros or 16% with adjusted costs excluding transformation charges up 17%. This reflects higher compensation costs including variable compensation, higher asset servicing costs due to the increase in assets under management, as well as investments in growth initiatives. The divisional cost income ratio remained stable at 63%. Profit before tax of 193 million euros in the quarter increased by 18% over the same period last year driven by record assets under management resulting in higher revenues. Adjusted for transformation charges and restructuring and severance expenses, profit before tax increased by 16% year on year to 198 million euros. Assets under management of 880 billion euros have grown by 21 billion euros in the quarter. Driven by net inflows and the positive impact of FX translation. Net flows in the quarter were 12 billion euros with inflows across all three product pillars, active, passive, and alternatives. The business attracted 5 billion euros of flows into ESG products during the quarter demonstrating continued momentum in this area. Turning to corporate another on slide 24. Corporate another reported a pre-tax loss of 605 million euros in the quarter versus a pre-tax loss of 393 million in the prior year quarter. The greater loss was driven by higher transformation related charges of 495 million euros which were not passed on to the divisions and are captured in the other line. In aggregate, these transformation charges should lower our group adjusted costs by around 150 million euros per year from 2022. Funding and liquidity in the quarter compared to the prior year period. Consistent with our prior guidance, funding and liquidity charges are expected to remain at around 250 million euros in 2021. The year on year improvement in valuation and timing differences was driven principally by a positive contribution from cross-country currency funding structures and interest rate basis effects as well as non-recurring one-off events. We can now turn to the capital release unit on slide 25. The capital release unit recorded a loss before tax of 344 million euros in the quarter, a significant improvement on the prior year quarter. Negative revenues in the quarter were driven by funding, risk management and de-risking impacts that were partly offset by positive revenues from prime finance cost reimbursement. Adjusted costs excluding transformation charges declined by 27% versus the prior year quarter reflecting lower service cost and lower compensation and noncompensation costs. We continue to make great strides in portfolio reduction, taking advantage of favorable market conditions to exit a number of aged or concentrated positions. We also intensified the pace of the prime finance transition in the quarter and transferred a number of large client relationships. By the end of October, we expect to have transferred about two-thirds of client balances. Taken together, this led to a 10 billion euro reduction in leverage exposure in the quarter and a 2 billion euro reduction in risk-weighted assets including operational risk. At the end of the third quarter, we recorded capital release unit RWA of 30 billion euros including 22 billion euros of operational risk RWA. Since the second quarter of 2019, the division has reduced leverage exposure by 76% or 188 billion euros and RWA by 53% or 34 billion euros. We've now achieved our 2022 target for RWA and expect to be at or ahead of our 2022 target for leverage exposure by year-end 2021. This includes completing the transition of our prime finance platform. We expect this transition to release over 20 billion euros of incremental leverage exposure in the fourth quarter this year. For the remainder of the year, we expect negative revenues in the capital release unit and we are on track to hit the cost reduction targets we set out at the last investor deep dive. Turning finally to the outlook on slide 26, we see continued momentum towards our 2022 revenue ambitions given the resilience and growth in our core businesses. The credit environment remains supportive and we expect provisions of below 15 basis points of average loans for the full year based on our current views. We expect macroeconomic growth to slow in 2022 from the exceptionally strong levels this year and CLP levels to partially normalize. Our credit portfolio quality remains strong and we are well positioned to manage emerging risks including supply chain disruptions and potential policy tightening. We're focused on the cost measures we have underway and by year-end we expect to have booked the majority of our transformation related effects in what has been an investment year supporting our 70% cost income ratio target for 2022. As I've said before, we expect to end the year with a CET1 ratio of around 13%. Above our target of 12.5%, despite booking almost all of our estimated 8.8 billion euros of transformation related effects and absorbing substantially all of the regulatory driven inflation prior to Basel III final framework implementation. On the leverage ratio, we feel confident we are on track to finish the year around .5% based on original definition of leverage exposure, that is including all central bank balances. The CET1 capital calculation reflects a common share dividend deduction of over 600 million euros for possible future distributions from the nine-month 2021 earnings under the standard ECB rules. This starts us on a clear path to return 5 billion euros of capital from 2022 over time. With that, let me hand back to you, Anna, and we look forward to your questions.

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

Ladies and gentlemen, at this time, we'll begin the question and answer session. Anyone who wishes to ask a question may press star followed by one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star followed by two. If you are using speaker equipment today, please leave the handset before making your selections. Anyone who has a question may press star followed by one at this time. And one moment for the first question, please. The first question is from Danieli Brubeke of UBS. Please go ahead.

Good afternoon and thank you. I had questions on revenues. At the Deep Dive last year, you gave quite some detailed guidance and outlook for the group and the various divisions, and obviously, since then, a few things changed. So I was wondering whether you could firstly talk about revenues last 12 months. I think that's a quite relevant metric up nicely. How do you think about that now, backward-looking and forward-looking in terms of NICs and where you see the key drivers here, just a bit of an updated view here. And then secondly, there is rate headwinds and tailwinds. And if I recall correctly, at the recent conference, you quantified the headwinds this year, something like 400 million, of which a bit more than half is in the corporate bank, if I recall correctly, and this should go away this year. And then just now, you talked about the 150 and 500 million from the yield curve shift. Can you just sort of add this all up again for me and how this will hit the P&L and in which divisions and how we should model that? That would be super useful. Thank you.

