Dws Group Gmbh & Co. Kgaa · XETR:DWS
Dws Group Gmbh & Co. Kgaa — DWS — Investor Presentation (January 2018)
134 slides from Dws Group Gmbh & Co. Kgaa's investor presentation, Jan 25, 2018
Slide 1: DWS: Positioned for the Future – Company Presentation
DWS POSITIONED FOR THE FUTURE COMPANY PRESENTATION JANUARY 25, 2018
Slide 2: Disclaimer
DISCLAIMER This presentation is being provided for information only. By opening this presentation, you agree to be bound by the following terms and conditions. This presentation has been prepared by Deutsche Asset Management (the “Company”) and should not be treated as investment advice. This presen
Slide 3: Contents
CONTENTS 1 Positioned for the future 2 Investment platform and capabilities 3 Distribution 4 Operating platform 5 Financial performance and targets 6 Risk and control 7 Governance 8 Summary 1
Slide 4: DWS: Positioned for the Future
DWS: POSITIONED FOR THE FUTURE Excellent products and investment solutions designed to meet current and future 1 client needs 2 Global and balanced distribution reach across multiple channels to support growth 3 Scalable operating platform with digital capabilities 4 Performance culture and experien
Slide 5: Diversified business with leading positions in key areas
DIVERSIFIED BUSINESS WITH LEADING POSITIONS IN KEY AREAS AuM by asset class AuM by geography AuM by client type and channel Alternatives DB Network 12% APAC 5% 10 % Germany Other Direct 2% Active Fixed EMEA 42% Institutional(2) Passive Income (ex Germany) 31% 16% 35% Retail 25% €700bn €700bn €700bn
Slide 6: DWS – Diversified and differentiated
DWS – DIVERSIFIED AND DIFFERENTIATED Latest disclosed AuM mix Asset class Channel Geography Fixed income Equity Institutional Home country Alternatives Cash Retail Other geographies Net flows Mgmt fee margin Adjusted Multi asset / Solutions Other Other Captive % (% of BoP AuM) (bps) CIR(1) (3) 16% G
Slide 7: Capabilities aligned with growth opportunities
CAPABILITIES ALIGNED WITH GROWTH OPPORTUNITIES Market forecast (global)(1) DWS Additional AuM (Dec-17, €bn) and Adjusted Revenue(3) (9M-17, €m) Average net flows Total AuM CAGR market AuM (2016-2021) (2016-2021) (2016-2021) 700 1,850 Passive 6% 11% €8.8tn Passive 10% 16% Alternatives Alternatives 4%
Slide 8: Strong and consistent investment performance
STRONG AND CONSISTENT INVESTMENT PERFORMANCE Investment outperformance Historical rolling % of total Active and Alternatives AuM outperforming benchmarks for the period(1) 3Y 5Y 76 74 79 71 67 71 70 72 2014 2015 2016 2017 74% of AuM outperforming 73% 87% against 3-year benchmarks Active Alternatives
Slide 9: Global delivery from regional centers of excellence
GLOBAL DELIVERY FROM REGIONAL CENTERS OF EXCELLENCE US Money Markets EMEA Liquid Real Assets Europe Equity Real Estate GlobalFixed Income ‒ Home market and headquarters with EU Fixed Income €15bn capabilities across asset classes and EMEA €13bn Americas liquidity spectrum ‒ Leader in Germany with st
Slide 10: Strong profit from revenue growth and cost discipline
STRONG PROFIT FROM REVENUE GROWTH AND COST DISCIPLINE AuM / Revenue growth Cost discipline Profit growth AuM (€bn) Adjusted CIR Adjusted Profit Before Tax (€m) +5% +20% (3)pp 709 714 689 700 599 658 72% 582 71% 68% 499 2013 2014 2015 2016 2017 2016 9M-16 9M-17 2016 9M-16 9M-17 x% CAGR 2013-2017 x pp
Slide 11: Strategy to be the investment partner of choice
STRATEGY TO BE THE INVESTMENT PARTNER OF CHOICE ‒ Further leverage leading positions in Germany and EMEA Client ‒ Focused growth as multi-specialist in Americas coverage ‒ Expand coverage in APAC ‒ Continue delivering consistent investment outperformance Investment ‒ Grow Multi Asset and Solutions o
Slide 12: DB plans for DWS supportive of strategy
DB PLANS FOR DWS SUPPORTIVE OF STRATEGY Track record of net flows and margin resilience DB Group challenges Return to Steady inflows / management change growth Enhanced external profile for DWS 31bps 32bps 31bps 32bps(1) ≥30bps Leaner decision making processes and further efficiency gain potenti
Slide 13: A disciplined approach to inorganic growth opportunities
A DISCIPLINED APPROACH TO INORGANIC GROWTH OPPORTUNITIES M&A target Selection Criteria Financial objectives: • EPS accretion Low execution risk • Attractive ROI Complements product Strengthens distribution Complements platform Consolidation & scale range reach capabilities Select bolt-on acquisition
Slide 14: Relationship agreement and KGaA structure
RELATIONSHIP AGREEMENT AND KGAA STRUCTURE Key highlights of Relationship Agreement KGaA structure – simplified overview ‒ Supports a stable, long term relationship between both parties Deutsche Bank AG Public ‒ Addresses matters which are either of a strategic 100 % Shareholders nature or which are
Slide 15: Positioned to deliver shareholder value
POSITIONED TO DELIVER SHAREHOLDER VALUE Strategy KPI Current Medium term financial targets Positioned to Net flows (% of BoP AuM) 2.3%(1) 3% to 5% capture net flows Management Consistent fee margin 32bps(2) ≥30bps margin resilience Adjusted Operational CIR 68%(3) <65% leverage and cost discipline Di
Slide 16: Contents
CONTENTS 1 Positioned for the future 2 Investment platform and capabilities 3 Distribution 4 Operating platform 5 Financial performance and targets 6 Risk and control 7 Governance 8 Summary 14
Slide 17: A global integrated platform
A GLOBAL INTEGRATED PLATFORM DWS: European origin with a global perspective ~900 Investment professionals AMERICAS EMEA(1) GERMANY APAC ~270 Investment ~160 Investment ~350 Investment ~100 Investment 17Countries professionals professionals professionals professionals US UK India Brazil Switzerland S
