Deutsche Bank AG

Gentlemen, welcome to the Q1 2024 NLS conference call and live webcast. I'm Moritz, the chorus call operator. I would like to remind you that all participants will be in the listen-only mode and the conference is being recorded. The presentation will be followed by a question and answer session. You can register for questions at any time by pressing star and 1 on your telephone. For operator assistance, please press star and 0. The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Iona Patrinici, head of investor relations. Please go ahead.

Thank you for joining us for our first quarter 2024 results call. As usual, our chief executive officer, Christian Saving, will speak first, followed by our chief financial officer, James Von Malpe. 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, Iona, and a warm welcome from me. I'm delighted to be discussing our first quarter results with you today. In February, we laid out a clear path to our 2025 objectives for financial performance and capital distributions, and we have delivered in line with our objectives and targets. Group revenues were 7.8 billion euros. This reflects business growth and franchise momentum, particularly in areas where we have been investing, like our capital-wide businesses, while net interest income was more resilient than expected. This performance underlines the benefit of our complementary business mix. We are delivering on our cost targets. Adjusted costs were in line with our commitment to a quarterly run rate of around 5 billion euros for this year. Provision for credit losses remained elevated this quarter, but in line with our expectations and prior guidance, considering where we are in the credit cycle. Portfolio quality remains very solid, and we continue to expect provisions for the year to be at the higher end of our guidance range of 25 to 30 basis points of average loans. Our return on tangible equity was .7% in the first quarter, up from .3% in the first quarter last year. Capital remains robust. Our CET1 ratio was 13.4%, enabling us to remain on track in raising distributions to shareholders and supporting business growth. Let me unpack some of the drivers of our first quarter results on slide 2. Pre-provision profit was up by 11%, year on year to 2.5 billion euros and more than 20% higher since we launched our global house bank strategy. This reflected continued progress on driving operating leverage, which is a core element of our strategy execution. We increased revenues in our operating divisions by 3% year on year, while group revenues were up 1% on a reported basis. Group revenues include corporate and other, which tends to add some level of volatility into our revenue line. As committed, we delivered growth in non-interest revenues and saw an increase of 11% year on year in commissions and fee income, mainly in divisions where we made investments last year. As expected, our reported net interest income declined this quarter, but net interest income remains stable in our banking books and James will shortly talk you through this in more detail. We reduced adjusted costs by 6% year on year and 5% sequentially to around 5 billion euros in line with our guidance. This includes bank levies and higher compensation costs, which James will discuss later. Now let's look at the franchise achievement across all divisions on slide 3. The corporate bank delivered strong business growth with a 5% increase in incremental deals won with multinational corporate clients compared to the prior year quarter. We closed a series of landmark project finance transactions and saw strong momentum across the structured credit market and trust and agency services. We also ranked number one in 17 categories in the 2024 EuroMoney Trade Finance Survey, including being the best trade finance bank in Western Europe for the seventh consecutive year. Demonstrating the strengths of our business model, the investment bank delivered a strong quarter with notable advances across the franchise. Investments in talent boosted our origination and advisory market share to 2.6%, a 70 basis point increase compared to the full year 2023 with notable gains in LDCM and DCM, elevating our global ranking from 11th to 7th. Our advisory franchise benefited from the breadth of our product set in the quarter. In GTCR's acquisition of world pay, we provided an integrated offering from financial advice to debt financing through to FX and rate hedging. The revenue increase in FIC was driven by both financing and our well-balanced business portfolio, which supports our revenue profile through the cycle. We maintained our strengths in credit trading driven by our investments in 2023, particularly in the flow business, and we also grew revenues in the Americas. These developments further diversified revenue mix in our portfolio. The private bank benefited from our investments. Accelerated business momentum delivered 12 billion euros of net inflows in the first quarter, which makes it 17 consecutive quarters of net inflows, bringing the total assets under management to 606 billion euros with a strategic shift toward fee-generating investment solutions. We also continued to strengthen capabilities in strategic areas by increasing coverage of ultra-high net worth individuals in Germany and enhanced offering of investment solutions, including third-party exclusive collaborations, which should drive further inflows. Asset management delivered another strong quarter of volume growth. Net inflows were 9 billion euros ex-cash, helping assets under management grow by 45 billion euros to 941 billion euros, over 100 billion euros higher than in the prior year quarter, which we expect to support future revenue generation. Now let me turn to the progress against our strategic objectives on slide four. Starting with revenues, we have delivered a compound annual growth rate of 6% since 2021, in line with our race target range of 5.5 to .5% from 2021 to 2025. As promised, we grew mainly in capital-wide businesses with strong growth in origination and advisory, as well as in the private bank and in asset management, supported by high inflows of assets under management, underlying our franchise momentum. We aim to build on these developments as our franchise expands, following our investments and growth initiatives across all business segments. With net interest income resilient at the start of the year and growth in non-interest revenues, we feel we are well on our way to our 2025 revenue ambitions. We continue to deliver on our 2.5 billion euro operational efficiency program. We have completed measures with delivered or expected savings of 1.4 billion euros, nearly 60% of our target, with around 1 billion euros in savings already realized. The incremental efficiencies this quarter were driven by optimization of our business in Germany and reshaping of our workforce in -client-facing roads. We have further incremental measures already underway, including re-engineering of our operating model via additional -to-back improvements of product processes and harmonization of infrastructure capabilities. This gives us full confidence that we will deliver on our commitment of a quarterly run rate of adjusted costs of around 5 billion euros in 2024 and total costs of around 20 billion euros in 2025. Finally on capital efficiency, we achieved a further 2 billion euro reduction in RWAs, bringing aggregate reductions to 15 billion euros. As we are intensifying our work on capital efficiency with further reductions coming from data and process improvements as well as securitizations, we remain highly confident that we can meet our target range of 25 to 30 billion euros. Let me conclude with a few words on our strategy on slide 5. In a nutshell, we delivered on all key initiatives and targets in the first quarter and as we progress on our global house bank strategy, we are on the right path for both our clients and our shareholders. First, we have a strong and growing franchise. Clients come to us as our well-balanced, complementary businesses provide them with full service products and solutions. This supports our revenue growth through different market cycles and drives our market share. And as we said consistently, clients want a partner that offers them an alternative to large US banks, a partner with our expertise, product range and global network. Second, we continue to improve our operational efficiency. We are maintaining our cost discipline and as always, we are committed to our approach of self-funding our investments. 2023 marked the peak of our investments, but we continue to invest to reduce the complexity of our organization through improving technology, processes and control capabilities. Finally, we are absolutely focused on creating value for our shareholders and as we are doing and as we said in previous quarters, we are fully committed to increasing shareholder distributions as rewarding our shareholders is a top priority. We are confident we can increase distributions well beyond our original goal of 8 billion euros in respect of the financial years 2021 to 2025 and we expect to continue to grow dividends and make incremental share buybacks. With that, let me hand over