Deutsche Bank Ag · XETR:DBK
Deutsche Bank — Q3 2008 Earnings Presentation
46 slides from Deutsche Bank's earnings presentation, Oct 30, 2008
Slide 1: 3Q2008 Results
3Q2008 financials reflect amendments to IAS 39 3Q2008 Results Stefan Krause Chief Financial Officer 30 October 2008
Slide 2: Agenda
Agenda 1 Summary y 2 Key current issues 3 Segment results 4 Risk, capital and liquidity management Investor Relations 10/08 · 2
Slide 3: 3Q2008 Highlights
3Q2008 Highlights Income I before b f income i taxes t off EUR 93 m – After mark-downs of EUR 1.2 bn Group – Includes only EUR 146 m gain on FV on own debt; election on all own debt performance would have increased pre pre-tax tax profit by more than EUR 2 bn Net income of EUR 414 m, including t
Slide 4: 3Q2008 results in summary
3Q2008 results in summary In EUR bn 3Q 008 3Q2008 3Q 008 3Q2008 vs. vs. 3Q2008 3Q2007 2Q2008 3Q2007 2Q2008 Net revenues 4.4 5.1 5.4 (14)% (19)% Provision for credit losses (0.2) (0.1) (0.1) 125 % 75 % Noninterest expenses (4 0) (4.0) (3 5) (3.5) (4 6) (4.6) 14 % (13)% Income before income taxes 0.1
Slide 5: Update on key credit market exposures
Update on key credit market exposures In EUR bn Mark-downs Mark downs Exposure net of hedges 30 Sep 2008 30 Jun 2008 30 Sep 2008 3Q2008 (at fair value) (1) CDO Subprime - 1.4 1.2 1.2 (1) Other U.S. RMBS 0.1 6.0 5.9(4) 5.5 (2) Monolines 0.3 2.1 2.7 2.7 (3) Commercial Real Estate 0.2 10.8 9.7 8.4 (3)
Slide 6: Revenues and impact of mark-downs
Revenues and impact of mark-downs Mark-downs Mark downs Net revenues In EUR bn 2.2 6.1 2.3 23.5 9.6 2.2 2.7 8.8 1.2 7.3 14.4 5.1 4.6 5.4 4.4 1Q 2Q 3Q 4Q 1Q 2Q 3Q Jan Sep Jan-Sep Jan-Sep Jan Sep 2007 2008 2007 2008 Note: Figures may not add up due to rounding differences Investor Relations 10/08 · 6
Slide 7: Non-comp expenses essentially unchanged year-on-year on like-for-like basis
On a like-for-like basis, basis non-comp expenses were essentially unchanged year-on year Noninterest expenses, in EUR bn G&A expenses 3Q2008 vs. 3Q2007 ∆ in EUR m Non-recurrence of VAT reimbursement ~140 Litigation / litigation releases ~100 Auction Rate Securities provision ~60 RREEF infrastructur
Slide 8: Agenda
Agenda 1 Summary y 2 Key current issues 3 Segment results 4 Risk, capital and liquidity management Investor Relations 10/08 · 8
Slide 9: Impact of IAS 39 reclassification
Impact of IAS 39 reclassification IAS 39 Impact on results In October 2008 the European Union endorsed 3Q2008, in EUR m amendments to IAS 39 and IFRS 7, ‘Reclassification of Financial Assets’ Assets , which permit the reclassification IAS 39 effect ff t of trading assets and assets available for s
Slide 10: Total assets increase primarily due to FX impact and derivatives
Total assets increase primarily due to FX impact and derivatives In EUR bn IAS 39 reclass 38 104 (103) 25 2,061 28 12 1,991 , ( ) (39) 29 (12) (154) Financial assets at FV: (12) Other assets: 82 30 Jun FX Derivatives Managed FX September Other / 30 Sep 2008 reductions / Other / settlement IAS 39 200
Slide 11: Assets reconciliation
Assets reconciliation As of 30 Sep 2008, in EUR bn 2 061 2,061 Positive market values from 727 derivatives Financial assets 1,361 at FV through P&L 163 Trading securities 347 347 Reverse repos / securities borrowed 208 Other 100 157 100 Loans 253 253 Cash and deposits from banks 52 Securities borrow
Slide 12: On a risk weighted basis, Deutsche Bank below peer average
On a risk weighted basis basis, Deutsche Bank below peer average As of 30 Sep 2008, in EUR bn Total assets RWA 2,186 2 186 894 2,061 776 1,725 1,603 1 460 1,460 621 1,361 1,295 445 Peer average 885 Ø: 424 735 671 319 613 258 228 201 201 196 (1) (1) RBS BAR JPM Citi UBS(1) CS GS (3) MS(3) MER(2) JPM