Thank you, Daniel. And good hearing you. Thank you for your question. Let me take the first part on the general revenue, also looking back at last year's IDD performance this year and then kind of where we see tracking to the target which we have given in last year's IDD. And James will then cover, in particular, the more specific question to the interest rates and the headwinds which we had and how this develops. Now, let me say again and let me really reiterate that we are very satisfied with the revenue picture which we have seen since the IDD in December 2020. I think for the last 12 months, these 12 months have shown a very good picture. And secondly, and most importantly to us, they clearly indicate an underlying sustainability of the revenues and that in each and every business, but in particular in the investment bank. If I look back for all the last three quarters, be it March, be it June, or now September, and then I take a 12-month look, we have shown always approximately 25 billion of revenues for the group which on group level, first of all, clearly indicates that our view and guidance for 2022 from the last IDD is absolutely in reach and in our view, absolutely doable. And let me explain that a little bit more in detail when I go through the individual business. I start with asset management. I think a very robust story, not only by the way in Q3, but to your question for the whole year, asset management outperformed in Q1 and Q2, now also in Q3. On the back of the rising assets under management, stable revenues, and overall, we see now kind of a revenue outlook for this year of 2.5 to 2.6 billion, and that makes me highly confident that we can achieve our goal, obviously, of the IDD of 2.3 billion, which was our goal in the IDD in 2022. Q4 in asset management, again, started well. So in this regard, I can't see kind of any downside to our numbers, and therefore, I see that we have a clear chance to outperform if I compare the next 12 months or 2022 towards the goal which we have stated in the IDD. Private bank, also here, in my view, a very solid story, in particular, if you take Daniel's three items into account. Number one, the impact of the German court ruling. We always said that this is impacting us next to reserves, which we built in Q2, but in the running revenues was approximately 100 million or 96 million a quarter in Q2 and in Q3. We have achieved now a good degree of content, so that will fall away over the next quarters. Secondly, James will outline that also with regard to your second question. The headwind from interest rates will be materially lesser in the next year, so we always have to take this into account if we see the running numbers for 2021 in the PB. And lastly, which is for me and for all of us, obviously, the nicer story, the underlying business, in particular, in lending and in the investment business, is higher than we expected, is higher than we planned. We overachieved our goals in this regard after nine months, which we had for 12 months. So if I take all these items into account, I think it's almost self-explanatory that we get to the 8.3 billion number, which we indicated at the IDD in 2020, i.e. for the year 2022. So also there, I do think that we are well on track, and if we continue to do the business operating in terms of lending and investments, I even see further upside. Corporate bank, also here. Let me first start with the strong underlying business story, which we in particular have seen in Q3. I'm quite happy with that, what we promised in Q2. We always said Q2 is the lowest quarter. Q3 is clearly a recovery, and that on the back, in particular, of a stronger financing and credit business in Q3. Looking at the German economy, looking at the mood in the corporates and our clients, I can see that demand will continue also in Q4 and also in 2022. Now if I now add to this, the interest rate headwinds for CB, which almost fully fall away in 2022, and you take into account the quite successful story which we have on the depository pricing, which brings on an annual basis almost $400 million of revenues, I think also there is a clear story and a clear bridge to the IDD target for 2022 of $5.5 billion. So also here, I'm confident that we can achieve that, and don't underestimate that two rating upgrades, in particular two rating upgrades of Fitch and Moody's obviously help two businesses in particular. That is the IB, and I'm coming to that in a second, but also the corporate bank. So also there is upside. So all in all, in the so-called three stable business, we have either hit the plan or are in line with plan or we even overachieve, and I can't see that changing for the next 12 to 15 months. Now let's come to the IB. Also there, you should have my impression, and that is that Q3 is nothing more than clear evidence that our investment bank is clearly set up to our strengths at Deutsche Bank and that we have achieved one thing which was always questionable, but that is sustainable growth, and I can't see that actually stopping. And now if we look at the last 12 months numbers for the investment bank and compare that to the IDD plan for 2022, then we targeted in the IDD for 2022 $8.6 billion for the last 12 months in Q1 or in Q2, and in Q3 we were in between $9.7 billion and $10 billion. Even if we now say there was in particular high market volatility in Q1, and it was not normalized, but we saw the normalization already in Q3, these numbers are obviously telling us a story, and if we then compare that to the $8.6 billion number which we target for 2022, we simply believe that this number is achievable. Why? Because I look in today's ONA pipeline at the same for financing, looks very robust, looks very healthy, and therefore I have a view obviously on the fourth quarter and also on the start of 2022. Obviously the rating upgrades by Fitch and Moody's are helping enormously. I already told you in the previous discussions that lines are coming back to Deutsche Bank based on our recovery, but obviously two rating upgrades from two agencies helps a lot, and we see a further positive evolution in this regard. October activity is very robust across the business in the IB, and also the overall momentum with making good hires clearly tell me there is a momentum we need to achieve our $8.6 billion goal in 2022. This year we will be well above $9 billion, kind of in line with last year, potentially even some upside, so we have the right setup, we have the right people, we have the right momentum, and therefore if we cannot achieve the $8.6 billion next year in that business, I tell you I would be severely disappointed, and I can't see that happening. So there is upside in this number. So if you add this all together, then I think we A, show sustainability of the revenue momentum, and B, that we are highly confident to achieve that what James and I indicated over the last quarters, and that is a $25 billion or better number next year in revenues.

