Deutsche Bank AG

Ladies and gentlemen, thank you for standing by. I am Sandra, the Chorus Call Operator. Welcome and thank you for joining the Deutsche Bank Q3 2023 Analyst Conference Call. Throughout today's recorded presentation, all participants will be in 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 a star and 1 on your touch-tone telephone. Please press the star key followed by 0 for operator assistance. I would now like to turn the conference over to Silke Csipa, deputy head of investor relations. Please go ahead, madam.

Thank you for joining us for our third quarter 2023 results call. As usual, our chief executive officer, Christian Seving, will speak first, followed by our chief financial officer, James von Moltke. The presentation, as always, is available to download in the investor relations section of our website at db.com. Before we get started, Let me 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 material. With that, let me hand over to Christian.

Thank you Silke and a warm welcome also from my side. It's a pleasure to be discussing our third quarter and nine months results with you today. These results show our continued progress on the path to our targets in several respects. First and foremost, we continue to demonstrate strong earnings momentum. We generated profit before tax of 5 billion euros in the first nine months after absorbing nearly 950 million euros in non-operating costs, including restructuring related to operational efficiencies. Our post-tax ROTE was 7% and would have been nearly 9% excluding these non-operating costs and with bank levies proportioned equally across the year. This reflects progress on our path to meet our 2025 target of above 10%. Second, we are seeing progress across all three dimensions of accelerated execution of our global house bank strategy, namely revenue growth, operational efficiency, and capital efficiency. Strong operating performance is driven by business momentum through a well-balanced business model. Revenues in the first nine months were 22.2 billion euros, up 6% year-on-year, well above our target growth rate. Private bank and asset management together attracted net inflows of 39 billion euros, alongside 18 billion euros of deposit growth at the group level in the third quarter. We also continue to make progress on the second dimension of our global house bank strategy, operational efficiency. We have progressed with existing measures and we have additional measures in flight. In terms of capital, we are delivering on our distribution commitments. We are on track to complete the 450 million euro share repurchase announced in July. thereby delivering total distributions across 2022 and 2023 of 1.75 billion euros. We finished the third quarter with strong capital. Our CET1 ratio was 13.9%. And in addition, we have identified further capital opportunities and we now see scope to free up additional capital of 3 billion euros, enabling us to accelerate our strategy and boost returns above our original expectations from now through 2025 and beyond. This gives us added potential to increase capital distributions to shareholders, while also deploying capital to support clients. Before we move on to progress in our businesses, let me give you an update on the PostBank IT migration. This was one of the largest IT migration projects in European banking. And it's essential to lay the foundations for more digital bank offering at PostBank. We successfully migrated 50 billion records of 12 million PostBank customers. However, we saw unexpected levels of client inquiries, which led to backlogs. We have put measures in place to work through these backlogs. This not only includes an increase of temporary stuff, but also accelerating measures already underway, such as implementation of automation and process optimization tools. And I'm pleased that we have reduced the operational backlog by about two-thirds over the past weeks, and we expect 70% of all impacted post-bank customer processes to run against service-level commitments again by end of October. including processes which have been particularly critical for our clients. We are confident that the remainder will be completed in the fourth quarter. Let me now turn to the key highlights of our resilient performance over the nine months on slide two. We delivered operating leverage of 4% on an adjusted basis in the first nine months with revenues up 6% and adjusted costs up 2%. As a result, our pre-provision profit for the first nine months was up 5% year-on-year to €6 billion. In addition, we continue to re-aid the benefits of disciplined risk management and a high-quality loan book. Provision for credit losses for the first nine months remained in line with our full-year guidance at 28 basis points of average loads. Our balance sheet proved its resilience. Deposits rebounded by €18 billion to €611 billion in the third quarter. We saw franchise momentum across the board. And furthermore, we strengthened our capital position. Our CET1 ratio rose to 13.9% during the quarter, thanks primarily to strong organic capital generation from earnings and the results of our capital optimization efforts. This more than offset negative regulatory impacts, mostly model changes and deductions for dividends and share