Deutsche Bank AG

And gentlemen, welcome to the Q4 2020 for Analyst Conference Call and Live Webcast. I am Surgent, the Call & Call Operator. I would like to remind you that all participants will be in listen-only mode and the conference is being recorded. The presentation will be followed by a Q&A 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 Patrinich, Head of Investor Relations. Please go ahead.

Thank you for joining us for our fourth quarter and full year 2024 preliminary results call. As usual, our Chief Executive Officer Christian Saving will speak first, followed by our Chief Financial Officer James von Mocker. The presentation, as always, is available to download in the Investor Relations section of our website, dv.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. And with that, let me hand over to Christian.

Thank you, Iona, and a warm welcome from me. Before we discuss our preliminary 2024 financials in detail, I wanted to offer you my perspective on 2024. This was a vital transition year for us, which has seen us deliver crucial building blocks in the transformation of our business model. We have moved past a number of legacy items, absorbing a series of non-operating costs, predominantly litigation matters, which have masked the underlying strengths of our business. Our operating performance demonstrated execution against our plans. As our pre-provision profit increased by 19% compared to 2023, if adjusted for certain specific items. Importantly, however, we are now set for a clean and significantly more profitable year in 2025, with the foundation now built for further improvements in the years beyond. Let me spend a bit more time talking through this turnaround work, which has resulted in fundamentally different bank in terms of earnings power, in combination with a better risk profile and improved resilience, all of which are visible in our 2024 financials. Let's start with the top line. First and foremost, we have successfully positioned all our businesses to perform by strengthening our market position, reinforcing our focus on clients, and working with deep education as their global house bank. Our business have clear momentum, which is visible through our revenue delivery of over 30 billion euros, well above what we thought would be achievable when we first set our 2025 targets. And we are very pleased with the strong start of this year, which again demonstrates our clear franchise momentum. Second, on expenses, we delivered on our adjusted cost guidance of 5 billion euros each quarter when excluding the already guided exceptional items. We have continued to execute on our operational efficiency measures, which gave us room to make critical investments into business growth, technology and controls, while reducing redundancies in our cost base in line with our plan. We believe these investment decisions will strengthen our delivery in 2025 and beyond. Third, importantly, we continue to improve our risk profile in 2024, which did come at a cost of 1.7 billion euros across three specific litigation items. And while these items, of course, impacted our reported results, moving forward, our position to deliver returns is not only strengthened for 2025, but also for future years, particularly given the supportive market backdrop for our businesses. Looking ahead, as we have continued to make conscious investments into our franchise, coupled with stickier inflation, we now expect to end 2025 with a cost income ratio of below 65%. We know we need to continue to focus on cost management in the near and medium term, and we have a clear management agenda to address this. Crucially, for this year, we expect to deliver strong positive operating leverage, as we increase revenues by 2 billion euros year on year, while keeping adjusted costs flat. Fourth, on distributions, we remain committed to capital returns, and today we are announcing a 750 million euro share buyback program, in addition to a dividend per share of 68 cents in respect of 2024, which we plan to propose for approval at our annual general meeting. Together, this represents a total of 2.1 billion euros of capital distributions announced so far this year. As we have said before, we want to maintain a prudent approach to capital management, and we will of course look to do more for our shareholders in line with our performance. Our strong CET1 ratio of .8% sets us up well for this heading into the rest of the year. And we remain committed to surpassing our total shareholder distribution target of 8 billion euros. To summarize, 2024 has not been easy, but it was an important year for us, as we took important management actions to secure our trajectory and cement our path to a return on tangible equity above 10% for 2025. And beyond that, we have defined a clear management agenda for further developing our global house bank offering and sustainably increasing returns in 2025 and in the years thereafter. Let's now discuss each of these points in detail, starting with our operating momentum on slide 3. We increased 2024 pre-provision profit by 19% compared to 2023, if adjusted for three specific litigation items, as well as the Goodwill impairment in 2023. The specific litigation items in 2024 comprised the Post Bank Takeover litigation matter, elevated provisions for Polish FX mortgages, and the derecognition of the reimbursement asset for the RusKem Alliance litigation matter, which James will elaborate on further. Pre-provision profit remained broadly stable on a reported basis, as our operating strength enabled us to absorb even large exceptional items. We have delivered sustained operating leverage of 5%, excluding the specific litigation items in 2024 and the Goodwill impairment in 2023. Growth was driven by both revenue momentum and cost discipline. Revenues grow by 4% year on year, supported by our deep dedication and client engagement, and around 75% came from more predictable revenue streams in corporate bank, private bank, asset management, and fixed financing. A well-diversified revenue mix enabled us to grow through the interest rate cycle. The net interest