Slide 18: Global investment team
GLOBAL INVESTMENT TEAM Thematic coverage across asset classes(1) Experienced team Business line view Staff tenure Alternative investment style Traditional investment style Other Alts 8% Fixed Income Infrastructure 3% Up to 5 years 17% 10+ years 35% 44% Liquid Real Active Assets 4% 47% Alternatives ~
Slide 19: Global investment platform: a holistic view
GLOBAL INVESTMENT PLATFORM: A HOLISTIC VIEW Investment capabilities across all major asset classes, styles and solutions Traditional investment style Multi Asset €628bn AuM Combination of asset classes to ‒ Index replication follow specific investment strategies ‒ Systematic investments ‒ Active sha
Slide 20: Investment process: global, consistent and transparent
INVESTMENT PROCESS: GLOBAL, CONSISTENT AND TRANSPARENT Integrated, transparent & client-oriented Accountability Research CIO View Portfolio Construction Portfolio Management Investment Consistent, transparent & Build efficient lead Implement portfolios in line recommendations repeatable decision-mak
Slide 21: Investment quality management
INVESTMENT QUALITY MANAGEMENT: IDENTIFY & REVIEW SOURCES OF RISK, SKILL AND PERFORMANCE Connecting performance, risk & investment process… Key results & outcomes Performance ‒ Review attribution of returns Cross-portfolio scan Liquidity / ‒ Evaluate research quality & recommendations (XPS) scores Po
Slide 22: Strong investment performance across asset classes
STRONG AND CONSISTENT INVESTMENT PERFORMANCE ACROSS ASSET CLASSES Investment outperformance Historical rolling % of total Active and Alternatives AuM outperforming benchmarks for the period(1) 67% 68% 70% 73% 74% 73% of AuM outperforming Active 2014 2015 2016 2017 against 3-year benchmarks(1) 71% 71
Slide 23: Traditional asset classes: from replication to active share
TRADITIONAL ASSET CLASSES: FROM REPLICATION TO ACTIVE SHARE The investor’s rationale: alpha & beta vehicles for every market trend Easy market access, liquidity, Smart beta Active share cost-efficiency, replication Quant investing Stock & bond selection Core Beta Pure Alpha AuM by style AuM by asset
Slide 24: Passive overview
PASSIVE OVERVIEW €115bn AuM 18 years of index replication experience ~60 investment professionals AuM by asset class AuM by product type Key highlights Multi Asset(1) / Commodities 4% Cash 1% #2 #6 Institutional ETF / ETP ETF / ETP Fixed Mandates in Europe(2) globally(2) Income 29% 24% €115bn €115bn
Slide 25: Passive tracking accuracy
PASSIVE TRACKING ACCURACY Process to strive for best in class tracking products Index analysis Portfolio construction & trading Portfolio & index monitoring ‒ Ex-ante analysis of the benchmark ‒ Replication methodologies (synthetic & ‒ Index monitoring ‒ Assessing potential sources of physical) ‒ Co
Slide 26: Well positioned against passive industry trends
WELL POSITIONED AGAINST PASSIVE INDUSTRY TRENDS Full-range offering, differentiating through innovation and specialties Cumulative Net flows AuM net flows 2017 Dec-17 Europe / Product type Description 14-16 in €bn in €bn in €bn APAC US Replication of traditional Differentiate Core Beta 11.7 10.6 79.
Slide 27: Core Beta
CORE BETA Key facts Capabilities ‒ Core ETFs: Major benchmarks, physical replication OUR ALMOST WORK IN ‒ Customized mandate solutions STRENGTHS THERE PROGRESS ‒ ~250 benchmarks accessible via ETFs ‒ EQ indices (global, ‒ Extend fixed ‒ Increase fixed ‒ 47 Funds with 4&5 Morningstar stars(1) regiona
Slide 28: Beta Plus, Strategic Beta and Specialities
BETA PLUS, STRATEGIC BETA AND SPECIALITIES Key facts Capabilities ‒ Development of innovative Strategic Beta products OUR ALMOST WORK IN ‒ Thought leadership: Passive Insights STRENGTHS THERE PROGRESS ‒ 19 Funds with 4&5 Morningstar stars(1) ‒ Broad offering of ‒ Thematic ETFs ‒ Differentiate with f
Slide 29: Active overview
ACTIVE OVERVIEW €513bn AuM(1) >60 years investment heritage ~450 investment professionals AuM by asset class AuM by distribution channel Key highlights Multi Asset(1) Systematic & Quantitative 12% Fixed Income 48% Retail 41% #1 #5 Retail Germany(2) Retail Europe(3) 10% €513bn €513bn Equity 19% 27% 1
Slide 30: Well positioned against active industry trends
WELL POSITIONED AGAINST ACTIVE INDUSTRY TRENDS Quality of flows is improving, strategy to focus on Multi Asset is delivering Cumulative Net flows AuM Management fee net flows 2017 Dec-17 margin Product type Key strategies 14-16 in €bn in €bn in €bn 9M-17 in bps(2) ‒ Core fixed income Fixed Income ‒
Slide 31: Fixed Income
FIXED INCOME Key facts Capabilities ‒ Global team of >200 research & investment professionals OUR ALMOST WORK IN ‒ Research universe: >1,750 issuers >1,400 structured STRENGTHS THERE PROGRESS finance transactions ‒ Euro Government ‒ Global ‒ Illiquid fixed ‒ 25 Funds with 4&5 Morningstar stars(1) bo
Slide 32: Cash
CASH Key facts Capabilities ‒ Global team of >20 research and investment professionals OUR ALMOST WORK IN ‒ Research universe: >400 issuers(1) , company limit STRENGTHS THERE PROGRESS control system ‒ ESMA compliant ‒ Official fund rating ‒ Trade receivables money market funds of product range by as
Slide 33: Equity
EQUITY Key facts Capabilities ‒ Global team of >100 research and investment professionals OUR ALMOST WORK IN ‒ Research universe: >800 issuers STRENGTHS THERE PROGRESS ‒ 32 Funds with 4&5 Morningstar stars(1) ‒ Global equity income: ‒ Income product ‒ ESG equity dividend strategies suite: US & Japan
Slide 34: Systematic & Quantitative Investments
