Deutsche Bank Ag · XETR:DBK
Deutsche Bank — Q4 2020 Earnings Presentation
53 slides from Deutsche Bank's earnings presentation, Feb 4, 2021
Slide 1: Q4/FY 2020 results
Deutsche Bank Q4/FY 2020 results 4 February 2021
Slide 2: Profitable and resilient through transformation
Profitable and resilient through transformation Return to post-tax profit despite challenges faced in 2020 Core Bank profit growth more than offset transformation effects and elevated provisions for credit losses Execution discipline demonstrated through 6 quarters of successful transformation Refoc
Slide 3: Delivered on all milestones in 2020
Delivered on all milestones in 2020 2020 milestones 2020 Adjusted costs(1) € 19.5bn € 19.5bn Provision for credit losses (in bps of average loans) 35 – 45bps 41bps Leverage ratio(2) 4.5% 4.7% CET 1 ratio(3) ~13.0% 13.6% Capital Release Unit risk weighted assets € 38bn € 34bn (1) Sustainabl
Slide 4: Disciplined delivery of transformation agenda
Disciplined delivery of transformation agenda Key achievements in Q4 2020 Transformation delivery in 2020 Signed and closed sale of Postbank Systems Achieved targeted cost savings from >100% core transformation initiatives Signed multi-year strategic partnership with Google Cloud Concluded balan
Slide 5: Refocused strategy driving franchise improvements in 2020
Refocused strategy driving franchise improvements in 2020 Corporate Bank Investment Bank € 78bn deposits under charging agreements Double digit FIC revenue growth in all four quarters 20% growth in payment volumes(1) O&A revenues outperformed fee pool growth in all four quarters(3) Grew As
Slide 6: Growing revenues under refocused strategy
Growing revenues under refocused strategy Core Bank revenues(1) excluding specific items(2), in € bn Group 23.2 24.0 24.2 ~24.4 ~0.4% CAGR 6% 22.8 5.2 Corporate 5.2 Bank Investment 9.3 7.0 Bank Private 8.1 8.1 Bank Asset Management 2.3 2.2 2019 2020 2022 Group revenue plan as of 9 December 2020 Note
Slide 7: Cost discipline continues for the 12th consecutive quarter
Cost discipline continues for the 12th consecutive quarter Adjusted cost excluding transformation charges, in € bn Adjusted cost ex transformation charges(1) Bank levies Prime Finance(2) Prime Finance(2) 0.1 0.7 (9)% 0.6 0.5 0.4 0.1 21.5 5.7 5.6 5.5 5.4 5.3 5.3 5.2 5.0 4.9 4.7 4.7 4.6 19.5 0.1 0.1 0
Slide 8: Strategic transformation drives growth and higher profitability
Strategic transformation drives growth and higher profitability In € bn, unless stated otherwise Operating leverage(1) Adjusted profit (loss) before tax (PBT)(2) Group Group Core Bank reported (2.6) 1.0 PBT 12% 11% 4.2 Core Bank 52% 2.7 3% Capital (2.0) Release (2.4) Unit (1)% 2019 2020 2019 2020 (1
Slide 9: Maintained strong balance sheet
Maintained strong balance sheet 2019 2020 Common Equity Tier 1 ~315bps above regulatory 13.6% 13.6% capital ratio requirements(1) Improved quality and cost of Liquidity reserves € 222bn € 243bn funding base € 66bn above regulatory Liquidity Coverage Ratio 141% 145% requirements Provision for credit
Slide 10: Outlook
Outlook Robust revenue momentum: Remain confident in the growth path to 2022 Continued cost focus: 2021 cost plans reflect incremental investments consistent with our 2022 targets Disciplined risk management: Provision for credit losses to remain above pre-COVID levels, but below 2020 Robust balance
Slide 11: Q4 and FY 2020 Group financial highlights
Q4 and FY 2020 Group financial highlights In € m, unless stated otherwise Change in % Change in % Q4 2020 vs. Q4 2019 FY 2020 vs. FY 2019 Revenues 5,453 2 24,028 4 Revenues Revenues ex specific items(1) 5,520 4 23,998 4 Noninterest expenses 5,027 (21) 21,216 (15) Costs Adjusted costs ex transformati
Slide 12: Adjusted costs
Adjusted costs In € m Prime Finance(1) Q4 2020 year on year comments (8)% 5,102 — Reductions in all cost 102 4,896 categories 4,689 207 (201) (68) (8) 81 — Lower compensation and (136) 4,999 4,608 benefits primarily reflect workforce reductions — IT costs decreased mainly due to lower software Q4 20
Slide 13: Provision for credit losses
