Deutsche Bank Ag · XETR:DBK
Deutsche Bank — Investor Presentation (July 2019)
48 slides from Deutsche Bank's investor presentation, Jul 8, 2019
Slide 1: Compete to win
Deutsche Bank Compete to win July 8th 2019 Deutsche Bank
Slide 2: Our strategy
Deutsche Bank Our strategy
Slide 3: Focused on unresolved challenges
Focused on unresolved challenges Insufficient Group and Investment Bank profitability Costs too high Lack of disciplined culture in capital allocation Leverage too high Not client centric enough 2
Slide 4: Our mission
Our mission Deutsche Bank is … the leading German bank with strong European roots and a global network aligned with the strengths of our home market economy around trade and investment at the center of our corporate, institutional and private clients’ needs the risk manager and trusted advisor to ou
Slide 5: Our guiding principles
Our guiding principles We only operate where … … our clients want us to be … we can grow and deliver … we are competitive sustainable value All on the basis of a robust balance sheet with strong controls 4
Slide 6: Our decisive actions
Our decisive actions Invest in Exit Create four client- Cut Manage and technology & businesses centric divisions costs liberate capital growth Exit Equities Sales & Trading, Overhaul our front-to-back Invest in our leading Create a Capital Release Unit(3) Focus on market leading resize Fixed Income,
Slide 7: Four client-centric businesses positioned to grow
Four client-centric businesses positioned to grow Private Bank Corporate Bank Leading retail bank in Germany and focused One of the leading in Europe. Global wealth manager corporate banks globally 2018 revenues Return on Tangible Equity(1) Return on Tangible Equity(1) 2018 revenues >15% >12% 9% € 8
Slide 8: Corporate Bank
Corporate Bank Heritage in Europe, global in reach, reliable partner Leading global platform with long-lasting client relationships – Top 3 provider(1) for global corporates and commercial clients The core of our clients’ needs – Our transaction banking services, financing and lending, and risk mana
Slide 9: Investment Bank
Investment Bank A focused, profitable and competitive capital markets, fixed income and FX offering Globally competitive in our core markets – 75% of our businesses hold top 5 market positions(1) Leading financing business – A leader in debt capital markets, leveraged finance, structured finance, as
Slide 10: Private Bank
Private Bank Leading retail bank in Germany and focused in Europe. Global wealth manager Leader in 4th largest economy globally – Approximately 20 million clients with € 320bn in assets under management and € 130bn in deposits Trusted advisor to loyal clients – German wealth manager, boutique focus
Slide 11: Asset Management
Asset Management German leader, globally successful, client solutions focused Market leader in Germany – 26% market share(1), leverage domestic leadership to expand internationally Diversified products – Comprehensive offering of Active, Passive and Alternatives products with consistent performance
Slide 12: Executing our strategy
Deutsche Bank Executing our strategy
Slide 13: Our way to fundamentally change the bank
Our way to fundamentally change the bank Refocus Restructure FOUR BUSINESSES COMPETING TO WIN IMPROVE EFFICIENCY AND INFRASTRUCTURE Exit loss making businesses Reduce adjusted costs to € 17bn in 2022 Increase share of predictable revenues € 4bn of additional spend on our controls Enhance c
Slide 14: Refocus: Four businesses competing to win
Refocus: Four businesses competing to win Decisions improve the quality and consistency of our earnings 2018 impact of Capital Release Unit (€ bn) Exit Global Equities (Cash Equities, Equity Derivatives & Prime Finance). Retain focused Exit 2.5 equity capital markets capability Resize our Rates
Slide 15: Refocus: More stable and predictable revenues
Refocus: More stable and predictable revenues Our Investment Bank … … will be smaller … and highly competitive Sales & Trading 29% 20% Investment Bank excl. O&A Origination and 24% Other Advisory 8% 10% Origination & Advisory (O&A)(3) Global Transaction 15% Bank 23% Corporate Bank 34% 3-5 position A
Slide 16: Restructure: Improving efficiency
Restructure: Improving efficiency Radically overhauling our cost base while continuing to invest in our controls (25)% Adjusted costs (€ bn) Structural measures 22.8 Execute on previously announced € 1bn cost reductions in 2019 17.0 Reduce costs in Capital Release Unit and from previously announ
Slide 17: Reinvigorate: Leadership & spirit
Reinvigorate: Leadership & spirit A new leadership team as basis for a client-centric, team and execution focused turnaround New leadership team to accelerate turnaround by Senior Leadership bringing in new and dedicated skill sets and experience Team First step on our way to cultural transformation