SYSTEMATIC & QUANTITATIVE INVESTMENTS Key facts Capabilities ‒ Global team of >60 research and investment professionals OUR ALMOST WORK IN ‒ 3 distinctive quantitative investment processes with 19 STRENGTHS THERE PROGRESS proprietary models (i.e. optimizer, selection) ‒ CROCI: systematic ‒ Risk-fact
Slide 35: Global investment platform: a holistic view
GLOBAL INVESTMENT PLATFORM: A HOLISTIC VIEW Investment capabilities across all major asset classes, styles and solutions Traditional investment style Multi Asset €628bn AuM Combination of asset classes to ‒ Index replication follow specific investment strategies ‒ Systematic investments ‒ Active sha
Slide 36: Alternatives overview
ALTERNATIVES OVERVIEW €71bn 45+ years #11 87% AuM Investment heritage Global Real Estate platform(1) Global Alternatives AuM outperforming(4) AuM by asset class AuM by region AuM by client type Other(2) Private Equity 1% 3% Real 35% Retail Institutional Infrastructure Estate 43% Americas 36% 64% 12%
Slide 37: Net flows strong in illiquid products, stabilizing in liquid products
NET FLOWS STRONG IN ILLIQUID PRODUCTS, STABILIZING IN LIQUID PRODUCTS Alternatives net flows detail (€bn) Highlights Year-end 4.2 7.0 8.0 7.5 ‒ Illiquid products continue to generate consistent dry powder positive net inflows (€bn)(1) 10 ‒ Following ~€6bn of net inflows from Japanese retail investor
Slide 38: Strongest focus on high growth and stable revenue areas
STRONGEST FOCUS ON HIGH GROWTH AND STABLE REVENUE AREAS Alternatives landscape 12.0% Strong DWS focus Infrastructure Securities(1) Direct Infrastructure DWS presence Infrastructure Infrastructure Debt Bubble size indicates estimated 10.0% Private equity industry AuM size (2016) Liquid Alternatives(2
Slide 39: Direct Real Estate
DIRECT REAL ESTATE Key facts Capabilities ‒ #11 global real estate manager(1) OUR ALMOST WORK IN ‒ 45 years of fiduciary experience STRENGTHS THERE PROGRESS ‒ 1,000+ properties and 13m+ square meters ‒ Equity: Core real estate ‒ Americas: CPIF(6) ‒ Americas: ‒ 365+ institutional clients across 20 co
Slide 40: Direct Infrastructure
DIRECT INFRASTRUCTURE Key facts Capabilities ‒ Regional strategies in both infrastructure equity and debt OUR ALMOST WORK IN ‒ 84 direct infrastructure acquisitions since 1994 STRENGTHS THERE PROGRESS ‒ 44 assets currently under management ‒ Equity: Core infrastructure ‒ US: Expanding ‒ US: Gaining
Slide 41: Liquid Real Assets
LIQUID REAL ASSETS Key facts Capabilities ‒ With €17 billion AuM, one of the world’s largest liquid real OUR ALMOST WORK IN asset managers STRENGTHS THERE PROGRESS ‒ #3 infrastructure securities and #8 global real estate securities manager(1) ‒ Global real estate ‒ Growing real asset ‒ Refining secu
Slide 42: Focused growth businesses within Alternatives
FOCUSED GROWTH BUSINESSES WITHIN ALTERNATIVES Sustainable Investments, Hedge Funds and Private Equity AuM breakdown by business as of Dec 31, 2017 Sustainable Investments ‒ Private debt and equity investment solutions with emphasis on social and environmental impact investing Hedge Fund ‒ 20 years o
Slide 43: Multi Asset & Solutions
MULTI ASSET & SOLUTIONS Leveraging capabilities across the global investment platform - well set up to compete for growth Core Traditional Multi Asset investment style 16 Strategies Total Return Funds with Combination of asset classes to Income 4&5 MS stars(1) follow specific investment strategies €
Slide 44: Multi Asset
MULTI ASSET Key facts Capabilities ‒ Global team of >50 research and investment professionals OUR ALMOST WORK IN ‒ Dedicated cross-asset strategy based on CIO View single- STRENGTHS THERE PROGRESS asset class research ‒ Multi Asset total ‒ Multi Asset ‒ Multi Asset total ‒ 16 Funds with 4&5 Mornings
Slide 45: Solutions
SOLUTIONS Solution strategies for client needs that traditional asset classes do not address Defined contribution Optimal diversification Allocation & selection Tailor-made, bespoke Actively manage risk Client needs products and allocation advisory solutions exposure Balance sheet Defined targets fo
Slide 46: Key takeaways
KEY TAKEAWAYS Global integrated investment platform: 60+ years Active track record, 18+ years index replication experience and 45+ years Alternatives heritage Investment capabilities positioned for the future: Alternatives, Passive, Next Generation Active and Solutions / Multi Asset capabilities Lon
Slide 47: Contents
CONTENTS 1 Positioned for the future 2 Investment platform and capabilities 3 Distribution 4 Operating platform 5 Financial performance and targets 6 Risk and control 7 Governance 8 Summary 45
Slide 48: Global distribution network overview
GLOBAL DISTRIBUTION NETWORK OVERVIEW (3) Global network Client concentration(2) Diversified client base Regional view, FTE AuM view Channel view, number of clients >€1m AuM DB Network Germany Americas Germany Americas 12% 32% 37% 36% 27% Institutional 53% Other clients APAC 48% EMEA ~2,300 11% ~350
Slide 49: Well diversified by region, distribution channel and asset class
WELL DIVERSIFIED BY REGION, DISTRIBUTION CHANNEL AND ASSET CLASS Regional Distribution channel Asset class AuM in €bn AuM in €bn AuM in €bn 714 700 714 700 714 700 689 689 689 73 69 90 71 92 96 17 15 231 193 16 47 208 48 60 316 319 54 301 53 227 52 214 236 173 179 171 18 15 271 12 263 247 165 163 14
Slide 50: Q4 2017 and FY 2017 net flows
Q4 2017 AND FY 2017 NET FLOWS 2017 net flows breakdown Highlights ‒1 FY 2017 Net Flows / AUM was 2.3%; excl. Cash By asset class (in €bn) 9M17 Q4 2017 FY 2017 & Insurance GA it was 4.9% Active Equity (1.5) (0.3) (1.9) ‒2 Multi Asset net inflows continued in Q4 2017, Active Fixed Income 4.6 0.6 5.3 c
Slide 51: Net flows development by region