Provision for credit losses In € bn Corporate Bank Capital Release Unit 1.8 Investment Bank Other 0.4 — FY provisions at 41bps, impacted by Private Bank COVID-19, in line with our April 0.7 guidance of 35-45 bps of loans 0.7 0.5 — Q4 provisions slightly below the 0.3 previous quarter and remain elev
Slide 14: Capital ratios
Capital ratios Movements in basis points, period end CET1 ratio — CET1 capital ratio increased by 31bps in the quarter 13.3% 0 60 13.6% — 33bps net improvement from regulatory changes, (28) notably from CRR2 changes regarding the treatment of software assets (43bps) — 20bps improvement from RWA redu
Slide 15: Segment results
Segment results Deutsche Bank Q4 2020 results 14 Investor Relations 4 February 2021
Slide 16: Corporate Bank
Corporate Bank In € m, unless stated otherwise Change in Change in % vs. % vs. Q4 2020 Q4 2019 FY 2020 FY 2019 FY 2020 year on year comments Revenues 1,230 (4) 5,145 (2) — Revenues ex specific items Revenues 2% lower, flat excluding FX Revenues ex specific items(1) 1,246 (3) 5,161 (2) translation ef
Slide 17: Q4 2020 Corporate Bank revenue performance
Q4 2020 Corporate Bank revenue performance In € m X% X% Excluding specific items(1) Change vs. Q4 2019 Q4 2020 vs. Q4 2019 comments Global Transaction Banking (ex FX translation effects): — Global Transaction Banking 3% lower Global Transaction Banking 871 (6)% (6)% — Cash Management essentially fla
Slide 18: Investment Bank
Investment Bank In € m, unless stated otherwise Change in Change in % vs. % vs. Q4 2020 Q4 2019 FY 2020 FY 2019 FY 2020 year on year comments Revenues 1,888 24 9,283 32 Significantly higher revenues Revenues — Revenues ex specific items(1) 1,910 28 9,255 32 driven by strong market activity, strong c
Slide 19: Q4 2020 Investment Bank revenue performance
Q4 2020 Investment Bank revenue performance In € m X% X% Excluding specific items(1) Change vs. Q4 2019 Q4 2020 vs. Q4 2019 comments Fixed Income, Currency Sales & Trading: — Significantly higher revenues in Credit from Fixed Income, Currency strong client engagement and constructive Sales & Trading
Slide 20: Private Bank
Private Bank In € m, unless stated otherwise Change in Change in % vs. % vs. Q4 2020 Q4 2019 FY 2020 FY 2019 FY 2020 year on year comments Revenues 1,982 (1) 8,126 (1) — Results included € 642m Revenues Revenues ex specific items(1) 2,005 1. 8,100 (0) transformation-related effects — Revenues exclud
Slide 21: Q4 2020 Private Bank revenue performance
Q4 2020 Private Bank revenue performance In € m X% Excluding specific items(1) Change vs. Q4 2019 Q4 2020 vs. Q4 2019 comments Private Bank Germany: — Revenues include € 88m negative impact related to the sale of Postbank Systems Private Bank — Revenues excluding specific items increased 1,191 (3)%
Slide 22: Asset Management
Asset Management In € m, unless stated otherwise Change in Change in % vs. % vs. Q4 2020 Q4 2019 FY 2020 FY 2019 FY 2020 year on year comments Revenues 599 (11) 2,229 (4) Revenues — Revenues declined Revenues ex specific items(1) 599 (11) 2,229 (4) reflecting the non- recurrence of certain Nonintere
Slide 23: Corporate & Other
Corporate & Other In € m Profit (loss) before tax Change Change vs. Q4 vs. FY Q4 2020 FY 2020 2019 2019 Profit (loss) before tax (333) (162) (930) (684) (170) (247) Funding & liquidity (96) 47 (249) (25) (333) (396) Valuation & Timing (56) (302) (86) (660) differences(1) Shareholder expenses (97) (1
Slide 24: Capital Release Unit
Capital Release Unit In € m, unless stated otherwise Absolute Absolute change change vs. vs. Q4 2020 Q4 2019 FY 2020 FY 2019 FY 2020 year on year comments Revenues (65) 114 (225) (442) — Significant improvement in loss before tax driven by lower costs, including lower Revenues transformation charges
Slide 25: Our financial targets
Our financial targets 2022 Group return on tangible equity 8% Core Bank return on tangible equity >9% Adjusted costs(1) € 16.7bn Cost income ratio 70% CET 1 ratio >12.5% Leverage ratio ~4.5% (1) Adjusted costs excluding transformation charges Deutsche Bank Q4 2020 results 24 Investor Relations 4 Feb
Slide 26: Appendix
Appendix Deutsche Bank Q4 2020 results 25 Investor Relations 4 February 2021
Slide 27: Sustainability at Deutsche Bank