Slide 18: Return: Free up capital
Return: Free up capital Managing transformation with existing resources CRU to efficiently exit non-strategic businesses and low return assets Capital Release Unit (CRU) Capital targets € bn as of 2018 Majority of credit and market risk RWA expected to be exited by end of 2020 288 Additional c
Slide 19: Using capital differently
Using capital differently Our promises Free up Disciplined capital Target lower capital allocation cost of capital Careful management Focused on areas Changed business mix should reduce of shareholders funds where we compete to win volatility of earnings and funding needs Restructuring within exis
Slide 20: Our path to sustainable profitability
Our path to sustainable profitability
Slide 21: Our areas of focus
Our areas of focus Improve Reduce adjusted costs to € 17bn in 2022 efficiency Target a Cost Income Ratio of 70% in 2022 Create CRU with € 74bn of RWA and € 288bn of leverage exposure Optimize Expect to reduce CRU RWA by € 40bn and leverage exposure by approximately € 280bn by 2022 Balance sh
Slide 22: 2018 pro-forma financials
2018 pro-forma financials Core Bank(1) Capital Release Unit Group Revenues (in € bn) 22.8 2.5 25.3 Cost income ratio (in %) 87% 144% 93% RoTE(2) (in %) 1.7% (6.0)% (0.1)% RWA (in € bn) 277 74 350 Leverage exposure (in € bn) 985 288 1,273 Note: Divisional figures in this presentation showing the pro-
Slide 23: Realistic revenue growth assumptions
Realistic revenue growth assumptions Revenues in € bn 25.3 ~25 2018 – 2022 Operating business growth CAGR(1): Corporate Bank 3% 22.8 (2.5) Investment Bank 0% Private Bank 2% Asset Management 2% 2018 Capital 2018 Operating Interest rate Balance sheet 2022 Group Group Release Unit Core Bank businesses
Slide 24: Targeting a material reduction in adjusted costs
Targeting a material reduction in adjusted costs € 5.8bn reduction driven by business exits 22.8 2018 – 2022 Operating business 22.1 1.0 0.3 0.6 0.6 adjusted cost CAGR: 3.3 18.8 1.4 0.9 Corporate Bank (2)% 17.0 0.5 16.0 1.0 Investment Bank (4)% 21.5 Private Bank (1) (3)% Asset Management (2)% 2018 P
Slide 25: Private Bank cost reductions
Private Bank cost reductions 2019 – 2022 planned cost reductions Joint IT platform with single product systems and operations (~50% of merger synergies savings(1)) German merger Joint head office structure synergies and € 0.6bn(1) efficiency measures Cease duplicate digital investments Imple
Slide 26: Upfront costs to execute our strategy quickly
Upfront costs to execute our strategy quickly € 2.3bn of incremental Restructuring & Severance planned to support cost reduction 5.8 Deferred Tax Asset valuation adjustment 2.8 ~€ 2.0bn Other CET1 impact 1.2 in 2019 0.3 Bank levy 3.8 IT and Software impairment 0.6 1.7 Professional Goodwill 0.7 Real
Slide 27: Continuing to invest in our IT
Continuing to invest in our IT Planned IT spend in € bn % of adjusted costs: 17% 17% Ongoing investments in our IT 4.2 Accelerated infrastructure amortization 3.8 0.5 Focused perimeter allows greater 3.5 investments into our core businesses 3.1 2019 will be the peak year for IT spend as: 2.9
Slide 28: Capital Release Unit (CRU)
Capital Release Unit (CRU) 2018 (€ bn) Equities business (Cash, Derivatives, Prime Finance) 288 Leverage driven by Prime Finance business. RWA Equities excluding Operational Risk driven by Derivatives and Prime Finance businesses 74 Equities 170 Lower yielding longer dated legacy Assets, Fixed
Slide 29: Capital Release Unit deleveraging
Capital Release Unit deleveraging Majority of the run-down expected to occur in the next 18 months (€ bn) Risk weighted assets Leverage exposure 288 (59)% Operational 36 Risk ~32 (86)% 119 ~30 ~28 ~28 Credit and 38 Market Risk ~20 17 10 ~10 9 ~7 7 ~6 2018 2019 2020 2021 2022 2018 2019 2020 2021 2022
Slide 30: CET1 ratio: CRU wind-down and capital generation offset inflation
CET1 ratio: CRU wind-down and capital generation more than offset potential inflation Capital available for distribution … with capital available Excess for distribution in 2022 Capital 12.5% at least CET1 ratio 11.8% 2019 maximum at all times distributable amount Known regulatory Expected Gro
Slide 31: Material improvement in leverage ratio planned
Material improvement in leverage ratio planned Leverage exposure in € bn, unless otherwise stated Group leverage ratio 4.1% Phase 1: Run-down 4.5% Phase 2: Capital generation ~5% (fully loaded): 1,273 ~1,050 ~1,050 € 270bn planned reduction from Capital Release Unit, partially offset by selective
Slide 32: A smaller, simpler, less market-sensitive balance sheet