NET FLOWS DEVELOPMENT BY REGION Regional net flows detail (€bn) Highlights 14.1 13.5 ‒ Americas stabilized in 2014-15 following decision to retain business after a strategic review. 2016 proved 8.7 8.4 8.8 extremely challenging driven by DB Group issues. 2017 saw positive 4.6 net flows 2.3 1.8 1.4 1
Slide 52: Stabilized Americas flows
STABILIZED AMERICAS FLOWS Americas net flows detail (€bn) Highlights ‒ Flows across the Americas stabilized in 2014 0.1 and 2015 following decision to retain the 0.2 4.8 business after a strategic review 0.1 1.9 (0.4) (0.3) (1.7) ‒ Passive significant net inflows in 2015 helped by (4.7) success of c
Slide 53: Americas retail
AMERICAS RETAIL Highlights AuM A multi-specialist provider in Americas retail AM Alternatives Fixed 13% Income 28% €53bn 66 4 Passive AuM Sales professionals(1) Offices 21% €53bn Active #5 Liquid Real Assets #14 393 66% Americas(2) ETF / ETP US(3) Number of clients(4) Cash Equity 4% SQI 22% 5% Multi
Slide 54: Americas institutional
AMERICAS INSTITUTIONAL Highlights AuM An established solutions provider in Americas institutional AM Alternatives Fixed 13% Income 57% Passive €140bn 28 8 4% Cash AuM(1) Sales professionals(2) Offices 20% €140bn #5 Insurance #14 Real Estate 399 Multi Asset & SQI Active general account manager(3) Ame
Slide 55: European AM industry: large untapped growth potential
EUROPEAN AM INDUSTRY: LARGE UNTAPPED GROWTH POTENTIAL Amount of non-invested assets(1) Continental European industry is still relatively small(2) GDP in 4,000 Germany $bn Life insurance UK Cash 3,000 Pension €7.1tn 2,000 Italy funds Spain Savings accounts & 1,000 Switzerland term deposits Mutual fun
Slide 56: EMEA flows overview
EMEA FLOWS OVERVIEW DWS net flows (€bn) Cross-border fund distribution in Europe (€bn)(1) 14 14 13 Net sales(2) Total assets(3) 12 9 8 9 1. Italy 33.9 282 2 2. Spain 13.1 101 2 3. Germany 9.4 172 0 4. Switzerland 8.9 178 … … (10) 8. United Kingdom 3.4 95 (12) 2015 2016 2017 … … EMEA ex Germany Germa
Slide 57: EMEA (ex Germany) retail
EMEA (EX GERMANY) RETAIL Highlights AuM A market leader in EMEA (ex Germany) retail AM Alternatives Fixed 1% Income 18% €91bn 43 8 Active 49% AuM Sales professionals(1) Countries €91bn Equity 14% #5 #2 373 Passive 52% Multi Retail AM EMEA(2) ETF / ETP Europe(3) Number of clients(4) Asset SQI 12% Cas
Slide 58: EMEA institutional
EMEA INSTITUTIONAL Highlights AuM A tier 1 solutions provider in EMEA institutional AM Alternatives 10% Fixed Income Passive €214bn 44% 78 11 12% AuM Sales professionals(1) Countries €214bn Cash 12% #4 Institutional AM #8 Institutional AM 760 Active 78% Germany(2) Europe(3) Number of clients(4) SQI
Slide 59: German retail industry
GERMAN RETAIL INDUSTRY Market development (€bn)(1) DWS' key strengths ‒ Unit linked business: ~42% of all German products use +8% CAGR DWS funds as an underlying(2) 929 799 828 ‒ Saving plans: Xtrackers account for ~21% of the ETF 707 assets executed by the six largest discount brokers(3) 635 DWS ‒
Slide 60: Strong and diversified retail distribution network
STRONG AND DIVERSIFIED RETAIL DISTRIBUTION NETWORK Key distribution partner ‒ Retail banking network with 2,656 branches in total, of which 1,776 in Germany(1) ‒ 10-year agreement as preferred provider or primary provider depending on product type €68.5bn ‒ Overall access to 20m clients across Deuts
Slide 61: Germany retail
GERMANY RETAIL Highlights AuM The market leader in German retail AM Alternatives Fixed 8% Income Passive 12% €165bn 14% 84 187 AuM Sales professionals(1) Number of clients(2) Cash €165bn Active 2% 78% #1 in unit linked products with #1 in German MF market #1 Retail AM Germany with SQI Equity ~42% ma
Slide 62: Embracing the platform economy
EMBRACING THE PLATFORM ECONOMY Value opportunity EDISON ‒ Currently an operating cost DWS fund platform center (Investment application) ‒ Offering account & custody ‒ Transformation into a fee ‒ New digital front-end experience for services based platform in line with retail end clients and distribu
Slide 63: APAC retail
APAC RETAIL Highlights AuM Targeted approach utilizing intermediary partners to penetrate key segments Fixed Income 39% €10bn 33 4 Alternatives 36% AuM Sales professionals(1) Countries €10bn Active 54% #1 China benchmark A-share #1 ETF issuer on 122 ETFs listed in US & Europe(2) Singapore Exchange(3
Slide 64: APAC institutional
APAC INSTITUTIONAL Highlights AuM Provider of a comprehensive suite of solutions to serve a diverse client base Alternatives 22% Fixed Income 64% €27bn 14 6 Passive 2% AuM Sales professionals(1) Countries Cash €27bn 3% #9 #1 61 Multi Asset 7% Equity Active Foreign firm in China(2) CIO of the Year in
Slide 65: Harvest Fund Management
HARVEST FUND MANAGEMENT Harvest profile AuM breakdown (€bn)(4) ‒ 9th largest mutual fund manager in China(1) Channel view Product view ‒ 4th largest mutual fund manager both by long term assets and by Institutional Fixed income management fee income in China(1) Retail 59% 30% Pension ‒ One of two si
Slide 66: Key takeaways
KEY TAKEAWAYS German home market strength, a European market leader, strong Americas foothold and promising APAC positioning Very strong retail brand in Europe where 2017 net flows were 7% of AuM A broad product offering across Active, Passive and Alternatives to serve a well diversified client base
Slide 67: Contents
CONTENTS 1 Positioned for the future 2 Investment platform and capabilities 3 Distribution 4 Operating platform 5 Financial performance and targets 6 Risk and control 7 Governance 8 Summary 65
Slide 68: We have already built a robust and scalable operating platform
