Deutsche Bank Ag · XETR:DBK
Deutsche Bank — Debt Investor Presentation (July 2020)
42 slides from Deutsche Bank's debt investor presentation, Jul 31, 2020
Slide 1: Q2 2020 Fixed Income Investor Conference Call
Deutsche Bank Q2 2020 Fixed Income Investor Conference Call 31 July 2020
Slide 2: Agenda
Agenda 1 Q2 2020 results and strategic progress 2 Balance sheet, Capital, Liquidity and Issuance 3 Appendix Deutsche Bank Q2 2020 Fixed Income Investor Call 2 Investor Relations 31 July 2020
Slide 3: Q2 2020 Group financial highlights
Q2 2020 Group financial highlights In € m, unless stated otherwise Change in % Change in % Q2 2020 vs. Q2 2019 vs. Q1 2020 Revenues 6,287 1. (1) Revenues Revenues ex specific items(1) 6,269 3. (0) Noninterest expenses 5,367 (23) (5) Costs Adjusted costs ex. transformation charges(2) 4,923 (8) (10) P
Slide 4: COVID-19 impact on financials
COVID-19 impact on financials(1) COVID-19 impact Q1 2020 Q2 2020 Drivers — Changes to macro-economic outlook Provision for credit losses € (260)m € (410)m — Client credit rating migration — Increase in defaults — Higher Market Risk RWA due to increased average market volatility in the second quarter
Slide 5: Strategic transformation drives growth and higher profitability
Strategic transformation drives growth and higher profitability In € bn, unless stated otherwise Operating leverage(1) Last 12 months (LTM) adjusted profit (loss) before tax(2) Group Core Bank 13% 11% 11% 10% 7% 3.1 Core Bank 5% 2.6 18% 3% 1% 1% (1.6) Capital (1)% (2)% (2.7) Release Unit LTM Q2 2019
Slide 6: Stabilizing revenues under re-focused strategy
Stabilizing revenues under re-focused strategy Last 12 months (LTM) revenues(1) ex. specific items, in € bn Group 24.0 23.3 ~ 2% ~24.5 CAGR(3) +5% 23.7 22.6 5.3 Corporate 5.2 Bank Investment 8.2 6.8 Bank Private 8.2 8.1 Bank Asset Management 2.2 2.3 LTM Q2 2019(2) LTM Q2 2020 2022 Group revenue plan
Slide 7: Continued momentum in all four businesses
Continued momentum in all four businesses Corporate Bank Investment Bank # Corporate cash transactions, Loans, in € bn Origination & Advisory Revenues in FIC(2) with in bn market share(1) Top 100 institutional Corporate clients clients +9% +1% +9% +58% +16% 1.5 1.6 118 120 2.3% 2.5% Jun 2019 Jun 202
Slide 8: 10th consecutive quarter of annual adjusted cost reductions
10th consecutive quarter of annual adjusted cost(1) reductions Adjusted cost ex. transformation charges(2), in € bn Expenses eligible for reimbursement related to Prime Finance (3) Bank levies 21.6 19.9 0.7 0.6 (0.6) H2 10.2 0.5 0.1 9.3 € 19.5bn adjusted cost target ex. transformation charges and 0.