income in key banking book segments and other funding outperformed our prior guidance and remained broadly stable year on year. Adjusted costs decreased 1% year on year to 20.4 billion euros, or 2% to 20.2 billion euros, in the last year. We delivered 4 quarters of adjusted cost of around 5 billion euros in line with our plans. We have made steady progress on our efficiency programme, this offset conscious investments in the franchise and inflationary pressures. We have now completed measures with delivered or expected gross savings of 1.85 billion euros, almost three quarters of our 2.5 billion euro goal, with around 1.67 billion euros in savings already realized. As part of this program, we have removed three in a thousand roads, primarily reducing non-client facing roads, focused in high cost locations, while recent hires have been focused on technology and controls as well as revenue generating areas. Turning to slide four, let us now look at the momentum we have created in each of our businesses against the goals set in 2022. At our investor day in March 2022, we set ambitious objectives for 2025. With 12 months to go, our business growth focused strategies are delivering strong results against these objectives. The corporate bank remains at the core of the Deutsche Bank franchise, and we have further enhanced its value proposition through a strengthening client franchise and investments in technology supported by our global network. As an example, incremental deals, one with multinational clients, have increased by around 40 percent since 2022. The division outperformed its revenue growth ambition despite normalizing interest rates and delivered a return on tangible equity of 13 percent in 2024, three times its 2021 level. The investment bank is outperforming its revenue growth target and delivered a ROTE of nine percent in 2024, cementing its position as the leading European investment bank. We are also particularly pleased we have outperformed the peer average for the full year as we continue to see our investments paying off. The business has demonstrated sustained revenue performance through the cycle since 2021, supported by further diversifying its income streams and increasing market share and origination advisory by around 50 basis points in 2024. In fixed income and currencies, we have built strong market share and demonstrated sustained growth in financing, which is up 12 percent year on year in 2024. And we achieved significant year on year growth of over 60 percent in ONA in 2024 through considerable market share increases in a growing fee pool. Since 2021, the private bank created two distinct businesses to sharpen the commercial focus and to better serve clients changing needs. We scaled up the wealth management franchise, successfully turning around profitability in core markets, while strengthening our number one positioning in Germany. In personal banking, we have launched a major efficiency transformation with a decisive review of our service model and branch footprint optimization. The business continues to leverage its leading market position with net inflows of 29 billion euros, supporting non-interest revenue growth of five percent last year in line with our strategy. Overall, the division grew revenues in line with targets since 2021. The business has made transformative efficiency gains since 2021, closing a further 125 branches in 2024, increasing the total to almost 400 closures since 2021, in addition to reducing full time employees by a further 1300 in 2024 alone. Looking at the fourth quarter more closely, adjusted costs were down nine percent, reflecting delivery of savings despite ongoing inflationary pressures. Profitability and higher returns, especially in German personal banking, will remain top priorities, and we expect to deliver them by a further streamlining of our branch network and the modernization of both our brands, while leveraging the synergies from our unified IT environment. In short, the private bank continues its path to sustainably transform the business, which we believe will translate into substantially better returns, which will be visible this year and beyond. As it management again grew assets under management in 2024 by 115 billion euros and surpassed one trillion euros for the first time, boosted by net inflows of 42 billion euros into passive investments. Exceeding this mark shows the scale and competitiveness of our asset management division. Overall, the business demonstrated its strengths and showed increased cost efficiency, leading to an ROTE of 18 percent in 2024. Driven by the benefits of higher AUM levels and revenue growth initiatives already in place, we expect the compound revenue growth rate in asset management to turn positive in 2025 and approach its original ambition. On slide five, let me now turn to the question why we feel confident in reaching our 2025 revenue growth ambitions. Since 2021, we have delivered a compound annual growth rate of 5.8 percent in line with our upgraded target range. In 2025, we expect continued franchise momentum and our capital-like businesses to drive further growth supported by our investments, increasing the revenue tagger to around 5.9 percent. We have a clear roadmap towards our 2025 target. In the corporate bank, we expect revenues to grow by around 5.5 percent or 400 million euros, largely from scaling of commissions and fee income predominantly in trade finance and fee-based institutional business and repricing of existing clients. Resilient net interest income will provide further support. Investment bank revenues are expected to grow by around 8 percent, as we see encouraging trends in the market, good levels of corporate activity and confidence, solid financing conditions, and pent-up private equity dry powder. The main growth driver is expected to be ONA, with an increase in revenues of approximately 600 million euros, reflecting growth globally but led by the U.S. We have positioned ourselves well to benefit from these trends and grow market share further, supported by our investments reaching their full potential. We also expect