WE HAVE ALREADY BUILT A ROBUST AND SCALABLE OPERATING PLATFORM… Global investment platform Global customer management Global trading: top tier model ‒ Global investment and risk ‒ Globally standardized CRM platform ‒ Centralized trading activity out of management for all institutional clients portfo
Slide 69: Further room to optimize and increase efficiency
…HOWEVER, WE HAVE FURTHER ROOM TO OPTIMIZE AND INCREASE EFFICIENCY Target architecture Optimization Digital channels / distribution Three key levers: CRM & Client reporting Operating model and processes Investment management and analytics Organizational and location strategy Custody / Fund account
Slide 70: Lever 1: Operating model and processes
LEVER 1: OPERATING MODEL AND PROCESSES Accounting Reporting Data ‒ Standardize operating ‒ Enhance client experience ‒ Consolidate data stores model via digital self-service within a single platform, “Data Lake” ‒ Simplify accounting ‒ Centralize reporting processes function within the ‒ Reduce time
Slide 71: Lever 2: Organizational and location strategy
LEVER 2: ORGANIZATIONAL AND LOCATION STRATEGY Business support organization Location and real estate strategy ‒ Implement a more efficient infrastructure organization with clear roles and responsibilities ‒ Automate manual processes especially in operations or administrative functions ~2,400 Interna
Slide 72: Lever 3: Consumption and pricing of services
LEVER 3: CONSUMPTION AND PRICING OF SERVICES Third party vendors DB Group as a vendor − Redesign vendor − 10-year initial minimum term management model and process − Serves as the umbrella legal Transaction agreement for Deutsche Bank– Operations processing − Rationalize number of DWS services vendo
Slide 73: Our investment in technology positions us well for the future
OUR INVESTMENT IN TECHNOLOGY POSITIONS US WELL FOR THE FUTURE Third party Digital framework providers Applications Distribution Design User Robo Omni-channel language interface advisory fund platform WISE Edison Application Data services architecture Data Client data Big data Process analytics Fund
Slide 74: Case studies: how we benefit from our digital platform
CASE STUDIES: HOW WE BENEFIT FROM OUR DIGITAL PLATFORM Automation: Cash reinvestment Automation: Cash reconciliation Data: Predicting fund flows ‒ Automation of the cash reinvestment ‒ Automation of the cash reconciliation ‒ Data analytics tool being developed platform for the AM fund treasury to pr
Slide 75: Key takeaways
KEY TAKEAWAYS We have already built a robust and scalable operating platform… …but we have further room to optimize and increase efficiency Our platform is an integral part of our business proposition – with investment in technology to drive a competitive advantage 73
Slide 76: Contents
CONTENTS 1 Positioned for the future 2 Investment platform and capabilities 3 Distribution 4 Operating platform 5 Financial performance and targets 6 Risk and control 7 Governance 8 Summary 74
Slide 77: Key messages
KEY MESSAGES Steady net flows, except 2016, and well positioned to capture stronger net flows in the future Diversified asset base with higher margin products positioned for growth, providing resilience to margin compression and supporting revenue growth and profitability Limited reliance on one-off
Slide 78: Positioned to deliver shareholder value
POSITIONED TO DELIVER SHAREHOLDER VALUE Medium term Current financial targets Positioning to deliver targets Net flows ‒ Product and distribution strength 2.3%(1) 3% to 5% (% of BoP AuM) ‒ Steady net flows (ex 2016) ‒ Diversified asset base Management 32bps(2) ≥30bps ‒ Recent flows concentrated in h
Slide 79: Adjusted PBT includes a number of one-off adjustments
ADJUSTED PBT INCLUDES A NUMBER OF ONE-OFF ADJUSTMENTS Reconciliation from reported Deutsche AM to adjusted DWS standalone 9M-17 (€m) 646 36 (52) 610 6 599 Adjustments mainly for sold & discontinued business and DB Group treasury allocations 9M-17 Perimeter adjustments 9M-17 Insurance Cost adjustment
Slide 80: Reconciliation from DWS standalone reported to adjusted PBT
RECONCILIATION FROM DWS STANDALONE REPORTED TO ADJUSTED PBT PBT reconciliation (€m) Adjustments FY-15 FY-16 9M-16 9M-17 1 Proceeds from the sale of the PowerShares Profit before Tax (reported) 633 647 431 646 fund in the Americas in 2015 Revenue adjustment items 2 Mark-to-market valuation impacts
Slide 81: Financial performance snapshot
FINANCIAL PERFORMANCE SNAPSHOT x% y-o-y change Adjusted profit before tax (€m) AuM (€bn) Consistent profit generation Return to asset growth 19 (39) 16 (3)% (3)% +1% 732 709 +20% 714 689 700 599 499 2015 2016 9M-16 9M-17 2015 2016 2017 xx Net flows (in €bn) Adjusted revenues (€m) Adjusted costs (€m)
Slide 82: DWS detailed standalone financials
DWS DETAILED STANDALONE FINANCIALS Adjusted profit & loss statement and key performance indicators (€m) Highlights FY 2015 FY 2016 9M-16 9M-17 FY16 %Δ 9M17 %Δ 1 Management fees and other Management fees and other recurring 1 2,260 2,136 4 1,584 1,653 (6)% 4% recurring revenues decreased by revenues
Slide 83: Strong net flows except for 2016
STRONG NET FLOWS EXCEPT FOR 2016 AuM (€bn) AuM development detail (€bn) ~(6)% of AuM ~2% of AuM 0 714 ~3% of AuM 34 3 16 +5% 1 700 29 15 689 714 700 5 (5) 689 19 35 658 (39) 658 (36) ~5% of AuM 582 (16) 30 €31bn or ~7% of €(22)bn or ~(5)% €23bn or ~5% of AuM ex Cash & of AuM ex Cash AuM ex Cash & In
Slide 84: Net flows strong in passive, active multi asset and alternatives
NET FLOWS HAVE BEEN STRONG IN PASSIVE, ACTIVE MULTI ASSET AND ALTERNATIVES Historical net flows vs management fee margin Cumulative Mgmt fee Net flows % of BoP AuM net flows Net flows margin(1) (’14 ‒ ’16, (FY-2017, (9M-17, Product type €bn) €bn) bps) Cumulative net flows (‘14 – ‘17, €bn) Active (7.