Slide 13: Deutsche Bank: Limited application of fair value option
Deutsche Bank: Limited application of fair value option Disclosed P&L benefit / (loss) from fair value option on own debt, FY2007-3Q2008, in EUR bn (1),(2) 5.5 47 4.7 2.4 (3) 22 2.2 2.1 2.0 (3) 0.4 0.3 (1) Also reflects fair value gain on Mandatory Convertible Notes of EUR 2 2.4 4 bn in 1Q2008 (2) 3
Slide 14: Progress towards our leverage ratio target
Progress towards our leverage ratio target Balance sheet leverage ratio per target definition 38 34 ~30 30 June 2008 30 September 2008 Target Investor Relations 10/08 · 14
Slide 15: Agenda
Agenda 1 Summary y 2 Key current issues 3 Segment results 4 Risk, capital and liquidity management Investor Relations 10/08 · 15
Slide 16: CB&S in summary
CB&S in summary Results at a glance Condensed P&L IIncome before b f income i taxes, t in i EUR m I EUR m In Jan- Δ vs. Key ratios, in % 3Q Δ vs. Sep Jan-Sep 2008 3Q2007 2008 2007 2,181 1 752 1,752 Revenues 1,016 (20)% 4,079 (68)% 447 Provisions* (66) n.m. (44) n.m. (179) Noninterest exp exp. (1,758
Slide 17: S&T debt: A very challenging quarter
S&T debt: A very challenging quarter S&T (debt and other products) Trends vs. 3Q2007 / key features N revenues, iin EUR m Net Mark-downs Mark downs FX/Rates/MM Net revenues Record and near-record client flows across all products on ‘flight to quality’ Favourable market positioning 3 354 3,354 RM
Slide 18: S&T equity: Impact of extremely adverse conditions in September
S&T equity: Impact of extremely adverse conditions in September S&T (equity) Trends vs. 3Q2007 / key features N t revenues, in Net i EUR m Equity E i Continued C ti d market k t di dislocation l ti iin Derivatives correlation and volatility, worsening from mid-September Low customer volumes in s
Slide 19: Origination & Advisory: Mark-downs in Leverage Finance
Origination & Advisory: Mark-downs in Leverage Finance Origination & Advisory Trends vs. 3Q2007 / key features Net revenues, in EUR m Advisory Advisory Revenues down with market Origination Increased global market share and rank #1 year year-to-date to date in EMEA 895 824 797 Equity 256 Origi
Slide 20: Stable businesses: Impact of specific items
‘Stable’ Stable businesses: Impact of specific items GTB AWM Income before income taxes PBC 2003 – 2007 Quarterly trend In EUR bn In EUR m 2x 3.0 835 832 854 2.6 742 695 643 1.9 449 1.6 1.4 Specific items: Seed capital investment losses 49 Money market fund injections 54 Auction Rate Securities prov
Slide 21: GTB: Another quarter of year-on-year growth
GTB: Another quarter of year-on-year growth Results at a glance Condensed P&L IIncome before b f income i taxes, t in i EUR m I EUR m In Jan- Δ vs. Key ratios, in % 3Q Δ vs. Sep Jan-Sep 2008 3Q2007 7% 2008 2007 Revenues 692 5% 2,023 5% 263 250 283 281 247 222 Provisions* (0) n.m. (2) n.m. 214 Nonint
Slide 22: AWM: Result reflects specific items and extreme markets
AWM: Result reflects specific items and extreme markets Results at a glance Condensed P&L IIncome before b f income i taxes, t in i EUR m I EUR m In Jan- Δ vs. Key ratios, in % 3Q Δ vs. Sep Jan-Sep 2008 3Q2007 2008 2007 292 265 242 Revenues 713 (37)% 2,676 (18)% 188 169 188 Provisions* (1) 82% (2) 1
Slide 23: PBC: Decline in profit driven primarily by higher provisions
PBC: Decline in profit driven primarily by higher provisions Results at a glance Condensed P&L IIncome before b f income i taxes, t in i EUR m I EUR m In Jan- Δ vs. Key ratios, in % 3Q Δ vs. Sep Jan-Sep 2008 3Q2007 (14)% 2008 2007 Revenues 1,435 (0)% 4,367 1% 293 297 304 304 328 Provisions* (168) 36
Slide 24: Corporate Investments: Lower disposal gains
