Deutsche Bank AG

Ladies and gentlemen, thank you for standing by. I'm Frencie, your Chorus Call Operator. Welcome and thank you for joining the Deutsche Bank's Q1 2022 Analyst Call. Throughout today's recording 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 assistant. I would now like to turn the conference over to Iona Patrinchi, Head of the Investor Relations. Please go ahead.

Thank you for joining us for our first quarter 2022 Results Call. As usual, our Chief Executive Officer, Christian Saving, will speak first, followed by our Chief Financial Officer, James Von Molka. 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 forwarded information and 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, Your Honor. A warm welcome from me as well. It's a pleasure to be discussing our first quarter 2022 Results with you today. Before we go through these, we are mindful that the war in Ukraine has been devastating for millions of people and continues to bring a high degree of uncertainty to the world economy, to the market environment, and to our clients. We have made our position clear. We condemn the Russian invasion of Ukraine in the strongest possible terms, and we support the German government and its allies in defending democracy and freedom. We are not taking on any new business in Russia, nor with entities incorporated in Russia. We have been clear that we are in the process of winding down our operations in line with our legal and regulatory obligations and are accompanying our clients in doing the same. We are committed to helping our clients navigate this period of upheaval, and we are supporting our people in Ukraine and their families. However, this of course has the potential to impact our full year results in our important measurement year. Nonetheless, we delivered the highest quarter of net profit since 2013, and we believe this puts us on a good trajectory to reach our 2022 goals. That shows through in our performance. We delivered group revenues of 7.3 billion euros, an increase of 1% year on year, even compared with a strong quarter in the prior year. We saw revenue growth across all four core businesses, driven by business momentum, market share gains, and investments that will support sustainable growth in 2022 and beyond. This quarter, we generated a reported .1% return on tangible equity up on the first quarter of last year, despite a 28% increase in annual bank levies, which are recognized in the first quarter. If bank levies were apportioned evenly across the four quarters of the year, with a quarter of the annual charge booked in the first quarter, post-tax returns on tangible equity would have been 11.2%. We also improved our efficiency. Post-tax profit was up 18% over a successful prior year quarter, driven by positive operating leverage. This brings our cost income ratio down to 73%, four percentage points lower compared to the prior year, or 66% if bank levies were apportioned evenly across all four quarters. We are mindful that the current operating environment presents many challenges, including on the cost front, and we will continue to focus on cost discipline. Finally, looking at our balance sheet, we are well equipped to navigate the current environment thanks to our high quality loan book and tight risk management. Our capital position remains strong, despite the impacts of the war in Ukraine and business growth. And this enabled us to continue our progress towards our goals for capital distribution to shareholders. Last week, we completed the execution of our share repurchase program of 300 million euros, and we have proposed a dividend of around 400 million euros at the upcoming AGM, delivering on our commitment to distribute 700 million euros in 2022. Now let me take you through the progress on strategic priorities in our core businesses on slide two. In the corporate bank, business growth continued despite the more challenging market, as we diligently executed on our strategy. We saw this reflected in loan growth, which alongside interest rate tailwinds, contributed to an increase in net interest income. This, coupled with cost discipline, helped us deliver operating leverage of 18% this quarter. In the investor bank, strong client activity in FIC supported revenues with year on year growth across institutional and corporate clients. Advisory revenues were more than 80% higher year on year, partly offsetting lower revenues in equity and debt origination. The private bank delivered its best quarter since we launched the transformation, with pre-tax profit up by more than half year on year to 419 million euros. It also captured net new business of 13 billion euros across inflows into assets under management and loans. In addition, the private bank made significant progress on the German IT platform consolidation. Over the Easter weekend, we completed a successful migration of around 4 million post-bank saving clients and contracts onto the DB platform. Asset management delivered revenue growth of 7% year on year, driven by higher management fees, despite the volatile market environment. At the same time, the business continued to invest in growth initiatives and platform transformation. The dynamics in all four core businesses provided a strong step-off point to deliver on our 2022 targets. Next, let me give you an update on Russia on slide three. We believe the investments we made in future proving our business meant we were well-prepared as we entered this period of uncertainty. This means we were ready to deal with not only the direct impacts of the war in Ukraine, where we reduced our net loan exposure to Russia to below 500 million euros by the end of this quarter, but also the second order ones, and our investments in controls are a testament