Deutsche Bank Ag · XETR:DBK
Deutsche Bank — Q1 2020 Earnings Presentation
51 slides from Deutsche Bank's earnings presentation, Apr 29, 2020
Slide 1: Q1 2020 results
Deutsche Bank Q1 2020 results 29 April 2020
Slide 2: Executing well in unprecedented conditions
Executing well in unprecedented conditions Robust group performance with significant increase in Core Bank revenues and profitability Strategic transformation ahead of plan and beneficial in current environment 9th consecutive quarter of annual adjusted cost reductions(1) – outperformance versus int
Slide 3: Strategic transformation drives growth and higher profitability
Strategic transformation drives growth and higher profitability In € bn Revenues ex. specific items(1) Adjusted profit (loss) before tax(2) 6.3 6.3 Capital 0.4 Release Unit Core 1.1 Bank 32% Core 7% 6.4 0.8 Bank 5.9 (0.5) Capital (0.8) Release Unit Q1 2019 Q1 2020 (0.1) Q1 2019 Q1 2020 Note: Through
Slide 4: 9th consecutive quarter of annual adjusted cost reductions
9th consecutive quarter of annual adjusted cost(1) reductions Adjusted cost ex. transformation charges(2), in € bn Bank levies Global Prime Finance(3) 21.6 0.1 19.9 0.4 0.7 (0.4) 0.6 0.5 Q2 - Q4 15.6 14.1 € 19.5bn adjusted cost target ex. transformation 5.7 5.6 5.5 5.4 charges and 5.3 5.3 5.2 5.1 4.
Slide 5: Growing revenues reflecting continued franchise momentum
Growing revenues reflecting continued franchise momentum Core Bank revenues(1) excluding specific items, in € bn 7% 6.4 — Repriced a further € 10bn of deposits in the quarter 5.9 — Good momentum on strategic priorities to develop platform, Corporate FinTech and ecommerce payments solutions (1)% 1.3
Slide 6: Strategic priorities supporting cost reduction path
Strategic priorities supporting cost reduction path Core Bank adjusted costs ex transformation charges(1), in € bn (4)% 5.0 4.8 — Cost increase driven by changes to group wide infrastructure Corporate cost allocation methodology 1.0 4% Bank — Focus on efficiency optimization in Germany and across 1.
Slide 7: Maintained strong balance sheet
Maintained strong balance sheet 2019 Q1 2020 Comment Common Equity Tier 1 capital 239bps above current regulatory 13.6% 12.8% ratio requirements Maintained a strong liquidity profile Liquidity reserves € 222bn € 205bn while supporting client demand Liquidity Coverage Ratio 141% 133% € 43bn above req
Slide 8: Low risk, well diversified loan portfolio
Low risk, well diversified loan portfolio Loans at amortized cost, in € bn, period end 459 — Trade Finance and working capital, mainly short-term to German midcaps and global multinationals 131 Corporate Bank — Commercial Banking loans to midcap and SME clients in Germany — Concentration risk subjec
Slide 9: Well positioned in this crisis as Germany's leading bank
Well positioned in this crisis as Germany’s leading bank Announced government COVID-19 measures Corporate debt (% of GDP as of 2019) (% of GDP as of 2019) 22 155 Access point to state 122 14 sponsored lending as 12 ‘Hausbank’ to ~900k 82 75 corporate and commercial 69 59 8 clients 6 5 Leading German
Slide 10: We have reacted quickly to the challenges
We have reacted quickly to the challenges How we are working How we are supporting our clients How we are helping More than 70% of employees More than 5k loan working from home with Corporate applications to KfW scheme Donated 575k protective masks operational stability and high Bank with a vo
Slide 11: Q1 2020 Group financial highlights
Q1 2020 Group financial highlights In € m, unless stated otherwise Change in % Change in % Q1 2020 vs. Q1 2019 vs. Q4 2019 Revenues 6,350. (0) 19. Revenues of which: specific items(1) 76( Revenues ex specific items 6,275( (1) 18. Noninterest expenses 5,638( (5) (12) of which: Adjusted costs ex. tran
Slide 12: COVID-19 impact on financials
COVID-19 impact on financials Q1 2020 COVID-19 impact Drivers — Changes in macroeconomic environment — Rating migration Provision for credit losses ~€ 260m — Drawdowns on committed credit facilities — Modest actual impairments — Drawdowns on committed credit facilities — Increase in capital deductio