Thank you. It's James on the interest side. We have talked a lot about the headwinds we have been fighting through. At the group level this year, it will have represented over $700 million. The $400 million number you remember is for the private bank alone, and there is about another $250 million in the corporate bank, and the rest is in capital investments in IB. So it's a considerable headwind. In the third quarter, it is about rateable, so we had about $100 million -on-year headwind in the private bank from interest rates, deposit hedges if you like, and about $50 in corporate bank. So that's playing through our numbers. We talked about $150 million of upside in 2022, and a lot more as time goes by, over $525 million in our prepared remarks. That reflects the change between today's interest rate curve and the curve we built our last year's plan on. It splits about $50-50 million based on the keys between the private bank and the corporate bank, but it of course underlies our statements that this interest rate headwind will more than half for the PB next year and be effectively neutralized for the corporate bank next year.

Thank you. So it's not additive, so the $150 million, I shouldn't add it to the $700 million? Or did I just get this wrong now?

No, it is

additive.

The $700 million is behind us, or practically behind us.

Now you should

think about the $150 million as part of the reason, as Christian went through, in the businesses we see support for our revenue outlook for next year. Yep.

Thank you very much.

Thank you, Daniela.

The next question is from a line of Andrew Lim, a Society General. Please go ahead.

Hi, good afternoon. Thanks for taking my questions. So it seems like the bulk of the $700 million transformation costs were taken in the three-queue. I was just trying to marry that up with the transformation guidance on slide 38. How should we think about the quantum transformation costs in the fourth quarter and then subsequent quarters in 2022? That's my first question. And then secondly, there's been a lot of speculation about how you might expand the DIB business by products and also geographically. Perhaps this is maybe front-running, what might happen in March in your deep dive, but maybe you can give a bit of color about your thoughts there, whether it be commodities trading or a bigger footprint in the US, for example. Any thanks.

Sure. Andrew, it's James. I'll take the first one. Yeah, you refer to slide 38, where we work to give you the best view we have on expected future transformation charges. You know, just for Q4 purposes, I would build about 500 into your model, split between transformation charges and restructuring and severance. And that would leave, as you see on the page here, about 300 million still to be booked in 2022. Of course, we're doing everything we can to minimize the 22 burden and book what we can in 2021, but it depends on the visibility and the accounting treatment of those items. But if you just do the math on it, we think about 97% of the total $8.8 billion is booked by the end of the year.

And Andrew?

Sorry, just on that point, sorry about that. But the two, 300 million for 22, obviously more front-ended in the year rather than spaced out?

It's sort of rateable based on what's going on and still in the books next year. I wouldn't think of it as front-ended, but again, we're trying to minimize it. I would think of it as, you can nearly disregard it next year and we look forward to not really talking about it, but on consistent sort of accounting definitions, we trace it all through to next year and the full program.

Great, thanks.

And Andrew, to your second question on IB and the speculation, let me be very clear. We want to grow there where we have decided to be in. I think for the last two and a half years, we have clearly shown that these are the strengths of Deutsche Bank, be it in those areas we are in the origination advisory business, the financing and the trading business. Now within that, obviously we are doing further investments. For instance, in the further franchise built in core rates, in our flow credit development, obviously we are investing quite heavily in our workflow solutions, in particular in the ethics business. We are, as I said in my first answer, that we have a very good momentum in hiring bankers in those industries where we think we have the expertise and our clients are concentrated so that we can obviously generate more mandates in the origination advisory business and again, we see the evidence. And then obviously we are trying to grow in the whole field of ESG and also there we have seen good momentum. Everything else is not in our view, at least at this point in time, because we believe we have found our spot. We grow there, we take market share there, we defend it even in normalized markets and that's what we are all about to do.

Thanks Christian.

The next question is from a line of Nicholas Payne of Kepler Chevrolet. Please go ahead.

Yes, good afternoon. Thanks for taking my question. The first one will be on costs and looking at your 70% cost income ratio target for 2022 and your current run rate of 19 billion of adjusted cost extra information charges, where do you see the biggest improvement drivers to reach your target and how much of these are already backed into your current cost run rates? And the second question on distribution because you earmarked 5 billion for distribution starting in 2022 and I just wanted to know what's the time frame for this to happen and should we think about 2025 and the finalization of Bada3 as a good proxy? Thank you very much.

Sure Nicolas, James. Look, we're very focused, I have to say laser focused, on capturing a run rate in Q4 and then through 2022 that supports our targets. We've been working on that as you can imagine for quite some time and putting in place the measures as we've described both last quarter and this quarter that can help to drive that. I think if you look specifically at areas that drive the run rate from now down by Q1, it'll be particularly in the technology area, in part reflecting the charges we took this quarter, but also reflecting the benefits of some of the investments and if you like the roll off of things we've been working on for some time. We're also close to crystallizing some expense saves in our infrastructure areas. Again, as we've completed projects and moved to a BAU type of state in some of the areas where we've been focused on remediation for the past several years. Then there's the real estate. We've talked a fair amount about real estate which contributes next year significantly and as you've spent all together about 600 million of transformation charges in the real estate area, we're really pleased with what that's delivered in terms of the footprint we operate within our future proofed portfolio from here and there's some benefits flowing through already in the first quarter from that, including incidentally ending the double rent period in New York. So lots of things that we're sort of tracking through in the run rate as we drive towards our 22 views. On distributions, it's frankly too early to say. We're working through that as we finalize our planning, finalize the results for 2021. I think we're confident about our ability to move to meaningful distributions next year which has been our plan really since we embarked on this program back in 2019. I think the deduction from CET1 of 640 million that we have today is clear evidence of our wherewithal, our ability to support distributions next year. It's just too early to say how much and what form it'll take.