Sustainability at Deutsche Bank Our key focus areas Recent achievements Q4 achievements in blue – Target of more than € 200bn in financing and investment until 2025 – More than € 40bn in financing and investment versus a target of more than € 20bn for 2020 Sustainable Finance – Ranked #5 for full ye
Slide 28: 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 29: Core Bank financial highlights
Core Bank financial highlights Q4 2020, in € bn, unless stated otherwise Core Change vs. Change vs. Capital Release Bank Q4 2019 Q3 2020 Unit Revenues 5.5 (0)% (8)% (0.1) Revenues ex specific items 5.6 2% (7)% (0.1) Noninterest expenses 4.7 (18)% (3)% 0.4 Adjusted costs ex transformation charges(1)
Slide 30: Core Bank financial highlights
Core Bank financial highlights FY 2020, in € bn, unless stated otherwise Core Change vs. Capital Release Bank FY 2019 Unit Revenues 24.3 6% (0.2) Revenues ex specific items 24.2 6% (0.2) Noninterest expenses 19.3 (11)% 1.9 Adjusted costs ex transformation charges(1) 18.1 (5)% 1.7 Profit (loss) befor
Slide 31: Core Bank adjusted post-tax RoTE
Core Bank adjusted post-tax RoTE In € m, unless stated otherwise Q4 2019 Q4 2020 FY 2019 FY 2020 Profit (loss) (866) 489 (2,982) 2,208 Profit (loss) attributable to noncontrolling interests (35) (42) (125) (129) Profit (loss) attributable to additional equity components (69) (85) (266) (334) Profit
Slide 32: Specific revenue items and adjusted costs – Q4 2020
Specific revenue items and adjusted costs – Q4 2020 In € m Q4 2020 Q4 2019 Q3 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 1,230 1,888 1,982 599 (181) 5,518 (65) 5,453 1,286 1,525 2,003 671 44 5,528 (180) 5,349 1,254 2,365
Slide 33: Specific revenue items and adjusted costs – FY 2020
Specific revenue items and adjusted costs – FY 2020 In € m FY 2020 FY 2019 Core Core CB IB PB AM C&O CRU Group CB IB PB AM C&O CRU Group Bank Bank Revenues 5,145 9,283 8,126 2,229 (530) 24,253 (225) 24,028 5,244 7,019 8,206 2,332 147 22,948 217 23,165 DVA - IB Other / CRU - 6 - - - 6 (8) (2) - (140)
Slide 34: Reconciliation adjusted costs excluding transformation charges
Adjusted costs excluding transformation charges In € m, unless stated otherwise Q4 2020 Q4 2019 YoY FY 2020 FY 2019 YoY Compensation and benefits 2,404 2,605 (8)% 10,260 10,981 (7)% Adjusted costs excluding transformation IT costs 895 963 (7)% 3,605 4,035 (11)% Professional service fees 269 277 (3)%
Slide 35: Adjusted profit (loss) before tax (PBT)
Adjusted profit (loss) before tax (PBT) In € m Q4 2020 Q4 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 36: Operating leverage
Operating leverage(1) In € m, unless stated otherwise (2) (2) (2) (2) FY 2019 vs. FY 2020 vs. FY 2018 FY 2019 FY 2020 FY 2019 FY 2020 FY 2018 FY 2019 Revenues Group - Revenues 25,316 23,165 24,028 (8)% 4% Specific revenue items 691 (8) 30 n.m. n.m. Group - Revenues ex specific items 24,625 23,173 23
Slide 37: Transformation-related effects
Transformation-related effects In € bn 2019 – 2019 – 2022 Q4 2020 expected % of total cumulative cumulative 2019 – Q4 2020 expenses expenses Q4 2020 Deferred tax Deferred Tax Asset asset valuation 2.8 0.0 2.8 2.9 97% valuation adjustment adjustment Nonoperating Goodwill impairment - 1.0 1.0 100% cos
Slide 38: Bridge from EU IFRS to IASB IFRS
Bridge from EU IFRS to IASB IFRS Profit (loss), in € m Q4 2020 — Deutsche Bank’s financial statements have historically 215 been prepared based on the International Financial 189 26 Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”) and endorsed by the Eu
Slide 39: COVID-19 impact on financials
COVID-19 impact on financials(1) COVID-19 impact Q1 2020 Q2 2020 Q3 2020 Q4 2020 FY 2020 Full year drivers — COVID-19 related defaults lower quarter on quarter but remained elevated Provision for € (260)m € (410)m € (76)m € 20m € (726)m — Improved macro-economic outlook drove credit losses partial r
Slide 40: Supporting clients through COVID-19
Supporting clients through COVID-19 Loan # Customers Amount — More than 90% to Private Bank clients — Represents 2% of Group loan portfolio Legislative & voluntary industry-driven moratoria(1,2) >100k € 9bn — >90% customer moratoria expired with ~€ 1.5bn of active loan amounts outstanding(3) Volunta