Slide 13: Provision for credit losses
Provision for credit losses In € m, unless otherwise stated — Higher provision for credit losses driven by COVID-19 pandemic 506 32 — Increased Stage 1 and 2 provisions related to COVID-19 to reflect: 229 — Updated approach in-line with ECB 245 guidance incorporating a three year average macroeconom
Slide 14: Loan book composition
Loan book composition Loans at amortized cost, period end Key focus — Well diversified across high quality properties Commercial industries: — Largely first lien, 60% average loan to value Real Estate(1) ~11% (€ 33bn) — Manageable exposure to hotels and retail mitigated by low LTVs and strong sponso
Slide 15: Capital ratios
Capital ratios In € bn, except movements (in basis points), period end CET1 ratio 13.6% 0 — CET1 capital ratio declined by 79bps in the quarter (66) — ~30bps from the new securitization framework 12.8% — ~40bps due to COVID-19 pandemic, notably: (13) — Client drawdowns driving higher credit risk RWA
Slide 16: Liquidity profile
Liquidity profile Liquidity Reserves, € bn Cash and cash equivalents(1) Highly liquid and other securities(2) 260 246 243 222 205 >200 Temporary operating range — Reduced excess Liquidity Reserves and 71% 64% 67% 60% 55% Liquidity Coverage Ratio (LCR), mainly reflecting € 18bn of drawdowns on commit
Slide 17: Transformation-related effects
Transformation-related effects In € bn 2019 – 2022 expected % of total cumulative 2019 – Q1 2020 expenses Q1 2020 Deferred tax Deferred Tax Asset 2.8 0.0 3.4 82% asset valuation valuation adjustment adjustment Nonoperating Goodwill impairment - 1.0 100% costs(4) Restructuring & 0.1 1.8 45% Severance
Slide 18: Adjusted costs
Adjusted costs In € m, FX adjusted Global Prime Finance(1) Drivers (9)% 5,966 5,452 5,536 — Reductions across all (183) (90) (53) (101) 98 84 categories year-on-year (88) 5,354 — Decline in compensation and benefit costs primarily reflects workforce reductions — Reduced internal workforce Q1 2019 Co
Slide 19: Segment results
Segment results Deutsche Bank Q1 2020 results 18 Investor Relations 29 April 2020
Slide 20: Corporate Bank
Corporate Bank In € m, unless otherwise stated Change in Change in % vs. % vs. Q1 2020 Q1 2019 Q4 2019 Q1 2020 year-on-year comments Revenues 1,326. (1) 2 Revenues of which: specific items(1) -. n.m. n.m. — Revenues essentially flat, with Noninterest expenses 1,088. 8. (16) limited impact from COVID
Slide 21: Q1 2020 Corporate Bank revenue performance
Q1 2020 Corporate Bank revenue performance In € m X% X% Excluding specific items(1) Change vs. Q1 2019 Q1 2020 year-on-year drivers Global Transaction Banking: — Cash Management essentially flat as interest rate headwinds partly offset by Global Transaction Banking 968 (2)% (2)% deposit repricing an
Slide 22: Investment Bank
Investment Bank In € m, unless otherwise stated Change in Change in % vs. % vs. Q1 2020 Q1 2019 Q4 2019 Q1 2020 year-on-year comments Revenues 2,339. 18. 54. — Revenue increase driven by higher volumes and volatility in Fixed Income Revenues of which: specific items(1) 36. and growth in Debt Origina
Slide 23: Q1 2020 Investment Bank revenue performance
Q1 2020 Investment Bank revenue performance In € m X% X% Excluding specific items(1) Change vs. Q1 2019 Q1 2020 year-on-year drivers Fixed Income, Currency Sales & Trading: Fixed Income, Currency — Strong client activity in all products Sales & Trading 1,854 13% 16% — Rates, FX & Emerging Markets re
Slide 24: Private Bank
Private Bank In € m, unless otherwise stated Change in Change in % vs. % vs. Q1 2020 Q1 2019 Q4 2019 Q1 2020 year-on-year comments — Revenues essentially flat as growth Revenues 2,162 2. 9. in Wealth Management and volume Revenues of which: specific items(1) 16 growth in Private Bank Germany Revenue
Slide 25: Q1 2020 Private Bank revenue performance