All right, thank you.

The next question is from a line of Jeremy Sigi of XAIM B&P Paribas. Please go ahead.

Thank you. Just a couple of questions please following up on things that you've touched on. So the first one was just coming back onto the BGH impact. I was a little surprised that it's unchanged quarter on quarter. I thought we would be seeing some benefit already because it sounded like you were already implementing new contracts with customers a quarter ago. So I thought we might be seeing some benefit come through. So I wonder if you could sort of talk about the timing and in particular whether we expect that to be back to normal in 4Q or how much longer you think it might take to get those revenues back on stream. And then the second question just circling back to the investor deep dive that you scheduled in March next year. I just wondered how you see the balance of that in terms of starting to talk about plans beyond 2022 versus still focusing on how you achieve the 2022 targets.

Sure, Jeremy. I'm happy to go into that. So first of all, on the BGH ruling, the client consents that we sent out all had October 1st as an effective date. And that's for both legal and operational reasons. So the two thirds of responses that we've gotten allows us to switch those on from the beginning of this month. And the additional responses we get in Q4 equally will be, in that case, backdated to October 1st. So if you assume that we'll be at, let's say, an 80% response rate, then in round numbers, 80 million of the lost 100 million will be back in the run rate this quarter. And we would work to then close out the rest as time goes on. Some of that may be moving accounts out of the bank. Some of it may be restructuring our relationships with clients in other ways. But we have, I think, a pretty high degree of confidence at this point that 80 of the lost 100 million will be back. The delay, as I say, was intended from the very start when we first gave guidance on this in June, reflected that effective date. On the IDD, Christian may want to add to this, but we want to talk about

the

things we've done, the trajectory that remains to be achieved to 22. And certainly that's part of our agenda. But I think the larger part of the agenda will be how we have positioned the company through this transformation for strategic and financial performance from 22 onwards. There's nothing to it.

OK, I look

forward to it. Thank you.

The next question is from the line of Magdalena Stockloser of Morgan Stanley. Please go ahead.

Thanks very much. I've got three questions, if I may. So I'll run through them quite quickly. The cost reductions for next year, the planned cost reductions for next year, broadly imply your adjusted cost being down by 1.4 billion. And of course, you've mentioned some of the things that are kind of rolling off, IT projects, real estate savings, and so forth. But if we look at it slightly differently per business, the biggest delta year on year between 21 and 22 is effectively in two places, CRU and the private bank. And I'd like to talk to you particularly about the private bank. There are a couple of things which are still ongoing, particularly in Germany. How should we think about that cost base next year, but of course also rolling forward? There was a new flow of course about bank closures. You've got some mega projects from the perspective of putting Postbank and the Deutsche Bank together. That has been going on for a good few years. How should we think about that cost base going forward, further out than 22? My second question is really about your AUM rotation, because you're showing very, very different numbers in terms of influence into your wealth investment products, literally quarter on quarter. And I'm just curious how much of it is effectively a deposit flow versus just an investment flow, i.e. are you actually seeing that deeper rotation into investment products? And my last one is really about ESG, because a huge thing for you, you've talked about it within the context of the group. You've talked about it within the context of ID. Where do you actually see the biggest opportunity? Because of course at the moment, the biggest market, the biggest issuance of course is happening in Europe. But how is your footprint in Asia and the US responding to that too? Thank you.

Sure. Thank you for the questions, Magdalena. A lot to get into there. You're right that on a segment disclosure perspective, there are big moves in CRU, also PB, also elsewhere by the way as the infrastructure cost base, which can encapsulate not just IT but other support functions. As we continue to harvest cost savings there, it's then visible in all of the functions, all of the segments. CRU would be moving down from about 1.2 billion this year based on our IDD numbers last year to 800 million. We think we'll beat that at this point when we talk to you again in March. We'll be better than that target when we get there. PB Germany as you say is a big part of where our efforts are focused at the moment. You will have seen us announce and by the way take in relatively significant restructuring and severance charges in the PB area, but announce a series of workers council agreements, balance of interests and also actions whether it's head office restructuring, operations restructuring, branch reductions and the like. They're all being executed as we speak. It is a gradual decline. It takes time. You do it one by one in terms of both employees leaving the platform, branches being shut and other actions being taken. We do think we're on a good glide path there. To the earlier question from Andrew, the transformation costs will be almost entirely behind us to support that going forward. The technology piece in PB Germany will still be a burden next year and that's what we updated you on last December relative to our earlier plans. There we're engaged in a significant exercise of core bank conversion to put the Postbank onto the business onto the same systems as the existing Deutsche Bank systems. That investment is ongoing next year and the benefits from that then are visible only in 23. But we think we have that sort of funded in our plans and we're executing on that and as you'll recall the Postbank systems sale was one of the actions we took to ensure that we're well prepared. On the AUM rotation, it's interesting. We've been looking at that disclosure. What you see is increases in AUM and new inflows in PB but relatively static levels of deposit balances that are in accounts that support investment activity which in a sense is bullish because it means that the available deposit funding that our clients have to put to work in investment products is still there, is sort of unchanged. We're finding that discussion to be a very positive discussion today as we go through for example repricing discussions, talk about again the need to put in positive consent in those businesses. It creates if you sales opening to have a dialogue with our clients about moving more into investment products. We see it as a limitless opportunity but it is a significant opportunity as the German saver continues to react to better return opportunities outside of the deposit products and frankly the banking industry as a whole reprices the deposit product to make it harder to hold.