Slide 9: Provision for credit losses
Provision for credit losses In € m, unless stated otherwise 761 208 — Provisions increased in line with expectations 351 202 — COVID-19 related Stage 1 and 2 provisions reflect changes in macro-economic outlook Total COVID-19 impact: 410 since March 31 and a management overlay to account for uncerta
Slide 10: We are benefiting from our strong position in Germany
We are benefiting from our strong position in Germany The German government has the room …which we expect to lead to a less severe …and combined with low debt levels should to act decisively during COVID-19… GDP decline than in other countries… make Germany a more stable market Government debt GDP g
Slide 11: Continued progress on strategic transformation
Continued progress on strategic transformation Delivered against all targets and major milestones in first 12 months of strategic transformation Momentum in core businesses driving Group profitability despite Capital Release Unit wind-down, elevated provision for credit losses and transformation cos
Slide 12: Agenda
Agenda 1 Q2 2020 results and strategic progress 2 Balance sheet, Capital, Liquidity and Issuance 3 Appendix Deutsche Bank Q2 2020 Fixed Income Investor Call 12 Investor Relations 31 July 2020
Slide 13: Strong key fundamentals
Strong key fundamentals Q4 2019 Q1 2020 Q2 2020 Comment Common Equity Tier 1 283bps above regulatory 13.6% 12.8% 13.3% capital ratio requirements Loss-absorbing capacity € 19bn above most binding € 115bn € 112bn € 111bn (MREL) MREL requirement Increase driven by lower lending Liquidity Reserves € 22
Slide 14: Conservatively managed balance sheet
Conservatively managed balance sheet Net balance sheet(1), in € bn, as of 30 June 2020 Assets Liabilities & equity — Resilient balance sheet to manoeuvre 986 986 through current volatile environment Trading and — Highly liquid balance sheet with Liquidity Liquidity 148 related liabilities(2) Reserve
Slide 15: CET1 ratio
CET1 ratio(1) In € bn, except movements (in basis points), period end, fully-loaded — CET1 capital ratio increased by 42bps in the quarter 12.8% 31 12 13.3% — ~12bps due to COVID-19, notably: (1) — Higher Market Risk RWA due to increased average market volatility in the second quarter — Lower Credit
Slide 16: Distance to regulatory capital requirements
Distance to regulatory capital requirements(1) In %, as of 30 June 2020, phase-in view 17.5 — Buffer over total capital requirement increased T2 2.1 245bps by 90bps to 245bps over the quarter 15.0 — 44bps increase relate to higher CET1 AT1 2.1 ratio with buffer over CET1 requirement 2.6(4) now at 28
Slide 17: Leverage ratio
Leverage ratio(1) In basis points, period end, fully-loaded 15 4 4.2% 4.0% 2 — Leverage ratio increased by 20bps in the quarter to 4.2% — ~5bps improvement from FX and Q1 2020 FX Effect Leverage Capital Q2 2020 higher Tier 1 capital Exposure change change — ~16bps from CRR quick-fix bringing Tier 1
Slide 18: Sound liquidity profile
Sound liquidity profile Liquidity Reserves, € bn Cash and cash equivalents(1) Highly liquid and other securities(2) 246 243 222 232 205 200 Temporary — Both Liquidity Reserves and Liquidity Coverage 64% 67% 60% 67% operating range Ratio (LCR) increased during the quarter, 55% mainly driven by — Redu
Slide 19: Deposit charging
Deposit charging Quarterly revenue impact, € m 45 32 — Well on track to achieve 2022 revenue plan associated with negative rate pass through, predominantly reflecting higher deposit retention 16 <10 — 90% of charging agreements currently in the Corporate Bank Q3 2019 Q4 2019 Q1 2020 Q2 2020 — Implem
Slide 20: Loss absorbing capacity well above all requirements
Loss absorbing capacity well above all requirements In € bn, as of 30 June 2020 111 111 Available MREL — Available loss absorbing capacity Senior 4 preferred comfortably above all regulatory Available TLAC / requirements 108 subordinated MREL — MREL is the most binding constraint with 92 MREL requir