buybacks. Let me now discuss the growth and balance across our business on slide three. The corporate bank delivered a post-tax ROTE of 17% in the past nine months. Strong revenue growth combined with flat adjusted costs driven by tight expense discipline produced operating leverage of 24%. Our momentum with key clients is encouraging. We saw an increase of around 40% in incremental deals, one with multinational corporate clients, which will drive future revenues. Our client focus, strong core capabilities and standing as an innovative thought leader in the market have been evidenced by the Bankers Transaction Banking Awards 2023, where Deutsche Bank has been voted best bank for cash management, as well as Transaction Bank of the Year for Western Europe for the second consecutive year. In the investment bank, we have a well diversified business portfolio. supported by our leading financing business, which contributed 2.2 billion euros or approximately 35% of FIG revenues year to date. We have invested into our origination and advisory business, taking advantage of market opportunities, which are expected to drive future revenues, including through the acquisition of Numis, which we recently completed. We are also seeing clear signs of recovery in the market led by debt origination. Turning to the private bank, the business grew revenues, attracted inflows of 22 billion euros supported by new money campaigns and made further progress in streamlining our distribution channels. And finally, we also grew volumes in asset management. Assets under management grew by 38 billion euros, including 17 billion euros of net inflows in the first nine months of 2023, driven by strong inflows into passive, including extractors. The business launched 18 new products in the third quarter alone, including our first thematic ETFs in the US market. To sum up, We delivered revenues of 28.5 billion euros in the last 12 months to September 30th, up over 6% versus the equivalent prior period. We also see forward momentum from net inflows, investments and business wins with key clients. Our businesses are strongly complementary and well-balanced. All of this supports our conviction that we will continue to grow our franchise and exceed our revenue growth targets. Now let me turn to the progress we are making to accelerate the execution of our global house plan strategy on slide four. First on revenues, with compound annual revenue growth of 6.9% over 2021, we are well on track to outperform on our revenue growth target of 3.5 to 4.5%. And we will continue to benefit from the higher rate environment, which drives sustainable performance in the private bank and corporate bank. We also made progress with our own initiatives that are expected to drive fee income. We are confident that the new addition to the family, Deutsche Numis, will enable us to take added advantage of an expected pickup in corporate finance activity. With 39 billion euros of net asset inflows in the nine months, we expect the growth of our assets under management to drive fee income in future quarters. Second, on operational efficiencies, our existing savings measures are largely proceeding in line with or ahead of our plan. This includes streamlining of front-to-back processes and headcount management. We are also optimizing our distribution network and we have reduced branches by more than 90 over the first nine months of 2023. And this enabled us to keep our adjusted costs essentially flat compared to the prior year quarter, despite absorbing inflationary pressures and investments in growth and controls. And we continue to work on further measures. And third, turning to capital efficiencies, as I mentioned earlier, we have made considerable progress on several fronts. We have already delivered, after two quarters, around 10 billion euros of the 15 to 20 billion euros RWA reduction we planned by the end of 2025. Other measures are already ongoing, mainly focused on hedging and reductions in sub-hurdle lending. And given progress to date, we have identified additional opportunities to reduce RWAs further. And this enables us to raise our target by 10 billion to 20 to 30 billion euros. Let's now discuss what this means for us on slide five. As just mentioned, we will deliver a further RWA reduction of around 10 billion euros from our capital optimization measures. And on top of this, we now anticipate a lower impact from Basel III by 10 to 15 billion euros, which James will discuss in a moment. Taken together, these two factors give us potential to free up additional capital of around 3 billion euros through 2025. We believe that our enhanced capital outlook will support accelerated and expanded distributions to shareholders while increasing our ability to invest in our platforms to boost growth and profitability. We will deliver this by sharpening our business model around capital light and at scale businesses. while applying rigorous hurdle rates to our portfolios to drive returns. As we look to 2025 and beyond, we see a clear opportunity to shift gears through a self-reinforcing process of franchise growth, operating leverage, and increased returns, and to create more lasting value for our shareholders as our global house bank grows. With that, let me hand over to James.