To your second question, ESG is overall in our view a material opportunity for us and first of all because that is one of the few areas where Europe as a region is overall leading and obviously that plays then into our card because the whole transformation into a green economy needs to be financed and obviously then European banks have a big chance and should tap into the opportunity to get a big part out of this. So I would actually describe it in kind of four areas where we can succeed and where we do see actually a progress. Number one it's in the issuances in particular in the capital markets business. You are right, Europe is leading there. I mean we have one of the leading market positions in the issuances not only in terms of green bonds but in particular also bonds which are attached to social housings. Just the mandates we also and where we are public with which we have shown in October show what the market position of Deutsche Bank is but with the knowledge we have now accumulated with the global approach in which we are driving that in each and every business but with the central function kind of overlooking and coordinating that we have great success now also in the US and in Asia. So I think that what we see in Europe we can repeat and we see that in the numbers that we actually have good progress also in the other two regions. Secondly we are not talking a lot about this but we should talk more about this. The demand of our wealth management and private banking clients in ESG investments is simply huge and you see it in the DWS numbers but also in the wealth management numbers the ask and when our assets under management are rising the share of ESG bonds and sustainability bonds is big. If you then have on the other hand also the origination in house on the investment banking side obviously again a big opportunity for us. Third the discussions with each and every corporate client be it in Germany or in Europe is always centered around sustainability and how we as a bank can finance the transformation of the corporate actually into a green economy and that also includes not only the financing in terms of traditional parts and how we can help the clients but also we are offering new products. Asset as a service we discussed it in some of the previous calls but actually a service from us that corporates and clients are only paying actually for what they really used or what they use in their -to-day business is actually a big contributor also in terms of a sustainable economy and what we can offer from a bank. So new products are rising and last but not least don't underestimate actually the mandates we have on the advisory side because a lot in particular if you look at the goals we have set ourselves for the economy but also here in particular for Europe a lot of corporates are thinking in terms of M&A what they can dispose what they can buy how they can reset up the group and that is again something where we as a bank want to be close to are close to so a lot of mandates which we are winning are on the back of ESG mindset and ESG thinking and sustainability thinking of our corporate clients and therefore I do think it's not a surprise that at the end of the third quarter we are standing I think at 127 billion or 126 billion in terms of finance and investments on our goal to 200 billion by the end of 2023. On average we have seen 25 billion of net new financing and investments in business so one of the key themes which we are following up and which will also shape the future and also our business strategy going forward.

Thank you very much. The next question is from a line of Stuart Graham of Autonomous Research LLP. Please go ahead.

Oh hi thank you for taking my questions I had two. First can you tell us what the ZIM impact was in FIC revenues in Q3 please and then second you've talked about the 500 million revenue uplift from rates which I guess links into your rate sensitivity slide on slide 41. My question is how does that take account of the deposit charging fees on slide 39. I guess if interest rates actually go up one day you get the higher NII from slide 41 but you lose the fee income on slide 39. So is that assumption correct and is the 500 million you talked about is that gross or net of lost deposit charging fees in due course? Thank you.

Thanks Stuart. The interest rate question is a really interesting one. Let me start with ZIM. It was about 100 million in the quarter of revenues recognized. It ran therefore at relatively similar rates to the first couple of quarters of the year in terms of the increment call it 5% to revenues. Actually in this quarter there were some offsetting items in the credit trading businesses that went the other direction so I wouldn't think of this quarter's credit performance as necessarily being out of line with what we'd see in a typical quarter in normalized market environments but that's the answer on ZIM. In terms of the rates, so yes we're showing the interest rate sensitivity in the first and second years to 100 basis point parallel shift. The effect of deposit repricing in a sense is to make those liabilities floating rate. So a significant part of the rate sensitivity that you've seen come out of our disclosures over the past couple of years has been the impact on that interest rate risk of taking a large portion of the liabilities and making them floating. What isn't reflected in our models at this point is behavioral change. So the really interesting question is as we potentially lock in rates with zero being the cap in the same way it was for far too long with a floor, our rate sensitivity ultimately would be much higher than we're showing on the page. And so while we would lose some revenue, it's baked into this between minus 50 and zero, we think the upside leverage above zero is in fact much higher than you'd be showing on the page. I hope that gets to your question.

The slide is an interesting income slide. How do you capture the fee element in that?

It's essentially captured in it and at this point the fee piece on the this is the net interest income impact. I think you can for practical purpose disregard any fee income impact at this point.

Okay. All right. Cool. Thank you very much.

My pleasure.

The next question is from the line of Tom Haller of KBW. Please go ahead.

Hey guys, a couple of questions for me please. So DWS has had some recent troubles around ESG disclosures. I was just wondering if there could be any blowback on Deutsche and your wider business, have regulators reached out and what has the reaction amongst clients been? And then on your corporate lending growth, which seems to be picking up, margins also certainly in Germany between the front and back book has nearly converged. So does that mean with the sets we found a flaw in revenues and upside is really just a function of volume growth rates and obviously going repricing efforts? And just on that, do you think there is an opportunity to improve the spread on corporate loans or does the competitive environment stop that from happening? And maybe just sneakily follow up to the previous point around them. You said there were some offsetting items in the trading. What sort of things were they? Thank you.