Slide 21: 2020 issuance plan
2020 issuance plan In € bn Issuance plan Contractual maturity profile(1) Covered Bonds Senior Structured / Preferred Senior Non-Preferred AT1 / Tier 2 23 4 15-20 17 2 3-5 10-15 4 13 13 0.5 1 10 2 3-4 9.3 4 9 3-4 0.5 5 1 4 2.8 17 3 4-7 8 4 8-10 3.2 2 5 7 2.7 2.7 4 4 3 1 2 Original 2020 Revised 2020 Y
Slide 22: Summary & Outlook
Summary & Outlook Further execution of transformation with disciplined management of resources Resilient and low-risk balance sheet with high portion from stable funding sources Strong capital position to support clients and navigate challenging environment Excess liquidity to be prudently managed t
Slide 23: Agenda
Agenda 1 Q2 2020 results and strategic progress 2 Balance sheet, Capital, Liquidity and Issuance 3 Appendix Deutsche Bank Q2 2020 Fixed Income Investor Call 23 Investor Relations 31 July 2020
Slide 24: AT1 and Trust Preferred Securities outstanding
AT1 and Trust Preferred Securities outstanding(1) Regulatory Original Current Nominal Next call Subsequent Issuer Type capital ISIN issuance coupon outstanding date call period treatment(1) date Postbank Funding Trust I Legacy AT1 / -(2) DE000A0DEN75 0.000% € 300m 02-Dec-04 02-Dec-20 Semi-annually P
Slide 25: Current Ratings
Current Ratings Moody‘s Investors S&P Global Fitch Ratings DBRS Services Ratings Counterparty obligations (e.g. Deposits / Structured Notes / A3 BBB+(1) BBB+ A (high) Derivatives / Swaps / Trade Finance obligations/ LOC‘s) Senior Preferred(2) A3 BBB+ BBB+ A (low) Long- term unse- cured Non-preferred
Slide 26: Simplified legal entity structure
Simplified legal entity structure Issuing Deutsche Bank AG Germany entities Americas EMEA APAC DWS DB AG DB AG DB AG DB AG DB AG New London York Branch Singapore Hong Kong Sydney Branch Branch Branch Branch USA Great Britain Singapore Hong Kong Australia Deutsche Bank, DB USA Deutsche Bank Polska DB
Slide 27: Supporting clients through COVID-19
Supporting clients through COVID-19 Loan # Customers Amount — Mainly legislative moratoria in Germany and Legislative & voluntary Italy industry-driven moratoria(1) >100k € 9bn — More than 90% to Private Bank clients — Represents 2% of Group loan portfolio Voluntary bilateral — Bilateral forbearance
Slide 28: Risk in lower rating buckets well mitigated and provisioned
Risk in lower rating buckets well mitigated and provisioned Preliminary 160 143 117 105 Exposure at Default 72 (EAD) (€ bn)(1),(2) 35 49 41 Risk mitigation(3) 22 37 Adjusted exposure 37 43 38 10 12 (LGD basis) 18 12 8 6 5 3 iAAA-iAA iA iBBB iBB iB iCCC Default Probability of default 227 – 0-4 4 - 11
Slide 29: Level 3 assets
Level 3 assets As of 30 June 2020, in € bn Assets (total: € 25bn) Equity securities Mortgage backed securities — Level 3 is an indicator of valuation uncertainty and not of asset quality Other 10 2 — Increase in Level 3 assets in H1 2020 reflects: Debt — Net transfers due to the recent dispersion in
Slide 30: Net interest income sensitivity
Net interest income sensitivity Hypothetical +100bps parallel shift impact, in € bn First year Second year 1.4 1.0 0.8 0.6 0.6 0.4 Retail Non-retail Group Retail Non-retail Group Maturity Maturity > 3M 0.3 0.0 0.3 > 3M 0.5 0.1 0.6 EUR EUR ≤ 3M 0.3 0.3 0.6 ≤ 3M 0.3 0.3 0.6 > 3M 0.0 0.0 0.1 > 3M 0.0 0
Slide 31: Provision for credit losses and stage 3 loans
Provision for credit losses and stage 3 loans Provision for credit losses, € m Stage 3 at amortised cost, € bn Private Bank Investment Bank PB (ex-POCI) CRU (ex-POCI) Corporate Bank Capital Release Unit CB (ex-POCI) Purchased or Originated Credit Impaired (POCI) IB (ex-POCI) Group Stage 3 2.3% 2.3%
Slide 32: Litigation update