Q1 2020 Private Bank revenue performance In € m X% Excluding specific items(1) Change vs. Q1 2019 Q1 2020 year-on-year drivers Private Bank Germany: — Impact of deposit margin compression as well Private Bank Germany 1,327 (1)% (1)% as higher liquidity and funding costs largely offset by growth in i
Slide 26: Asset Management
Asset Management In € m, unless otherwise stated Change in Change in % vs. % vs. Q1 2020 Q1 2019 Q4 2019 Q1 2020 year-on-year comments Revenues Revenues 519) (1) (23) — Revenues essentially flat as interest rate related change in fair value of guarantees offset higher management fees Noninterest exp
Slide 27: Q1 2020 Asset Management revenue performance
Q1 2020 Asset Management revenue performance In € m X% X% Excluding specific items(1) Change vs. Q1 2019 Q1 2020 year-on-year drivers Management Fees 553 9% 9% Management Fees: — Higher Management Fees and other recurring revenues reflecting increase in average assets under management and the benefi
Slide 28: Corporate & Other
Corporate & Other In € m Profit (loss) before tax Change Change vs. Q1 vs. Q4 Q1 2020 2019 2019 Profit (loss) before tax (24) (8) 130. (15) (24) Funding & liquidity (47) (33) 80. Valuation & Timing differences(1) 190. 149. (56) Shareholder expenses (92) 23. (8) Litigation (10) (7) 128. (154) Noncont
Slide 29: Capital Release Unit
Capital Release Unit In € m, unless otherwise stated Absolute change vs. Q1 2020 Q4 2019 Q4 2019 Q1 2020 quarter-on-quarter comments Revenues (59) 120. (179) — Negative revenues in the quarter Revenues Revenues ex. specific items(1) (82) 81. (163) driven by funding and credit valuation adjustments a
Slide 30: Outlook and conclusion
Outlook and conclusion Comfortably on track to reach 2020 adjusted cost target(1) Elevated client demand and current environment make it difficult to predict opportunities and challenges in capital ratio outlook Opportunities to support clients which we believe are in the best interests of all stake
Slide 31: Appendix
Appendix Deutsche Bank Q1 2020 results 30 Investor Relations 29 April 2020
Slide 32: Definition of adjustments
Definition of adjustments Adjusted costs are calculated by deducting (i) impairment of goodwill and other intangible assets, (ii) litigation charges, Adjusted costs net and (iii) restructuring and severance from noninterest expenses under IFRS Revenues excluding specific items are calculated by adju
Slide 33: Core Bank financial highlights
Core Bank financial highlights Q1 2020, in € bn, unless otherwise stated Core Change vs. Change vs. Capital Release Bank Q1 2019 Q4 2019 Unit Revenues 6.4 7% 16% (0.1) Revenues ex. specific items 6.4 7% 16% (0.1) Noninterest expenses 4.9 (1)% (13)% 0.7 Adjusted costs ex. transformation charges(1) 4.
Slide 34: Specific revenue items and Adjusted costs
Specific revenue items and Adjusted costs In € m Q1 2020 Q1 2019 Q4 2019 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 1,326 2,339 2,162 519 63 6,409 (59) 6,350 1,342 1,988 2,125 525 (16) 5,964 387 6,351 1,299 1,523 1,979 671 56
Slide 35: Adjusted profit (loss) before tax
Adjusted profit (loss) before tax In € m Q1 2020 Q1 2019 Transfor- Transfor- Specific Goodwill Restructuring Specific Goodwill Restructuring PBT reported mation PBT Adjusted PBT reported mation PBT Adjusted revenue items impairments & severance revenue items impairments & severance charges(1) charge
Slide 36: Adjusted costs including transformation charges reconciliation
Noninterest expense trends In € m, unless otherwise stated Q1 2019 YoY Q1 2020 Q1 2019 YoY Q4 2019 QoQ ex FX(1) ex FX Adjusted costs including transformation charges Compensation and benefits 2,675 2,842 (6)% 2,858 (6)% 2,605 3% IT costs 942 954 (1)% 960 (2)% 1,392 (32)% Professional service fees 22
Slide 37: Adjusted costs excluding transformation charges
Adjusted costs excluding transformation charges In € m, unless otherwise stated Q1 2019 YoY Q1 2020 Q1 2019 YoY Q4 2019 QoQ ex FX(1) ex FX Adjusted costs excluding transformation charges Compensation and benefits 2,675 2,842 (6)% 2,858 (6)% 2,605 3% IT costs 870 954 (9)% 960 (9)% 915 (5)% Profession
Slide 38: Q1 2020 bridge from EU IFRS to IASB IFRS