Slide 85: Growing revenues in focus areas and maintaining margins
GROWING REVENUES IN FOCUS AREAS AND MAINTAINING MARGINS x Management fee margin (bps) Adjusted x% y-o-y change AuM (€bn) Revenues(1) (€m) 75 76 Equity 526 8% 570 700 1,850 Active 14% Equity 45 42 Multi Active 31% 32% 9% Asset 137 180 Multi Asset Active SQI 7% 24 28 Active 10% SQI 7% 117 125 Active 7
Slide 86: Regional management fees breakdown
REGIONAL MANAGEMENT FEES BREAKDOWN AuM Management fees Highlights As of Dec 31, 2017 (€bn) 9M-17 (€m) ‒ Booking view management fees influenced by 700 1,653 transfer pricing principles (e.g. attributing revenue to fund domicile and manufacturing regions) 23% Americas 28% ‒ Therefore, estimating marg
Slide 87: Limited reliance on one-off fees, leading to a stable revenue base
LIMITED RELIANCE ON ONE-OFF FEES, LEADING TO A STABLE REVENUE BASE Adjusted revenues (€m) Performance & transaction fees breakdown (€m) Other revenues ‒ Performance and transaction fees historically represent <10% of annual Performance and transaction fees and other revenues non-recurring revenues M
Slide 88: Performance & transaction fees details
PERFORMANCE & TRANSACTION FEES DETAILS Alternatives Active & other AuM breakdown by fee type and payment frequency as of Dec 31, 2017 Performance fee breakdown (in €m) Performance fees (Eligible every 2 years) 108 8% 99 28 24 Performance fees (Other) Performance 15% fees 23% 80 76 No one-off 26 fees
Slide 89: Significant revenue upside opportunities
SIGNIFICANT REVENUE UPSIDE OPPORTUNITIES Adjusted revenues Supports net flows target of 3-5% p.a. Grow with selected investments in key areas ‒ Client coverage ‒ Investment capabilities ‒ Digital FY-17 Organic growth Growth initiatives Market Margin Performance & Medium compression transaction fees
Slide 90: Key growth initiatives
KEY GROWTH INITIATIVES DWS growth initiatives Medium term target ‒ Protect market leading position in Germany and strengthen coverage teams in selected markets in EMEA (Spain / Italy / Switzerland) for selected client and product segments (insurance, pensions, passive Client coverage sales specialis
Slide 91: Compensation cost control
COMPENSATION COST CONTROL Adjusted compensation & benefits (€m) Highlights FTE (Period-end) 3,877 3,860 3,852 3,801 ‒ Compensation and benefits cost discipline in 2016 is driven by FTE efficiency measures and the Group- Comp & ben €220k €179k €176k(2) €200k(2) wide compensation measures per FTE(1) ‒
Slide 92: General expense discipline
GENERAL EXPENSE DISCIPLINE Adjusted general and administrative expenses (€m) Highlights x% y-o-y change (7)% ‒ ~70% of 9M-17 general expenses made 1,033 up of banking & transaction charges, 958 professional services, IT, 187 communications, occupancy, marketing, T&E, regulatory, tax & insurance, and
Slide 93: Potential for further efficiency improvements
POTENTIAL FOR FURTHER EFFICIENCY IMPROVEMENTS Adjusted costs (€bn) x Adj. CIR (in %) <65% Incremental costs from 2018: Create operational leverage from synergies in: ‒ Research costs / MiFID II ‒ Organizational and location strategy impact ‒ Consumption and pricing of services ‒ Additional VAT (DB G
Slide 94: Key cost efficiency savings and growth initiatives investments
KEY COST EFFICIENCY SAVINGS AND GROWTH INITIATIVES INVESTMENTS DWS cost efficiency savings and growth initiatives investments ‒ Organizational review ‒ Identifying synergies and consolidating activities in one integrated investment platform and home of best fit Organizational ‒ Realignment of group
Slide 95: Balance sheet: translation from IFRS reported to economic view
BALANCE SHEET: TRANSLATION FROM IFRS REPORTED TO ECONOMIC VIEW IFRS Consolidated DB Vita Economic Sep-17 (€bn) reported(1) Funds and pending view Key Highlights Assets €5.7bn adjustments comprise: Cash and bank balances 4.0 0.8 0.0 3.2 1 – Guaranteed Funds (€4.6bn) Fin. assets at FV through P&L 4.3
Slide 96: DWS – a simple and stable balance sheet
DWS – A SIMPLE AND STABLE BALANCE SHEET Cash and bank balances Economic view (€bn) FY-15 FY-16 Sep-17 covers regulatory requirements, dividend payments, daily operations, expected to decrease in 4Q17 from settlement of Assets short term liabilities partially offset by loan redemptions Cash and bank
Slide 97: Co-investment and seed capital expected to support product lineup
CO-INVESTMENT AND SEED CAPITAL EXPECTED TO SUPPORT EXPANSION OF PRODUCT LINEUP Co-investment (€m) – Long term investment in illiquid Alternative products 386 – Co-investing alongside clients demonstrates our investment 355 338 48 strategy conviction and aligns interests between the manager 60 and cl
Slide 98: Prudent regulatory capital position
PRUDENT REGULATORY CAPITAL POSITION Regulatory capital position as of Sep-17 (€bn) Highlights 6.3 ‒ DWS will be regulated as a CRR Investment Firm(1) ‒ The business is expected to be capitalized to meet all current and anticipated capital requirements including appropriate management headroom ‒ CET1
Slide 99: Drivers of capital demand and deployment of capital generation
DRIVERS OF CAPITAL DEMAND AND DEPLOYMENT OF CAPITAL GENERATION Pro-forma capital requirements(1) (€bn) ‒ Level of capital is driven by Pillar 2 requirements which exceed Pillar 1 minimum requirement due to: ‒ Inclusion of risks not captured in RWA (including Operational Risk) Excess Capital ‒ Applic
Slide 100: Key takeaways
KEY TAKEAWAYS Steady net flows, except 2016, and well positioned to capture stronger net flows in the future Diversified asset base with higher margin products positioned for growth, providing resilience to margin compression and supporting revenue growth and profitability Limited reliance on one-of