Litigation update In € bn, period end Litigation provisions(1) ― Increase in provisions in the quarter predominately relates to the settlement with the 1.2 1.1 New York Department of Financial Services in 1.1 1.1 1.0 July 2020 ― Provisions include approximately € 0.1bn related to settlements already
Slide 33: Definition of adjustments
Definition of adjustments Revenues excluding specific items are calculated by adjusting net revenues under IFRS for specific revenue items which Revenues generally fall outside the usual nature or scope of the business and are likely to distort an accurate assessment of the excluding specific divisi
Slide 34: Core Bank financial highlights
Core Bank financial highlights Q2 2020, in € bn, unless stated otherwise Core Change vs. Change vs. Capital Release Bank Q2 2019 Q1 2020 Unit Revenues 6.4 6% (1)% (0.1) Revenues ex. specific items 6.3 8% (1)% (0.0) Noninterest expenses 4.9 (19)% (1)% 0.5 Adjusted costs ex. transformation charges(1)
Slide 35: Core Bank financial highlights
Core Bank financial highlights H1 2020, in € bn, unless stated otherwise Core Change vs. Capital Release Bank H1 2019 Unit Revenues 12.8 7% (0.1) Revenues ex. specific items 12.7 7% (0.1) Noninterest expenses 9.8 (10)% 1.2 Adjusted costs ex. transformation charges(1) 9.3 (5)% 1.1 Profit (loss) befor
Slide 36: Specific revenue items and adjusted costs – Q2 2020
Specific revenue items and adjusted costs – Q2 2020 In € m Q2 2020 Q2 2019 Q1 2020 Core Core Core CB IB PB AM C&O CRU Group CB IB PB AM C&O CRU Group CB IB PB AM C&O CRU Group Bank Bank Bank Revenues 1,328 2,654 1,981 549 (154) 6,357 (70) 6,287 1,294 1,823 2,087 594 184 5,982 221 6,203 1,326 2,339 2
Slide 37: Specific revenue items and adjusted costs – H1 2020
Specific revenue items and adjusted costs – H1 2020 In € m H1 2020 H1 2019 Core Core CB IB PB AM C&O CRU Group CB IB PB AM C&O CRU Group Bank Bank Revenues 2,653 4,993 4,142 1,068 (91) 12,766 (129) 12,637 2,636 3,811 4,212 1,119 168 11,945 608 12,554 DVA - IB Other / CRU - 20 - - - 20 1 21 - (64) -
Slide 38: Reconciliation adjusted costs excluding transformation charges
Adjusted costs excluding transformation charges In € m, unless otherwise stated Q2 2020 Q2 2019 YoY Q1 2020 QoQ Compensation and benefits 2,579 2,771 (7)% 2,675 (4)% Adjusted costs excluding transformation IT costs 860 1,006 (14)% 870 (1)% Professional service fees 243 285 (15)% 221 10% Occupancy, f
Slide 39: Adjusted profit (loss) before tax (PBT)
Adjusted profit (loss) before tax (PBT) In € m Q2 2020 Q2 2019 Transfor- Transfor- Specific Goodwill Restructuring Specific Goodwill Restructuring Reported PBT mation Adjusted PBT Reported PBT mation Adjusted PBT revenue items impairments & severance revenue items impairments & severance charges(1)
Slide 40: Last 12 months (LTM) reconciliation
Last 12 months (LTM) reconciliation In € m Q2 2019 Q2 2020 Q3 2018(1) Q4 2018(1) Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 LTM(2) LTM(3) Revenues Core Bank 5,716 5,280 5,964 5,982 5,484 5,528 6,409 6,357 22,941 23,778 CRU 459 294 387 221 (222) (179) (59) (70) 1,362 (529) Group 6,175 5,575 6,35
Slide 41: Operating leverage
Operating leverage(1) In € m, unless stated otherwise Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q1 2018(2) Q2 2018(2) Q3 2018(2) Q4 2018(2) Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 vs. vs. vs. vs. vs. vs. Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Revenues ex. specific items Core B
Slide 42: Cautionary statements
Cautionary statements This presentation contains forward-looking statements. Forward-looking statements are statements that are not historical facts; they include statements about our beliefs and expectations and the assumptions underlying them. These statements are based on plans, estimates and pro
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