Okay. Look on DWS, you will understand that we will not respond to that. We can only refer to the clear statement DWS has given in public and rejected the allegations. I think the numbers in Q3 for the DB group and which I just repeated, the 127 billion shows that there is no negative impact on our business. Again, I think the DWS business performance in Q3 also speaks for itself. But obviously we make sure and we have made sure also for Deutsche Bank that we have a clear governance and reporting structure about our ESG reporting and how we are doing the validation of transactions. So we feel comfortable with that and there is no more to say.

So on the corporate lending, we have been looking at this and actually as you say, the spreads have held up quite well and perhaps surprisingly well in recent quarters. So we are encouraged by that. I am not sure I would bet on expanding spreads and margins on that lending at point. But we do see some stability and of course lending opportunities in the CB area. Also good opportunities in IB for what it is worth in our financing business, at least in the very near term. We see opportunity to deploy the balance sheet at attractive spreads. And spreads have also held up in the PB books in Germany. So all in all, I would say encouraging spread development and for corporate bank, I do not see any difference and we are encouraged as we have said by the loan growth. On the ZIM offsets, I do not want to go into each transaction and position. It was a handful of smaller positions which I think collectively we would see as offsetting in terms of market events to the ZIM and gets you to a relatively normalized performance in credit. Okay, thank you.

The next question is from a line of Adam Terulek of Media Banker. Please go ahead.

Afternoon, thank you for the questions. I have got two following up on NII and corporate bank. On the NII, 500 million you referenced on the Delta on the forward curve. Can you bring out how much of that is long end rates versus short end and a movement in the ECB rates? And then in the corporate bank, I want to do a bit more color on the episodic items. Clearly, it is a volatile line item. You are saying it is down quite materially year over year. But could you kind of size it for this course so we have got an idea of modeling it going forwards and what does that look like into next year? And then finally, just on corporate bank, you are talking about flat revenues year over year. Clearly, that is a big uptick in the fourth quarter revenues when normally a bit of seasonality. Would that be down to these episodic items? Thank you.

Yes, thank you, Adam, for the question. It has been predominantly long end movements. If I compare the rate curve snap last year to this year, so relatively little has, as we say, has fed into the 22 some. But it increases markedly in the years thereafter. We, like I think many banks, are more sensitive to the front end, but the long end has helped us and will do so increasingly in the years to come. On the CB side, with respect to episodic revenues, we have talked in the past that they would tend to vary between, say, 50 and 100 million. There is the occasional quarter where it will be zero or the occasional quarter where it exceeds 100 million, but by and large it comes in in that range. This quarter, year on year, it represented about 60 million of headwinds. The types of activity you see there, some of it is, we call it portfolio rebalancing actions, so when there is a shift that we do from a risk management perspective in treasury produces revenues or goes the other way, that can flow through. Recoveries on collateralized loan obligations go in it, so credit insurance. Those are the types of events or sometimes one-off larger inception fees on transactions we would treat as episodic. It is all matters that are inherent in the business, but create a little bit of volatility, if you like, waves on top of the tide and can help or hurt in a given quarter. Both in absolute and in variance terms.

Just to follow up on the 500 million, obviously you are talking about the forward curve and the shift in the forward curve. Is much of that benefit from short-term rates and not by 2025, the 500 million?

No, as I say, not by 2025. Yeah, it moves a little bit. I think it crosses the zero bound by sometime in 2024. I think early 2024 was the latest snap, but I would have to look at it again and it is something we update frequently. It is helping to the conversation I had with Stuart. Are we at the point where the greater leverage kicks in based on the current curves by 2025? Not even yet at that point. But it is significant upside leverage. You see it in the 100 basis points parallel shift analysis. In the detailed interest rate risk management numbers we do, the cumulative effect of these interest rate curves go easily into the billions over a five-year horizon, well into the billions. We see a lot of operating leverage to come for ourselves and of course other banks as the yield curve normalizes. In CB with respect to the balance of the year, it is not a big bet on episodics. They will be within a range, but we are seeing the momentum we have been calling for for a while. Whether it is loan growth, whether it is more deposit repricing, underlying transactions, increasing benefits from some of the investments we have been making. We are looking at it in a very focused way on how we are building the run rate in that business. Other treasury improvements that flow through to corporate bank, all of those things are what we are looking for to move that run rate closer to the delivery of the 5.5 that Christian talked about earlier. Thank you.

The next question is from a loan of Anker Reingun of RBC. Please go ahead.

Thank you very much for my question. The first is with respect to inflation and if you consider this as a concern of a headwind to your cost base and especially considering that there were press reports about requests to increase wages in Germany by 3-4%. Secondly, just on the bars of four impact you previously guided at the investor day, given that the document just one can come from. Thank you very much.