Corporate Investments: Lower disposal gains Results at a glance Condensed P&L (reported) I Income before b f income i taxes, t in i EUR m I EUR m In Jan- Δ vs. 3Q Δ vs. Sep Jan-Sep 2008 3Q2007 2008 2007 679 629 Revenues 261 (60)% 1,262 (7)% Provisions* 1 (2)% 2 n.m. Noninterest exp exp. (21) (18)% (
Slide 25: Agenda
Agenda 1 Summary y 2 Key current issues 3 Segment results 4 Risk, capital and liquidity management Investor Relations 10/08 · 25
Slide 26: Tier I ratio improved to 10.3%, above new target
Tier I ratio improved to 10 10.3%, 3% above new target Change to 10.3 Basel II 10.3 92 9.2 93 9.3 T Target t ~10% 10% 9% 8.7 8.8 8.6 8.4 Target range 8% 329 319 308 311 303 305 285 31 Mar 30 Jun 30 Sep 31 Dec 31 Mar 30 Jun 30 Sep 2007 2008 Tier I ratio, in % RWA, in EUR bn Investor Relations 10/08 ·
Slide 27: Reduced reliance in short-term funding
Reduced reliance in short-term funding Unsecured funding by source, in EUR bn 511 521 14% 75 153 30% 447 + EUR 88 bn 358 30 June 2007 30 September 2008 Capital markets Short-term wholesale funding Retail deposits Fiduciary, clearing & other deposits Note: Figures may not add up due to rounding diffe
Slide 28: Rise in provisions partly driven by IAS 39 asset reclassification
Rise in provisions partly driven by IAS 39 asset reclassification Provision for credit losses, in EUR m Single counterparty relationship 329 485 236 283 72 IAS 39 135 105 114 98 81 1Q 2Q 3Q 4Q 1Q 2Q 3Q Jan-Sep Jan-Sep 2007 2008 2007 2008 Thereof: CIB (20) (42) (19) 190 (11) (9) 66 (82) 46 117 124 12
Slide 29: Slight increase in problem loans driven by IAS 39
Slight increase in problem loans driven by IAS 39 Problem loans not considered Problem loans, in EUR bn impaired under IFRS IFRS impaired loans(1) IFRS impaired loans coverage ratio(2) 3.5 3.2 3.3 31 3.1 3.1 29 2.9 2.8 2.6 2.7 2.8 25 2.5 2.6 2.5 24 2.4 63% 66% 64% 64% 62% 65% 62% 31 Mar 30 Jun 30 Se
Slide 30: 3Q2008 Highlights
3Q2008 Highlights Income I before b f income i taxes t off EUR 93 m – After mark-downs of EUR 1.2 bn Group – Includes only EUR 146 m gain on FV on own debt; election on all own debt performance would have increased pre pre-tax tax profit by more than EUR 2 bn Net income of EUR 414 m, including t
Slide 31: Additional information
financial Additional information Analyst Gall A Passion to Perform. Deutsche Bank
Slide 32: Leveraged Finance exposure: Current status
Leveraged Finance exposure: Current status Composition of current loans and loan commitments In EUR bn Funded 30 Jun 2008 total loans and loan commitments 26.8 Unfunded FX 1.7 Sales Sa es ((2.9) 9) Restructured (0.4) 22.5 New Commitments 1.3 Cancelled ((2.5)) (1 1) (1.1) 30 Sep 2008 total loans and
Slide 33: Commercial Real Estate: Current status
Commercial Real Estate: Current status Composition of traded whole loans and loan commitments(1) In EUR bn 30 Jun 2008 total loans and loan commitments 15.9 FX 0.7 Sales (2.4) 8.4 Ri k reduction Risk d ti (2) (3 0) (3.0) Other (0.5) Other Europe 1.6 30 Sep 2008 total loans and loan commitments 10.7
Slide 34: Financial assets at FV: Development by category
Financial assets at FV: Development by category Positive market values Total assets, in EUR bn from derivatives Trading securities Reverse repos / securities borrowed 2,061 Other 1,991 1,395 1,383 640 727 Financial Assets 1,383 1 395 1,395 at FV through P&L 415 347 227 208 253 Loans 216 Cash and dep
Slide 35: Number of shares for EPS calculation
Number of shares for EPS calculation In million Average At end of period 3Q 2Q 3Q 30 Sep 30 Jun 30 Sep 2007 2008 2008 2007 2008 2008 Common shares issued 528 531 535 528 531 571 Total shares in treasury (31) (28) (25) (29) (25) (25) Common shares outstanding 497 503 509 499 505 546 (1) Forward purch