FIC to show continued growth in 2025, driven by ongoing strengths and further focused investments in financing. We will continue to develop our wider platform in both existing and adjacent businesses with a focus on the U.S. and flow credit. In the private bank, we expect revenue growth of around 400 million euros or about 4 percent, driven by higher NII from continued business volume growth and the deposit hedge rollover, as well as growing non-interest income, harvesting benefits from higher assets under management, and growth in investment solutions. Finally, we expect asset management to grow by around 300 million or 12.5 percent. We expect the business to benefit from the growth in assets under management during 2024 and a strong equity market development this year, which should boost management fees in 2025. We furthermore expect continued growth in passive, including extractors and in alternatives. These drivers underline our confidence in achieving our revenue goal of around 32 billion euros in 2025 before FX benefits. At year-end FX rates, we expect this number to be around 32.8 billion euros. Importantly, all divisions are contributing to this substantial growth from both non-interest revenues and NII, which once again reflects our well-diversified business mix. Around 75 percent of this growth is expected to come from more predictable revenue streams. Let me now turn to costs on slide six. In 2025, our goal is simple. Deliver a significant normalization of non-operating costs and essentially flat adjusted costs, despite our ongoing investments into growth. Moving past significantly elevated litigation and other restructuring charges in 2024, we are planning with a clear reduction of 2.1 billion euros in non-operating costs this year. Turning to adjusted costs, since we presented our ambitions for 2025 at our investor day in 2022, we have navigated dynamically through a volatile and fast-moving environment. And this resulted in some additional costs as we choose to make investments in technology, controls, and business growth, and with inflation proving to be more persistent than anticipated. In respect of the additional investments, we have positioned the bank for sustainable growth in 2025 and beyond by investing into two key areas. Firstly, growing our franchise beyond our original revenue ambition to better serve our clients and deliver higher rewards for shareholders. Secondly, expanding our initially planned mandatory and strategic investments into technology, controls, and regulatory remediation. In 2024, we hired 1,300 technology specialists and added 400 targeted revenue generating roads supporting long-term cost improvements and growth. In 2024 alone, we also invested a further 1.2 billion euros into controls, taking the total since 2019 to more than 6.5 billion euros. Some of these additional expenses will stay with us this year. However, we expect to offset much of the impact through our cost measures in line with our plan, which we expect to yield further benefits in 2025 and beyond. Our optimization initiatives in Germany are expected to generate savings of close to 200 million euros. Investments to reduce the complexity of our organization by improving technology and optimizing the workforce across infrastructure are expected to deliver a further 300 million euros. And optimization of processes alongside better alignment of our -to-back setup should deliver another 200 million euros. Our initiatives include the previously announced closure of additional branches in 2025, the implementation of new branch formats, as well as decommissioning of further applications or moving them to the cloud. The net effect is that we expect to hold our adjusted cost base flat -on-year while reducing non-operating costs significantly. James will detail the -on-year cost work later. This, combined with the anticipated revenue growth of 2 billion euros we just discussed, will create substantial operating leverage. As a result, we now target a cost-income ratio of below 65 percent this year, marginally higher than our original target, though this will further support growth and business momentum in and beyond 2025. As I said earlier, this does not compromise delivery of our greater than 10 percent ROTE target or our plans for capital distributions. Let me now turn to these, starting with the path to our return on tangible equity target on slide 7. We remain on a clear path to achieve our ROTE target of above 10 percent in 2025, driven by focused execution across all three delivery pillars of our global house bank strategy. As you saw, we have a -by-business roadmap to grow revenues to around 32 billion euros in 2025 in line with our target growth of 5.5 to 6.5 percent. Operational efficiencies play a key role in keeping adjusted costs flat in 2025 and thereby reducing total non-interest expenses as non-operating costs normalize. Capital efficiencies have delivered cumulative RWA equivalent reductions of 24 billion euros close to our end 2025 goal of 25 to 30 billion euros. In the fourth quarter alone, we delivered 2 billion euros of RWA equivalent reductions driven by data and process improvements. We are confident we will reach the upper end of our target range by year-end 2025 through further secularizations and data and process improvements. Delivering on these pillars gives us a clear path to our ROTE above 10 percent in 2025. The non-repeat of significant litigation items in 2024 gives us a starting point of an adjusted ROTE above 7 percent. Firstly, reaching our around 32 billion euro revenue goal is expected to add more than two percentage points to our 2025 ROTE. Around 20 percent of this growth is expected to come from an increase in net interest income by roughly 400 million euros primarily due to the rollover of hatches. Another 40 percent or roughly 800 million euros should come from higher non-interest revenues from more predictable income streams, including from scaling actions and monetizing client relationships in the corporate bank or the spillover effect from higher AUM levels in asset management and private bank. The remaining