Deutsche Bank AG

Gentlemen, welcome to the Q3 2024 analyst conference call and live webcast. I'm Moritz, the course 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 one on your telephone. For operator assistance, please press star and zero. The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Iona Patrinić, Head of Investor Relations. Please go ahead.

Thank you for joining us for our third quarter 2024 results call. As usual, our Chief Executive Officer, Christian Saving, will speak first, followed by our Chief Financial Officer, James Van Malka. The presentation, as always, is available to download on 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, Joanna, and a warm welcome from me. I'm delighted to be discussing our third quarter and nine-month results with you today. These show our ongoing strong operating performance, further reinforcing our confidence in our 2024 ambitions and 2025 financial targets. I'm particularly pleased that our continued intense client engagement has supported momentum in all businesses. This enabled us to generate revenues of 22.9 billion euros in the first nine months, putting us well on track towards our goal of 30 billion euros for the year. We recorded the third successive quarter of adjusted costs at 5 billion euros. in line with our 2024 guidance, underpinning our forward trajectory. We are pleased with the settlements we achieved in August and September in the post-bank takeover litigation matter, equivalent to around 60% of the total claims by value. This resulted in a litigation release that supported our reported pre-tax profit of 2.3 billion euros up over 500 million euros year-on-year, and our reported post-tax return on tangible equity of 10.2% in the third quarter. For the first nine months, our reported ROTE stood at 6%. Excluding the post-bank takeover litigation-related impact, ROTE was 7.8%, up from 7% in the prior year period. Asset quality remains stable despite the sequential increase in our provision for credit losses, which James will go through in more detail. Importantly, we expect provisions to reduce towards more normalized levels going forward, particular in expectation of improvements in commercial real estate over the next quarters. Our CET1 ratio of 13.8% reflects our strong organic capital generation. This puts us on a clear path to distribute capital to our shareholders as planned, and we have now sought authorization from the ECB for our next share buyback. Let me now discuss in more detail some of the drivers of our nine-month results on slide three. Disciplined execution of our global house bank strategy is driving steadily improving performance and operating leverage. Pre-provision profit grew by 17% year-on-year to 7 billion euros in the first nine months with operating leverage of 5%, both excluding the post-bank takeover litigation-related impact. Growth was driven by both revenue momentum and cost discipline. Nine-month revenues grew 3% year-on-year with around 75% of revenues coming from more predictable income streams. Reported non-interest revenues were up 14% year on year, with continued strong growth in commissions and fee income of 9%. This demonstrates that our strategy of growing our capital light business is paying off. At the same time, net interest income in our key banking book segments remains stable and better than anticipated at the beginning of the year. We remain focused on expense discipline, keeping our adjusted costs to 15.1 billion euros or 5 billion per quarter, as we continue to offset inflation while allowing for investments by delivering savings from our operational efficiency program. Our cost-to-income ratio, excluding post-bank litigation-related impacts, improved to 69% from 73% year-on-year. Now let's look at the franchise achievements across our business on slide four. The corporate bank increased the number of deals won with multinational clients by 18% compared to the first nine months of the prior year. We also had strong momentum in commissions and fee income, which grew by 5% across all regions. At the same time, NII remained resilient, supported by continued pricing discipline and deposit growth of 8% year-on-year. In the investment bank, we increased activity so far this year with our priority institutional clients by 11%, demonstrating the ongoing commitment and focus of our business and coverage teams in supporting our clients. Nine-month revenues in fixed income and currencies were up 5% year-on-year, supported by a 5% increase in financing revenues, even compared to a strong prior year. Looking at the third quarter, FIC demonstrated a strong performance and was up by 11% year-on-year. Origination and Advisory grew revenues by 58% and increased its global market share year-to-date compared to the full year 2023, while we maintained our number one ranking in our home market. The private bank sees further momentum with 27 billion euros of net inflows and grew non-interest revenues by 5% year-on-year, driven by higher margin products and volumes across both client segments. The division continues to transform its personal banking unit with around 50 branch closures year-to-date and more to come. The business also announced a further optimization of our Deutsche Bank branch network in the which will start next year. Asset management grew assets under management by 67 billion euros year-to-date to 963 billion euros. This was boosted by continued strong inflows into our diverse product suite, which should support future revenues. The group also made progress on its sustainability strategy, including ESG rating