Slide 36: Group headcount
Group headcount Full-time equivalents, at period end 30 Sepp 2008 vs. 30 Sep 31 Dec 31 Mar 30 Jun 30 Sep 30 Jun 2008 2007 2007 2008 2008 2008 Total Net of de-/consoli- change dation CIB 17,215 16,510 15,638 15,614 15,547 (67) (67) PCAM 30,509 30,745 31,213 31,666 32,098 432 432 Corporate 32 29 29 28
Slide 37: Invested assets report
Invested assets((1)) report In EUR bn Net new money 30 Sep 31 Dec 31 Mar 30 Jun 30 Sep 2007 2007 2008 2008 2008 Jan-Sep 3Q2008 2008 Assett and A dWWealth lth Management M t 759 749 698 700 700 (5) 10 Asset Management 561 555 516 515 510 (11) (8) Institutional 156 158 151 155 156 (4) 2 Retail 239 234
Slide 38: Regional invested assets – AM and PWM
Regional invested assets((1)) – AM and PWM In EUR bn 30 Sep p 08 30 Sep 31 Dec 31 Mar 30 Jun 30 Sep vs. 2007 2007 2008 2008 2008 30 Jun 08 Asset Management 561 555 516 515 510 (1)% Germany 265 264 252 248 232 (6)% UK 15 16 16 16 19 22 % Rest of Europe 37 37 36 34 34 (2)% Americas 212 205 187 192 202
Slide 39: Regional net new money – AM and PWM
Regional net new money – AM and PWM In EUR bn 3Q2007 4Q2007 FY2007 1Q2008 2Q2008 3Q2008 Asset Management 12 5 27 2 1 (11) Germany ( ) (0) 1 20 2 ( ) (3) ( ) (7) UK 4 1 7 1 1 3 Rest of Europe 1 1 (7) (0) (1) 0 Americas 4 1 3 0 4 (6) Asia / Pacific 4 1 4 (1) (0) (1) Private Wealth Management 1 3 13 5
Slide 40: Listed holdings
Listed holdings In EUR m Stake Market value (in %) 30 Sep 30 Sep 31 Dec 31 Mar 30 Jun 30 Sep 2008 2007 2007 2008 2008 2008 Daimler AG 2.7% 3,170 2,967 1,567 1,027 943 Allianz SE - 1,277 1,154 867 584 - Linde AG 3.3% 929 789 571 570 418 Other n.m. 362 171 141 122 135 Total market value 5,738 5,081 3,
Slide 41: Loan book
Loan book In EUR bn 30% 255 IAS 39 impact: 209 217 EUR 25 bn 193 195 201 186 145 CIB 100 107 112 91 97 97 105 109 PCAM 94 96 98 100 102 31 Mar 30 Jun 30 Sep 31 Dec 31 Mar 30 Jun 30 Sep 2007 2008 Note: Total incl. CI / Other; figures may not add up due to rounding differences Investor Relations 10/08
Slide 42: Risk
Risk VaR of CIB trading units (99%, 1 day), in EUR m EUR 1.0 bn Sales & Trading revenues EUR 0.8 bn 150 130 110 90 70 50 ∅ 90.5 ∅ 91.0 ∅ 117.8 ∅ 112.5 ∅ 123.7 3Q2007 4Q2007 1Q2008 2Q2008 3Q2008 Investor Relations 10/08 · 42
Slide 43: Our target definition
Our target definition Pre-tax return on equity (target definition) IBIT attributable to DB shareholders (target definition) Reported income before income tax expense IBIT attributable to DB shareholders Less minority interest (target definition) IBIT attributable to DB shareholders Average active eq
Slide 44: Balance sheet leverage ratio (target definition)
Balance sheet leverage ratio (target definition) In EUR bn 30 Jun 2008 30 Sep 2008 Total assets (IFRS) 1,991 2,061 Adjust derivatives according to U.S. GAAP netting rules (498) (564) Adjust pending settlements according to U.S. GAAP netting rules (92) (74) Adjust repo according to U.S. GAAP netting
Slide 45: Items excluded in target definition
Items excluded in target definition 2007 2008 Pre tax Pre-tax Post tax Post-tax Pre tax Pre-tax Post tax Post-tax First quarter 252 197 First quarter 854 854 Gains from the sale of FIAT 128 126 Gains from the sale of Daimler, shares Linde and Allianz 854 854 Equity pick-up from Interhotel 178 125 Go
Slide 46: Cautionary statements
Cautionary statements This presentation may contain forward-looking statements. Forward-looking statements are statements that are not hi t i l facts; historical f t they th include i l d statements t t t about b t our beliefs b li f and d expectations t ti and d the th assumptions ti underlying d l