Slide 101: Contents
CONTENTS 1 Positioned for the future 2 Investment platform and capabilities 3 Distribution 4 Operating platform 5 Financial performance and targets 6 Risk and control 7 Governance 8 Summary 99
Slide 102: Established risk and control organization
ESTABLISHED RISK AND CONTROL ORGANIZATION ‒ Nikolaus von Tippelskirch appointed as Chief Control Officer APAC ‒ Dedicated risk and control functions already in place AMERICAS ~40 and being formalized ahead of separation ~90 EMEA Risk, Compliance, AFC, Legal and Audit Risk, Compliance, AFC, Legal and
Slide 103: DWS' risk and control functions work closely with group counterparts
DWS’ RISK AND CONTROL FUNCTIONS WILL CONTINUE TO WORK CLOSELY WITH THEIR GROUP COUNTERPARTS DWS reporting line (disciplinary) Chief Control Officer Chief Executive Officer Compliance AFC Legal Risk Internal Audit Group reporting line (functional) Group Compliance Group AFC Group Legal Group Risk Int
Slide 104: Integrated approach to risk and control
INTEGRATED APPROACH TO RISK AND CONTROL Front office Control functions Assurance Integrated control functions 330 FTE across risk, compliance, AFC, legal and audit Independent from the investment business lines Globally consistent tools, processes and concepts Risk steer through coordinated
Slide 105: The risk management framework
THE RISK MANAGEMENT FRAMEWORK FROM RISK APPETITE AND STRATEGY TO PORTFOLIO STEERING Risk inventory 2 3 Risk measurement Leverages expertise within the The identified risks are measured business intended to achieve a qualitatively or quantitatively comprehensive identification designed to ensure both
Slide 106: Comprehensive risk coverage
COMPREHENSIVE RISK COVERAGE Risk management governance General Partner Audit committee Risk committee Finance committee Regional committees Reputational risk Seed capital Credit committee committee committee Risk types Financial risk Non-financial risk Investment risk ‒ Credit risk ‒ Legal & complia
Slide 107: Deutsche Bank Group support
DEUTSCHE BANK GROUP SUPPORT General principles Risk service ‒ Coverage services Corporate insurance – DWS risk committees are ‒ Fund broker placement services independent of Deutsche ‒ Credit risk framework services Bank Group Credit risk ‒ Counterparty analysis rating service ‒ Credit risk appetite
Slide 108: Overview of regulatory agenda in the asset management industry
OVERVIEW OF REGULATORY AGENDA IN THE ASSET MANAGEMENT INDUSTRY ‒ Significant changes to the rules governing the provision of financial services in the EU (investor protection and MiFID II transparency)(1) ‒ Regulation requiring disclosure of standardized product information to retail clients (new ca
Slide 109: Key takeaways
KEY TAKEAWAYS Established risk and control organization spanning the globe Coordinated and integrated approach to risk and control Defined risk management framework and principles Leveraging Deutsche Bank Group where appropriate 107
Slide 110: Contents
CONTENTS 1 Positioned for the future 2 Investment platform and capabilities 3 Distribution 4 Operating platform 5 Financial performance and targets 6 Risk and control 7 Governance 8 Summary 108
Slide 111: Background to KGaA structure
BACKGROUND TO KGAA STRUCTURE Key guiding principles in structuring the KGaA Structural elements of DWS KGaA structure ‒ KGaA design which safeguards free float Legal form of ‒ Gesellschaft mit beschränkter Haftung shareholders’ interests and secures appropriate General (GmbH)(1) level of influence P
Slide 112: Governance and corporate structure
GOVERNANCE AND CORPORATE STRUCTURE DB Group Deutsche Bank AG representatives 100% Public 1 Karl von Rohr DB Beteiligungs-Holding GmbH Shareholders 2 100% >75% Up to 25% 3 DWS Group KGaA Holding and listed company Joint Committee Independent representatives General meeting 1 Delegated by 4 shareholde
Slide 113: Relationship agreement between DB and DWS
RELATIONSHIP AGREEMENT BETWEEN DB AND DWS Selected key features of the Relationship Key principles of DB / DWS relationship Agreement ‒ Supports a stable, long term relationship ‒ Automatic termination if DB stake in DWS falls between both parties below 40% ‒ Addresses matters which are either of a
Slide 114: Compensation structure improving ability to retain key personnel
COMPENSATION STRUCTURE IMPROVING ABILITY TO RETAIN KEY PERSONNEL Support achievement of strategic, financial and cultural objectives Better align to market practice of asset management industry Pay for performance within regulatory frameworks Current framework Future framework Consistent with
Slide 115: Contents
CONTENTS 1 Positioned for the future 2 Investment platform and capabilities 3 Distribution 4 Operating platform 5 Financial performance and targets 6 Risk and control 7 Governance 8 Summary 113
Slide 116: DWS: Positioned for the future
DWS: POSITIONED FOR THE FUTURE 1 Excellent products and investment solutions designed to meet current and future client needs 74% of AuM outperforming 3-year benchmarks and best in class tracking error in passive investing Diversified asset mix: one of two players with top 20 positions across Ac
Slide 117: Appendix
ADWS APPENDIX 115
Slide 118: Reconciliation from Deutsche AM reported segment to adjusted DWS standalone (2015, 2016)
RECONCILIATION FROM DEUTSCHE AM REPORTED SEGMENT TO ADJUSTED DWS STANDALONE 2015 FY AND 2016 FY Perimeter adjustments DWS Adjustments Deutsche AM Adjusted DWS standalone reported Sold & Other standalone reported DB Group DWS 2015 Abbey Life discontinued perimeter 2015 2015 definition(3) specific(4)