Sure. Thanks for the questions. Again, both meaty topics and I will try to be as brief as I can. Hard to say at this point how much inflation impacts our cost base, for example, next year. It is one of the things we are watching we need to work to offset. The one item you cite is an important one. The conclusion of negotiations for the tariff staff in Germany is a relatively important assumption as we look to the one year forward. The rest of the cost base is very varied in how it performs. One of the positives of having pursued our transformation at the time that we did, we have actually locked in certain of our expenses at a time when that inflation was not present. When I say future proof, for example, on the real estate portfolio, some of our contracts for IT, some of our longer term contracts that we have been recutting, that provides a little bit of stability in our cost base that hopefully will shield us to some extent in the early years. Of course, further out, these inflationary pressures will, if they persist, will have a bigger impact. The banking business model should be, to a significant perspective, respect protected from that as rates shift and that operating leverage arises. Labor costs, as an example, is something we are looking at very carefully, not just in Germany, but all around the world. On the Basel III final framework, that is obviously something we have been following very carefully. We have been also very engaged in advocacy and dialogue with the official sector. We have been looking at the legislative proposal that was published earlier today and obviously had worked hard on what we had learned prior to the official publication. I guess the early snapshot for us is it confirms some of the earlier guidance that we provided to you. We thought that the first round of impact was about $25 billion as we sized it. For the most part, that has come in as we had expected. At this point, I would probably say that $25 billion number we gave you before is a good number. It does move out a year, though, relative to our earlier assumptions, which is helpful for us in terms of the glide path to get there. Then as we look further out to the impact of the output floor, I think it would confirm at this point the more optimistic end of our range that we provided. We would like to think of only about a 10% further inflation relative to the current level of risk-weighted assets as that output floor begins to bite. It does move back based on the proposal as we read it, the point in time at which the output floor begins to bite for us. It means the transition time in terms of balance sheet mix, business model, and obviously the capital build to offset that increase in capital requirements, this is all, I think, quite helpful. We welcome the legislative proposal, the clarity that it provides, the extent to which we think the European Commission has taken on board some of the feedback, and helping the banking sector to balance the goals of the Basel III final framework with the nature of European banking and the need for the banking sector to support economic growth. There are a number of features, whether it's operational risk, the treatment of underrated corporates, the multipliers applied to SACR, and on and on, where we think there's some very good proposals in that legislation, and we look forward to continuing to work with the official sector on the legislation as it goes from the initial draft.

Thank you very much. The next question is from a line of key on ABAHOS sign of JP Morgan. Please go ahead.

Yes, thanks for taking my questions. There are two of them. One is on the corporate and other division you mentioned in your prepared remarks, I think on page 18, about 150 million euro per year adjusted cost savings from 2022 onwards. And just wondering if this is coming on existing ABAHOS program, so is this a growth or is it a net number? And then the second question is you clearly speak very comfortably and this confidence that you will reach your fixed income guidance of 6.7 billion next year. And I just wonder what assumptions do you take in terms of credit environment in particular? So, high yield levels, spread volatility, issuance levels, in terms of refi. Can you share with us a little bit your input data to make that assumption considering it's clearly a very credit heavy number to achieve? So that's why I'm interested in the credit inputs.

Sure, thank you, Keon. So look, the 150 million was incremental. When we talked in the summer about we've been working on incremental actions to offset some of the volume and control investment pressures that we were seeing, that is one of those actions. We're working on more and hence, when I updated the guidance back in September, it was 700 million, so there are additional measures that we've been working on and intend to implement. But the 150 was part of that increment that we started talking about in the summer.

Keon, the overall fixed income number and our confidence in that and potentially even with some upside to that number, first of all, derives from the foundation which we have now built for the last two years. I think one shall not underestimate the platform we have now built in terms of setup, in terms of having the right people, a clear focused strategy and most importantly, clients coming back to Deutsche Bank and trading with us. That was a difference three years ago, that was a difference two years ago and we see an ongoing momentum in this regard and therefore, we are very positive that this is obviously continuing into 2022. From an overall credit point of view, I think we still see and we expect resilient markets into 2022. Of course, you will always have the risk or a certain event risk like we have seen now in China, in certain sectors, but this is exactly where our strength is and where we have an expertise on the first line of defense and second line of defense in terms of having the skill set in dealing with we think there are even opportunities for us. It is not only the normal credit business being on a secured basis but also in districts that there are a lot of opportunities we can look into. If I there again look at the pipeline we have against an overall resilient picture which I can see over the next 15 months with the underlying underwriting experience and skill set we have, we believe that there are good opportunities for us to be very active and again, if I look at the pipeline it makes me very confident.

Thank you.

The next question is from Andrew Combs of Citi. Please go ahead.

Good afternoon. Two big questions from me please. One looking out to Q4. Looking out a bit further to Q1. If I start with Q4, intrigued by your outlook commentary on age 21 of the report, you still talk about full year 21 revenues being essentially flat on full year 20 and yet when you look at your nine month revenues you are up 5% year on year and certainly in the walk that Christine gave earlier you still seem very confident on the growth to 2022 and the number of business lines. I'm just trying to tell you whether you genuinely do think you're going to see revenues down year and year on Q4 or whether that's just a prudent outlook comment that you've included. Second question on Q1 of next year. I was interested in your commentary about the costs you seem to suggest that you'd reach a new cost run rate through Q4 and then into Q1 as the technology costs drop away. Is it fair to say that to achieve your 70% cost income target for full year 2022 you think you need to hit a 70% cost income target in Q1 as well?

Sure. Thanks for the questions. Look, I would interpret it more as prudence in the outlook. There's obviously still uncertainties ahead of us as we look to the end of the year and there's also sort of the sum total of the businesses and their outlook and then the groups view but I think that I think Christian's commentary about the forward and 22 is critical and obviously we look to Q4 to be setting up to achieve that. In terms of the cost run rate, as I said earlier, we're laser focused on managing it down and so this what we'll call underlying run rate, we've talked for a while about adjusted costs excluding prime finance and also bank levies. That is a run rate that we've been working down now to range around 4.5, 4.6. It's something that needs to step down in Q1 to have reestablished a glide path that we want to be on and we will continue to work from there. Remember from a cost income ratio perspective, Q1 is where we have to recognize the bank levy so it's a little bit distorted but then if you remove the bank levy you can see then the underlying revenue to cost relationship that we need to establish. As part of the earlier question, what's one of the things that brings our cost down? One is the completion of that prime finance transition of the remaining technology and staff to be in Pippa. So while that's been excluded from the walks we've shown you, of course on a total expense basis, it's part of the run rate improvements we see going into

Q1. The next question is from a line of team items of DZ Bank. Please go ahead.