upgrades. In October, S&P's corporate sustainability assessment was upgraded to 66 and is now within the top decile of the financial industry. The MSCI rating was upgraded to AA from single A. Let me turn to our progress against our strategic objectives on slide five. Our third quarter results demonstrates our continued progress across all three pillars of our global house bank strategy. Starting with revenue growth, our well-diversified and complementary business mix delivered a compound annual growth rate of 5.6% since 2021, in line with our upgraded target range, and we expect it to increase from here. For the remainder of the year, we anticipate continued momentum in commissions and fee income, driven by ongoing high client engagement and our franchise strength, while NII remains stable. This gives us full confidence in reaching our revenue ambition of 30 billion euros for the full year 2024, providing a strong step off into 2025. Moving to costs, we continue to deliver on our operational efficiency program, having completed measures with delivered or expected gross savings of 1.7 billion euros, almost 70% of our target with around 1.5 billion euros in savings already realized. We have made further progress on workforce reductions, including 600 FTEs in the third quarter, bringing the total number to more than 90% of the 2024 year-end target. The achieved progress to date and efficiency still in the pipeline will support our adjusted cost run rate for the remainder of 2024 and further reductions in 2025 to meet our objective of around 20 billion euros in non-interest expenses, while continuing to invest in business growth, technology and controls. Lastly, we delivered a further benefit of 3 billion euros of RWA equivalent reductions in the third quarter, driven by data and process improvements. This brings total RWA equivalent reductions from capital efficiency measures to 22 billion euros, which puts us inside of our end 2025 target range of 20 to 30 billion euros more than one year early. We expect to achieve further reductions from securitizations as well as data and process enhancements, and we continue to work on finding further incremental optimization opportunities to exceed our target. Let me conclude with a few words on our strategy on slide six. Our operating performance in the first nine months shows that our global house buying strategy positions us well to serve our clients' needs and continues to deliver growth and profitability. We have firm confidence in reaching a ROTE of at least 10% next year. To be clear, our focus remains on us, our strategy and financial targets, unlocking further value for shareholders through the measures we have underway. Looking at revenues into 2025, we expect continued franchise momentum and our capital light businesses to drive further growth, harvesting investments we have made and are still making. In the corporate bank, We expect further growth in commissions and fee income from our investments in our fee-based institutional business as well as our payment platforms. FIC is expected to show further improvements into next year, benefiting from our investments into the franchise in both existing and adjacent businesses as well as continued strength in financing. In O&A, we have a clear value proposition to our clients, supported by our investments which should help us to further increase our market share in what we expect to be a growing market environment with further benefit of new hires still to come. At the same time, the private bank anticipates growing non-interest income mainly from investment products, predominantly in wealth management and private banking, further supported by NII. Within our asset management business, We expect to benefit from higher assets under management levels this year, which should lead to an increase in management fees in 2025. Additionally, we anticipate positive flows into the alternatives business and continued growth in passive, including egg strikers. These drivers underline our confidence in achieving our revenue goal of 32 billion euros in 2025. Turning to costs, we have taken decisive action. to put legacy items behind us, substantially reducing our risk profile and driving restructuring measures in order to clear the path to 2025. And we continue to focus on controls to future-proof the franchise, which will help us reduce non-operating costs. The delivery of operational efficiencies is expected to further reduce adjusted costs over the coming quarters. Together, We are confident these measures will bring us on a path to around 20 billion euros of non-interest expenses in 2025, which will also support delivery of robust operating leverage. We expect credit costs to reduce towards more normalized levels in 2025, largely driven by the expected continuation of the positive development of CRE provisions and the benefits of interest rate reductions flowing through into the economy, providing us with a much cleaner slate into 2025. We remain dedicated to creating values for our shareholders and confident that with achieving our financial targets, we can also maintain our trajectory to increase distributions beyond our original goal of 8 billion euros in respect of the financial years 2021 to 2025. Given this continued progress, we have now sought authorization from the ECB for our next share buyback. To sum up, we remain focused on our global house buying strategy and with our business momentum and all the progress made, we have clear line of sight on our target of an ROTE of greater than 10% for 2025. With that, let me hand over to James.