Slide 119: Reconciliation from Deutsche AM reported segment to adjusted DWS standalone (9M-16, 9M-17)
RECONCILIATION FROM DEUTSCHE AM REPORTED SEGMENT TO ADJUSTED DWS STANDALONE 9M-16 AND 9M-17 Perimeter adjustments DWS Adjustments Deutsche AM Adjusted DWS standalone reported Sold & Other standalone reported DB Group DWS 9M-16 Abbey Life discontinued perimeter 9M-16 9M-16 definition(3) specific(4) b
Slide 120: Market sensitivities
MARKET SENSITIVITIES Annualized management fee Exposure Market change AuM impact impact from change in AuM +/- 1% Equities(1) change in equity ~ +/- € 2bn ~ +/- € 10m markets +/- 10 bps Fixed income(2) change of interest ~ -/+ € 2bn ~ -/+ € 3m rate curves 1% USD appreciation/ FX(3) 1% USD ~ +/- € 3b
Slide 121: Historic management fee margins
HISTORIC MANAGEMENT FEE MARGINS 2015 2016 9M-16(2) 9M-17(2) Management fee margins in bps Active Equity 76 76 75 76 Active Fixed Income 17 15 15 14 Active Multi Asset 41(1) 44 45 42 Active SQI 31 28 24 28 Cash 8 8 8 8 Passive 30 27 27 25 Alternatives 58 56 55 59 Total 32 31 30 32 (1) Multi Asset man
Slide 122: Historic quarterly net flows development
HISTORIC QUARTERLY NET FLOWS DEVELOPMENT Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY All figures in €bn 2014 2014 2014 2014 2014 2015 2015 2015 2015 2015 2016 2016 2016 2016 2016 2017 2017 2017 2017 2017 Active Equity (1) (1) (1) (1) (4) (0) (1) (1) 1 (1) 0 (1) 0 (2) (2) (0) (1) (0)
Slide 123: Historic AuM development by asset class
HISTORIC AUM DEVELOPMENT BY ASSET CLASS Active Multi Active Active Fixed Active Cash Alternatives Passive Total All figures in €bn Asset Equity Income SQI FY 2013 AuM 61 27 77 254 46 57 60 582 Net flows 3 5 (4) 4 1 10 9 27 FX 4 0 2 16 0 3 4 30 Performance 2 2 7 13 3 6 3 35 (1) Other 0 (0) 0 (17)(2)
Slide 124: Detailed investment performance
DETAILED INVESTMENT PERFORMANCE All figures in %(1) 1Y 3Y 5Y Active Equity 88% 82% 90% Active Fixed Income 98% 90% 92% Active Multi Asset 54% 50% 74% Active Retail Active SQI 33% 19% 45% Cash 99% 99% 100% Total 88% 82% 89% Active Equity 49% 48% 55% Active Fixed Income 67% 67% 67% Active Multi Asset
Slide 125: Guaranteed products overview
GUARANTEED PRODUCTS OVERVIEW Overview Key products ‒ Guaranteed products AuM of €21bn, representing ~3% of ‒ Riester / iCPPI (AuM €10.7bn) total DWS AuM ‒ Pension saving contract with average remaining tenor of ‒ Contribute ~€0.1bn of stable management fees p.a. 25 years. Contributions guaranteed at
Slide 126: Harvest flows and financials
HARVEST FLOWS AND FINANCIALS Strong organic growth Net outflows primarily driven by disposal of Net flows(1) (% of BoP AuM) 44% 38% 25% (12)% unregulated business, based on recent CSRC regulatory guidelines, as reported by Harvest +26% CAGR 937 128 ‒ Harvest fundraising remained strong in 2017: 869
Slide 127: Selected industry rankings in detail
SELECTED INDUSTRY RANKINGS IN DETAIL Retail AM Germany Retail AM Europe Institutional AM Europe Insurance AM Global AuM €bn AuM €bn AuM €bn AuM $bn 1 DWS 246 1 BlackRock 749 1 BlackRock 912 1 BlackRock 273 2 Union 144 2 Amundi 499 2 Legal & General IM 793 2 DWS 190 3 AGI 142 3 JP Morgan 315 3 Insigh
Slide 128: Workforce footprint – more than 60 nationalities employed in 22 countries
WORKFORCE FOOTPRINT – MORE THAN 60 NATIONALITIES EMPLOYED IN 22 COUNTRIES Americas FTE – 910 APAC FTE – 747 COO Active Active Passive 138 66 120 16 Alternatives Central Passive 38 Support 29 Coverage 109 87 Trading and Trading and Products Products Alternatives 14 64 214 COO 421 Central Coverage Sup
Slide 129: Well positioned to face challenges and seize opportunities related to MiFID II
WELL POSITIONED TO FACE CHALLENGES AS WELL AS SEIZE OPPORTUNITIES RELATED TO MIFID II ‒ Dedicated regulatory expertise within DWS supplemented by DB Group resources, and a Higher regulatory track record of regulatory implementation requirements ‒ Its size enables DWS to manage the regulatory agenda
Slide 130: Comparison of KGaA and AG structure
COMPARISON OF KGAA AND AG STRUCTURE (WITH DEUTSCHE BANK SHAREHOLDING OF 75%+) AG structure KGaA structure KGaA is an established German legal structure ‒ Monitors performance of management ‒ Monitors performance of management where the listed company ‒ Made up of Shareholder and Employee ‒ Made up o
Slide 131: Rights / powers of the KGaA Supervisory Board
RIGHTS / POWERS OF THE KGAA SUPERVISORY BOARD Information rights Correspond to information rights of an AG Supervisory Board, in particular(2): ‒ Regular reports from the General Partner (‘GP’), e.g. annual / quarterly reports on strategy, intended business policy, business planning, profitability
Slide 132: Role of the KGaA Joint Committee
ROLE OF THE KGAA JOINT COMMITTEE Granting of general powers of attorney (Generalvollmachten) to represent the KGaA Structural changes such as inter-company agreements (e.g. domination agreements, profit and loss transfer agreements), transformations (e.g. merger, spin-off) between the KGaA and i
Slide 133: Simplified legal structure
SIMPLIFIED LEGAL STRUCTURE ‒ All majority owned entities are 100% dedicated to the DWS business Deutsche Bank AG 100% Deutsche Bank Beteiligungs- Holding GmbH 100% 100%(1) DWS Management Manages DWS Group KGaA GmbH 100% 5.1% 94.9% 99.18% 100% 100% Deutsche Asset Deutsche Asset Deutsche AM US RREEF D
Slide 134: Financial glossary
FINANCIAL GLOSSARY Terminology Definition AuM is defined as (a) assets we hold on behalf of customers for investment purposes and/or (b) client assets that are managed by us on a discretionary or advisory basis. AuM represents both collective investments (Mutual Funds, Exchange-Traded Funds, etc.) a