Hello, thank you for taking my questions. I've got two questions please and one clarification. Starting with the clarification in respect to the dividend accrual of roughly $640 million could you please remind us how much or how this is split between the three quarters this year? This would be the clarification during the first question on payments. Could you provide some more color on the strategic rationale to support the EPI initiative? Also its strategic importance that for the partnerships that you have with MasterCard for instance with Pyserv and also with the acquisition of better payments. And the last question is on your capital return plans. I understand that you cannot confirm right now the exact mix but what would be the triggers to basically confirm then the mix between dividends and share buybacks and also is there a certain timing that you have in mind for instance the deep dive that you planned for March? Thank you.

Thank you Timo for the question. So look I'll take the two dividend related ones together and then EPI. Christian may want to add on the EPI front. So first of all my accountants would tell me I should not refer to it as an accrual. It's an exclusion of certain earned income from our common equity tier one capital. So the numerator in the ratio calculation and it reflects an ECB guideline around sort of profit recognition in pillar one during the year that sort of disregards an intended payout going forward. That number was 300 million in the first quarter and 275 in the second. So we've built a significant amount in the first half. Obviously a little less in the third quarter reflecting the impact of those transformation charges and that's something you'd expect to sort of roll through to Q4 as well for both seasonal and because of the larger transformation charges in Q4. But as I said earlier it positions us well for for a distribution next year and one that would be neutral to the ratio based on that on it being disregarded already in the under the profit recognition guidelines. As to the amount and form as I said earlier too early to tell we're going to spend a lot of time I think in the next few months going through that question internally with our supervisory board and ultimately with the regulators. We're obviously very keen to restart our dividend. We know that the shareholders have contributed done their part of financing this transformation and it's time to restart a dividend and start one that reflects management's confidence about the future both in its amount and in our expectations for future growth. What that'll be and what the resulting payout ratios and mix will be it's too early to tell. On the European Payments Initiative we're constructive on that initiative among European banks and we're a key partner in that initiative. We think it's important to create capabilities. It's part of ultimately strategic sovereignty for the European landscape financial landscape and we think it can help our position strategically in the payments market. We don't think that it goes that it's inconsistent with our partnerships with a number of our important partners around the world. As you know we work closely with MasterCard as one example but we think that the EPPE product or capabilities can be enhancing for our business and for our customers. As to what the impact will be ultimately strategically or financially it's too early to tell.

The next question is from a line of Amit Gowla of Barclays. Please go ahead.

Hi thank you. I've got two questions. The first maybe just follows on from one of the other questions that's been asked. In terms of that guidance and the outlook for 2021 group revenues I was also just curious then so obviously that's potentially a bit conservative if you add up the individual businesses you can get a bit more but obviously then there is a delta there of about a billion to 2022 and I'm just wondering is that another way to think about it in terms of you think that whatever you achieve in 2021 you could achieve about a billion more revenue in 2022. So that's first question. The second question is just again coming back on costs. I just wanted to understand a bit better the incremental 700 million kind of transformation costs and it doesn't seem like the broader targets have changed so just curious which kind of incremental costs you've seen relative to original kind of planning and what are those kind of pressure points that you're looking to address. Thank you.

Sure thanks Amit. So look I don't want to get into the too early into what we ultimately will see for for 21. I think where where Christian was earlier is is the right way to think about it. Our last 12 month performance over the past several quarters which supports kind of a 25 billion run rate is a good way to think about that where we need to go next year. In that 25 billion you'd expect to see some normalization of IB, some improvement in the in the other business areas and what that net will be you know remains to be seen. We hope and expect that it'll be an improvement on that 25 billion level reflecting the performance of the businesses as Christian described. Ultimately it will be whatever it is in terms of the growth rate off of 21 when all is said and done. In terms of the incremental costs you know just to take you back to to the first quarter you know we we started talking about the uncontrollable items that came into the cost base at that time which were higher SRF than we'd hoped for and higher deposit insurance fees reflecting the green sill insolvency and that represented 400. We said that we are not willing or to try to offset that 400 million in the cost base so that we could support investments going forward. Then as you go to Q2 we started to see and have an expectation of more volume related costs coming into the cost base as well as as incremental investments in in controls that we needed to make. And so that's where we started to talk about the need to to undertake further cost measures in order to offset those additional costs. And so and that's where the measures are that that we talked about and and Kian asked about. So we're working on that. What the what the run rate in the next several quarters will reflect is the push and pull of of how quickly we are able to implement measures that can offset the the volume related and additional control costs and how quickly the the previous measures are flowing through to the to the run rate and you know any other changes that take place between now and then. But but that's the sort of how you can think about the the the the modeling on which we've built our expectations for next year.

Got it. Thank you.

And there are no more questions at this time. I hand back to you Anna Petronitz for closing comments.

Thank you for joining us for our third quarter 2021 results call and for your questions. Please don't hesitate to reach out to the investor relations team with any follow-up queries. And with that we look forward to speak to you at our fourth quarter call in January. Thank you.

Ladies and gentlemen the conference is now concluded and you may disconnect your telephone. Thank you for joining and have a pleasant day. Goodbye.