Slide 41: Deposit charging
Deposit charging Quarterly revenue impact, € m 69 57 45 32 — Performing well against updated revenue target 16 <10 — More than 90% of charging agreements currently in the Corporate Bank, increasingly protecting the Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 franchise against potential further i
Slide 42: Indicative divisional currency mix – Q4 2020
Indicative divisional currency mix – Q4 2020 Net revenues Total noninterest expenses 7% 7% 4% 9% 11% 14% Other (1) 19% 18% 5% Other (1) 20% 16% 4% 0% 3% 20% 25% 21% 17% USD 13% USD 19% 1% GBP 0% 13% 36% 45% GBP 1% 18% 19% 86% 87% 0% EUR 67% 67% 61% EUR 60% 42% 53% 50% 37% 6% CB IB PB AM Group CB IB
Slide 43: Net interest income sensitivity
Net interest income sensitivity Hypothetical +100 bps parallel shift impact, in € bn First year Second year 1.4 0.9 1.0 0.6 0.5 0.3 Retail Non-retail Group Retail Non-retail Group Maturity Maturity > 3M 0.3 0.1 0.3 > 3M 0.5 0.2 0.6 EUR EUR ≤ 3M 0.4 0.2 0.6 ≤ 3M 0.4 0.2 0.6 > 3M 0.0 0.0 0.0 > 3M 0.0
Slide 44: Litigation update
Litigation update In € bn, period end Litigation provisions(1) 1.1 1.0 1.1 1.0 ― Provisions decreased by € 0.1bn in the quarter 0.8 ― Provisions include approximately € 0.1bn related to settlements already achieved or agreed in Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 principle ― Contingent liabiliti
Slide 45: 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) 1792 IB (ex-POCI) 29 Group Stage 3 2.
Slide 46: Loan book
Loan book In € bn, period end Change vs. Q4 2019 Reported ex FX 459 434 442 431 433 432 415 419 65 Global Transaction 59 56 (12)% (7)% 66 66 58 Banking 65 66 15 11 4 8 6 n.m. n.m. Strategic Corporate 5 5 5 50 50 50 Lending 49 50 51 2% 2% 47 48 Commercial Banking 87 80 73 69 (8)% (2)% 74 75 Investmen
Slide 47: Loan book composition
Loan book composition Q4 2020, IFRS loans: € 432bn Capital Release Unit Other(1) IB Other(3) 1% 2% Leveraged Debt Capital Markets 6% — Well diversified loan portfolio 1% Asset Backed Securities — 55% of loan portfolio in Private Bank, 5% German mainly consisting of German retail IB - Commercial Real
Slide 48: Loan exposure by rating buckets
Loan exposure by rating buckets Preliminary 156 141 115 104 Exposure at Default 69 (EAD) (€ bn)(1) 43 38 36 Risk mitigation(2) 21 32 8 11 Adjusted exposure 33 41 37 (LGD basis) 17 11 6 5 2 5 iAAA-iAA iA iBBB iBB iB iCCC Default Probability of default 227 – 0-4 4 - 11 11 - 50 50 - 227 >1,022 N/A (bps
Slide 49: Level 3 assets
Level 3 assets As of 31 December 2020, in € bn Assets (total: € 24bn) Equity securities Mortgage backed securities Other 1 1 0 Debt Derivative securities 5 9 Assets — Level 3 is an indicator of valuation uncertainty and not of asset quality — The slight decrease in Level 3 assets reflects: — Portfol
Slide 50: Leverage exposure and risk weighted assets
Leverage exposure and risk weighted assets CRD4, fully loaded, in € bn, period end Leverage exposure Risk weighted assets 329 329 69 Operational Risk RWA 69 1,101 1,078 Trading assets 117 105 35 Market Risk RWA 29 Credit valuation 8 Derivatives(1) 142 141 27 adjustments Lending 429 250 428 113 Lendi
Slide 51: Trading book Value at Risk
Trading book Value at Risk DB Group, 99%, 1 day, in € m, unless stated otherwise Historical Simulation VaR Quarterly average ∅ 35 ∅ 35 ∅ 82 ∅ 73 ∅ 46 140 120 100 80 60 40 20 0 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Note: Deutsche Bank received regulatory approval for the Value at Risk model for Ris
Slide 52: Assets under Management – Private Bank
Assets under Management – Private Bank In € bn Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Assets under Management 473 478 481 482 442 471 477 493 Private Bank Germany 207 211 211 213 197 209 212 222 therein: Deposits (1) 106 108 106 104 106 106 107 108 therein: Investment Produc
Slide 53: Cautionary statements
Cautionary statements The figures in this presentation are preliminary and unaudited. Our Annual Report 2020 and SEC Form 20-F are scheduled to be published on 12 March 2021. This presentation contains forward-looking statements. Forward-looking statements are statements that are not historical fact