to this. As a result, we executed diligently on sanctions implementation without any major issues and managed the financial aspects of these sanctions. As it stands, we operate under a heightened alert status, and we are continuously adapting our controls to the evolving threat landscape. Despite the uncertainties of the current situation, we have not seen any major disruptions to our businesses, even with all the added safeguards we have put in place. While it is too early to quantify the potential long-term impacts of the war, we believe our conservative balance sheet and transform business model will help us face the challenges ahead. Of course, we continue to be mindful of the broader environment and uncertainties that go well beyond the wall, such as the supply chain issues that could further impact future economic growth. Turning now to our progress on sustainability on slide four. We continue to make rapid progress in our sustainability activities. After finishing 2021 with cumulative ESG financing and investment volumes of 157 billion euros, excluding DWS, we are now at 177 billion euros and on track to achieve our 200 billion euro target by this year end. We saw good volume growth across all categories. Issuance volumes were at 71 billion euros in the first quarter, an increase of 13% compared to the fourth quarter. Financing volumes increased to 64 billion euros, up 12% sequentially. And assets under management increased to 41 billion, also up 12%. We're also pleased with the growth rates in all businesses, as you can see on the slide. As we announced in our investor deep dive, we plan to generate 500 billion euros cumulatively by the end of 2025. This implies an average rate of at least 100 billion euros in ESG financing and investments per year from 2023 to 2025. According to our models, this will translate into revenues of at least 1.5 billion euros in 2025, representing the compound annual growth rate of more than 20%. We also took an important step on our pathway to net zero by disclosing the carbon footprint of our corporate loan portfolio at the beginning of March. And we are on track to publish 2050 net zero targets for key carbon intensive portfolios, together with intermediate targets for 2030 at our second sustainability deep dive in October. We will also share further details on our net zero strategy at this event and how we partner with our clients in their decarbonization efforts. A key driver of higher profitability is our delivery of positive operating leverage, which I will now cover on slide five. We delivered positive operating leverage at group level in this quarter. Starting with revenues, group revenues increased by 1%, year on year at the core bank contributed by generating revenues of 7.3 billion euros, up 3% year on year. Excluding revenues in corporate and other and the capital release unit, the average annual increase of revenues in the four operating divisions was 7%. Revenues in the corporate bank were up 11% year on year, a second consecutive quarter of double digit growth driven by continued deposit repricing and business growth. Investment bank revenues grew 7% year on year over a strong first quarter in 2021. A 15% increase in fixed revenues, more than offset a 28% decline in origination and advisory. And the private bank continued strong business growth more than offset interest rate headwinds and as a result, revenues were up 2% year on year. Across all these businesses, we delivered strong growth in client lending. Our total loan book is currently at 481 billion euros, up 9% year on year. Asset management revenues rose 7% year on year, driven by a 13% rise in management fees, which reflects consecutive quarters of inflows and assets under management growth during last year. Asset under management increased by 82 billion euros year on year to 902 billion euros. Moving now to costs, non-interest expenses were down 4% year on year, despite an increase in bank levies of 28% or more than 150 million euros, which was offset by lower transformation charges and the cessation of prime finance costs. Adjusted costs excluding bank levies, transformation charges and prime finance were also down 1% year on year, reflecting lower investment spending needs after the completion of some IT projects and delivery of efficiency gains in line with plan. Beyond these cost items, we faced higher than expected expenses, mainly in compensation costs, which James will detail later. Before I hand over to James, let me summarize the first quarter and outlook on slide six. The first quarter presented a challenging environment. We supported clients and responded to their needs to help them navigate through difficult times, and we will continue to do so. Our priority is to advance with our strategic plans and to further improve our profitability and efficiency while benefiting from strong risk management. Revenues in our stable businesses support this and demonstrate that we are on a clear path to meet our 2022 revenue guidance. And as always, we are absolutely focused on cost measures and we are executing on our plans. That said, we recognize that the path ahead of us is getting harder, especially with inflationary pressures we see in the current environment. But we remain committed to delivering positive operating leverage and tackling cost challenges while also capturing revenue opportunities, as we did in the first quarter. We are committed to our plan to return capital to shareholders, having already completed the 2022 share buyback program of 300 million euros. In short, in this quarter, we have delivered a strong step-off point towards our targets in this pivotal year, in particular, the 8% return on tangible equity target for 2022. With that, let me now hand over to James.