revenue increase is expected to come primarily from market share expansion in a growing feed pool in ONA. From a regional perspective, we expect increasing revenues in the Americas, supporting by an improving market backdrop and reflecting our targeted investments, while further growth is expected to come from Asia and the Middle East as well as Germany. Secondly, we expect an additional contribution of around 60 basis points from the reduction in non-interest expenses we just discussed. Together, this would bring us already to our targeted ROTE level. And finally, we expect a contribution of around 40 basis points from the reduction of credit loss provisions in 2025 towards more normalized levels in line with our guidance with our third quarter results. All in all, we see a clear path to achieving our ROTE target of above 10 percent. Let me now discuss the implications for capital distributions. The value we have created for our shareholders is visible in the growth and tangible book value per share by more than 20 percent since 2021 to almost 30 euros. This was driven by strong organic capital generation and greater capital efficiency, which supported both rising shareholder distributions and business growth. We have received regulatory approval for a share by a bank of 750 million euros. Additionally, and as guided, we plan to propose a dividend per share of 68 cents for 2024 at our upcoming annual general meeting in May, amounting to a distribution of around 1.3 billion euros. Together, these initiatives result in shareholder distributions of around 2.1 billion euros announced so far in 2025. The announced distributions in 2024 would bring cumulative capital return to around 5.4 billion euros since 2022 in line with our promise back in July 2019 when we announced our compete to win strategy. Looking ahead, our guidance for a dividend of one euro per share in respect of financial year 2025 would equal roughly 1.9 billion euros. With that, modest additional share buybacks this year or next year would be sufficient to get our 8 billion euro target. However, we are committed to surpassing this target as we have said before, and it remains our priority to reward our shareholders in line with our performance. And we are confident that we will continue to deliver rising distributions in the coming years. Before I hand over to James, let me give you a brief outlook on our next phase on slide nine. With the end of 2024, the foundation of the Global House Bank has been laid successfully. And as you heard, we are set to deliver the return target we have set ourselves for this year, supported by the momentum and operating strengths of our franchise. And of course, the management team also looks beyond 2025 towards our longer term ambitions, and we are committed to step up. We are already implementing measures today to elevate Deutsche Bank's performance beyond 2025, which will make us a more profitable bank. This focuses on client work, our own operations, and the way we work and lead. In short, we want to be even more dedicated to our clients needs while continuing to embed our clear purpose in our daily activities. This will drive further revenue growth. We are determined to make this bank more efficient, and that means changing how we do things. It starts with a simpler organizational setup and a smaller workforce, and it requires to become even more technology driven, which will also enhance client experience. We will put full focus on the productive allocation of capital to improve shareholder value and further balance out our earnings profile. In the end, we aim to become a much more profitable bank overall than our 2025 ROTE target. Our management agenda for 2025 and beyond focuses on three key points. Growing value generation, re-engineering our target operating model, and stronger leadership. Firstly, we aim to further grow value generation for our shareholders by sharpening our focus on capital allocation and RWA optimization at both business and client level to boost returns. We see tremendous potential from further improving resource productivity across the portfolio via repricing and reallocating capital to high return franchises supporting further revenue growth. We plan to drive higher resource productivity through capitalized origination in line with our strategy and accelerated asset rotation. We aim to boost the profitability of lower return business through -to-back efficiency improvements and be disciplined in redeploying capital elsewhere, including making exits if necessary. We have already started these reviews in some lending portfolios such as mortgages and are seeing benefits of these choices. Secondly, we plan to achieve the next phase of operational efficiencies beyond our 2.5 billion euro goal by re-engineering our target operating model. Our clear ambition is to operate the bank with a lower headcount and we aim to run a much leaner platform as our investments in technology automation and controls mature. We are tackling inefficiencies by giving business leaders more control over their cost base coupled with further -to-end streamlining of processes. We plan to actively reduce management layers and roads and integrate teams as part of our workforce optimization initiatives, in particular scrutinizing those areas where we do not see the required efficiency improvements. Thirdly, our management agenda emphasizes strengthening risk management and accountability and evolving our culture through a purpose-led framework we call This is Deutsche Bank. With our investments, we are well positioned to grow the global house bank model, make it more efficient and generate more capital for deployment in the business and shareholder distributions. Our management agenda provides significant scope to further improve our return profile and deliver sustainably growing earnings beyond 2025, unlocking the full potential of this bank. We will provide you with more details on our aspirations and actions beyond 2025 over the course of this year, but our immediate focus remains on demonstrating disciplined execution. With that, let me hand over to James.