A smaller, simpler, less market-sensitive balance sheet Funded balance sheet(1) in € bn, unless otherwise stated Funded balance sheet (after netting) reduction of around € (18)% 180bn planned principally from lower trading assets Up to € 60bn reduction in long-term debt, primarily ~1,000 ~1,000
Slide 33: Maintaining solid liquidity and funding
Maintaining solid liquidity and funding Liquidity coverage ratio (LCR) Net stable funding ratio (NSFR) Minimum required eligible liabilities (MREL) as % of total liabilities and own funds (TLOF)(1) 146% 141% ~130% 125% 117% ~120% 10.8% 10.7% >11% 100% 9.14% requirement requirement Q1 2019 Long-term
Slide 34: Reallocating resources
Reallocating resources 2018 Risk Weighted Assets, 2022 Risk Weighted Assets, excluding operational risk RWA excluding operational risk RWA and forecast regulatory inflation Asset Corporate & Other Corporate & Other Management Global Asset 6% Transaction Bank Management 8% Corporate Bank 2% 13% 3% 22
Slide 35: Improving returns over time
Improving returns over time 2018 Return on Tangible Equity(1) 2022 Targeted Return on Tangible Equity(1) Private Bank 5% Private Bank >12% Corporate Bank 9% Corporate Bank >15% Investment Bank 2% Investment Bank >6% Asset Asset 18% >20% Management Management Note: Divisional figures in this presenta
Slide 36: Near-term objectives…
Near-term objectives… 2019 2020 Adjusted Costs € 21.5bn(1) € 19.5bn CET1 Ratio At least 12.5% Leverage Ratio (fully loaded) 4% 4.5% (1) 2019 adjusted costs exclude € 0.5bn software impairment and € 0.1bn real estate impairment related to announced measures 35
Slide 37: ... support our financial targets
... support our financial targets 2022 Return on Tangible Equity(1) 8% for Group Adjusted Costs € 17bn Cost Income Ratio 70% CET1 Ratio At least 12.5% Leverage Ratio (fully-loaded) ~5% (1) Throughout this presentation updated definition of post-tax return on tangible equity (RoTE) to include the pay
Slide 38: A new and better bank
Deutsche Bank A new and better bank
Slide 39: On our way to a new bank
On our way to a new bank Our ambition To achieve that we have to transform the way we work Become the most client centric bank in the world. Understanding our clients needs is our top priority Client obsessed Transform DB into an Take responsibility for our company. We question what we do and experi
Slide 40: What is different this time?
What is different this time? Fixing the bank with existing capital resources no capital increase planned Restructuring decisively closing businesses, not trimming Realistic financial plans we deliver what we promise Accountability in short- and mid-term near-term financial targets Addressing key con
Slide 41: A new mindset
A new mindset Our ambitions in 2022 A growing bank An efficient bank A profitable bank ~€ 25bn revenue Adjusted cost base of € 17bn Profit before tax of € 6bn+ A bank that knows what it is, who it serves, how it wins and why its people are excited to be working for it. A shareholder-oriented bank A
Slide 42: Appendix
Deutsche Bank Appendix
Slide 43: 2018 pro-forma financials
2018 pro-forma financials Core Bank Capital Release Unit Group Revenues (in € bn) 22.8 2.5 25.3 P&L Adjusted Costs (in € bn) (19.2) (3.6) (22.8) Profit before Tax (in € bn) 2.4 (1.1) 1.3 RoTE (in %) 1.7% (6.0)% (0.1)% KPIs Cost Income Ratio (in %) 87% 144% 93% Resources Leverage Exposure (in € bn) 9
Slide 44: 2018 Financials – Old vs. New Structure
2018 Financials – Old vs. New Structure In € bn, unless stated otherwise Old Structure Group CIB PCB AM C&O Revenues Revenues (reported) 25.3 13.0 10.2 2.2 (0.1) New Structure Group CB IB PB AM CRU C&O Revenues Adj. 25.3 5.2 6.8 8.7 2.2 2.5 (0.1) Old Structure Group CIB PCB AM C&O ACB (reported) (22
Slide 45: Updated definition of Return on Tangible Equity
Updated definition of Return on Tangible Equity New Previous Return on Net income Net income Tangible Equity (after AT1 coupon payments) (before AT1 coupon payments) 44
Slide 46: Credit Loss Provisions increase but remain well below historic average
Credit Loss Provisions increase but remain well below historic average In bps of loans 38 Credit portfolio quality remains strong and compares favorably to peers with credit loss provisions about half the level of peers <30 Credit risk losses well below peer average in adverse scenario of 2018 E
Slide 47: We will remain a global bank
We will remain a global bank % of 2018 revenues 22% 20% Americas Will maintain a global presence with major hubs in US and Europe and Asia Serving cross-border needs of European 67% 66% clients EMEA Focused on growing our core operations in Asia Streamlining our US business and focusing on o
Slide 48: Cautionary statement
Cautionary statement 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 proj