Q1 2020 bridge from EU IFRS to IASB IFRS Profit (loss), in € m — Deutsche Bank’s financial statements have 66 historically been prepared based on the International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”) and endorsed by the European U
Slide 39: Deposit charging
Deposit charging Quarterly revenue impact, € m 32 — Implemented charging agreements to pass through negative interest rates to clients on a total of € 10bn of 16 deposit balances in the quarter <10 — Deposit attrition better than forecast with lower than expected reduction in Euro deposits and growt
Slide 40: Q1 2020 indicative regional currency mix
Q1 2020 indicative regional currency mix Net revenues Total noninterest expenses 7% 9% 5% 11% 14% Other(1) 16% 15% 13% Other(1) 18% 22% 4% 4% 0% 1% 21% 27% 20% US$ 16% 18% US$ 16% 33% GB Pound 0% 27% 13% 1% GB Pound 8% 13% 17% 0% 84% 86% Euro 65% 65% 41% 59% Euro 61% 51% 55% 52% 11% Corporate Invest
Slide 41: Net interest income sensitivity
Net interest income sensitivity Hypothetical +100 bps parallel shift impact, in € bn First year Second year 1.4 1.1 0.8 0.6 0.6 0.5 Retail Non-retail Group Retail Non-retail Group Maturity Maturity > 3M 0.2 0.0 0.2 > 3M 0.5 0.0 0.5 EUR EUR ≤ 3M 0.3 0.5 0.8 ≤ 3M 0.3 0.5 0.7 > 3M 0.0 0.0 0.0 > 3M 0.0
Slide 42: Litigation update
Litigation update In € bn, period end Litigation provisions(1) ― Provisions decreased by € 0.1bn predominantly due to settlement payments 1.1 1.2 1.1 1.1 ― Contingent liabilities remained stable in the 1.0 quarter. Figure includes possible obligations where an estimate can be made and outflow is mor
Slide 43: Loan book
Loan book In € bn, period end Change vs. Q1 2019 Reported ex. FX 459 431 434 415 419 65 16% 16% Global Transaction 66 66 n.m. n.m. 65 66 15 Banking 5 4 Strategic Corporate Lending 5 5 50 7% 7% 49 50 Commercial Banking 47 48 74 75 87 27% 27% Investment Bank(1) 69 69 43 43 44 5% 4% Wealth Management 4
Slide 44: Loan book composition
Loan book composition As of 31 March 2020 Capital Release Unit Other(1) IB Other(4) Leveraged Debt Capital Markets 1% — Well diversified Loan Portfolio. The gross 5% position of loans at amortized cost is 2% 2% Asset Backed Securities € 459bn as of Q1 2020 German Mortgages 7% 29% — 50% of loan portf
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) IB (ex-POCI) Group Stage 3 2.3% 2.3%
Slide 46: Level 3 assets
Level 3 assets As of 31 March 2020, in € bn Assets (total: € 28bn) 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 the quarter almost all in Debt derivative market values, driven by se
Slide 47: Leverage exposure and risk weighted assets
Leverage exposure and risk weighted assets CRD4, fully loaded, in € bn, period end Leverage exposure Risk weighted assets 341 341 72 Operational Risk RWA 72 1,168 1,248 116 Market Risk RWA Trading assets 109 31 25 Credit valuation 5 Derivatives(1) 148 161 adjustments 28 Lending 431 455 250 124 Lendi
Slide 48: Trading book Value at Risk
Trading book Value at Risk DB Group, 99%, 1 day, in € m, unless otherwise stated Stressed Value at Risk(1) Value at Risk Quarterly average 87 79 86 79 72 27 28 30 25 24 120 100 80 60 40 20 0 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 (1) Stressed Value-at-Risk is calculated on the s
Slide 49: Assets under Management – Private Bank
Assets under Management – Private Bank In € bn Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Assets under Management (1) 473 478 481 482 442 Private Bank Germany 207 211 211 213 197 therein: Deposits (2) 106 108 106 104 106 therein: Investment Products (3) 102 103 105 109 91 Private & Commercial Business
Slide 50: Reconciliation of Asset Management segment to DWS
Reconciliation of Asset Management segment to DWS Profit before tax, in € m 173 Q1 2020 1 35 27 110 0 Asset Management Sold & discontinued DB group allocation / Noncontrolling Other perimeter DWS Reported reported businesses Funding minority interest adjustments charges Q1 2019 148 (8) 30 28 97 0 As
Slide 51: 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