Deutsche Bank Ag · XETR:DBK
Deutsche Bank — Q2 2020 Earnings Presentation
53 slides from Deutsche Bank's earnings presentation, Jul 29, 2020
Slide 1: Q2 2020 results
Deutsche Bank Q2 2020 results 29 July 2020
Slide 2: 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 3: Delivering against key milestones
Delivering against key milestones Invest in Exit Create four client- Cut Manage and technology & businesses centric divisions costs liberate capital growth Focus on market leading Maintain conservative Exit from Equities Further improve businesses with Reduce adjusted costs(1) balance sheet with Tra
Slide 4: 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 5: 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 6: 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 7: Maintained strong balance sheet
Maintained strong balance sheet Q4 2019 Q1 2020 Q2 2020 Common Equity Tier 1 283bps above regulatory 13.6% 12.8% 13.3% capital ratio requirements Increase driven by lower lending Liquidity reserves € 222bn € 205bn € 232bn volumes and deposit growth € 64bn above regulatory Liquidity Coverage Ratio 14
Slide 8: 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 9: Disciplined delivery of transformation agenda
Disciplined delivery of transformation agenda Transformation delivery Key achievements in Q2 2020 Achieved targeted cost savings from Completed German legal entity merger >100% transformation initiatives in H1 2020 Announced creation of International Private Bank Completed integration of Corpora
Slide 10: Maintaining the cadence of transformation
Maintaining the cadence of transformation Continue execution of strategic agenda to deliver on financial targets Apply learnings from the COVID-19 pandemic to generate additional efficiencies Build further client momentum to support revenues and profitability Accelerate digital transition and launch
Slide 11: 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 12: 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 13: 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 14: 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 15: 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 16: Capital ratios
Capital ratios Movements in basis points, period end — CET1 capital ratio increased by 42bps in the quarter CET1 ratio(1) — ~12bps due to COVID-19, notably: 31 12 13.3% — Higher Market Risk RWA due to increased average market 12.8% volatility in the second quarter (1) — Lower Credit Risk RWA as repa
Slide 17: Adjusted costs
Adjusted costs In € m Year-on-year drivers Q2 2019 ex. transformation 5,345 charges — Reductions in all categories Compensation except bank levies (192) and benefits(1) — Lower compensation and benefits reflect workforce IT costs (146) reductions and a change in Professional estimate for certain def
Slide 18: Segment results
Segment results Deutsche Bank Q2 2020 results 17 Investor Relations 29 July 2020
Slide 19: Corporate Bank
Corporate Bank In € m, unless stated otherwise Change in Change in % vs. % vs. Q2 2020 Q2 2019 Q1 2020 Q2 2020 year-on-year comments — Revenues excluding episodic items Revenues 1,328 3. 0. Revenues declined slightly as interest rate Revenues ex. specific items(1) 1,328 3. 0. headwinds more than off
Slide 20: Q2 2020 Corporate Bank revenue performance
Q2 2020 Corporate Bank revenue performance In € m, unless stated otherwise X% X% Excluding specific items(1) Change vs. Q2 2019 Q2 2020 year-on-year drivers Global Transaction Banking: Global Transaction Banking 965 4% 4% — Cash Management lower excluding episodic items. Interest headwinds partly of
Slide 21: Investment Bank
Investment Bank In € m, unless stated otherwise Change in Change in % vs. % vs. Q2 2020 Q2 2019 Q1 2020 Q2 2020 year-on-year comments — Revenues significantly higher on Revenues 2,654 46. 13. strong client flows and market Revenues Revenues ex. specific items(1) 2,639 52. 15. conditions — Progress o
Slide 22: Q2 2020 Investment Bank revenue performance
Q2 2020 Investment Bank revenue performance In € m, unless stated otherwise X% X% Excluding specific items(1) Change vs. Q2 2019 Q2 2020 year-on-year drivers Fixed Income, Currency Sales & Trading: Fixed Income, Currency — Rates, FX and Emerging Markets revenues Sales & Trading 2,050 39% 46% signifi
Slide 23: Private Bank
Private Bank In € m, unless stated otherwise Change in Change in % vs. % vs. Q2 2020 Q2 2019 Q1 2020 Q2 2020 year-on-year comments Revenues 1,981 (5) (8) — Revenues declined on certain items Revenues related to strategy execution, ongoing Revenues ex. specific items(1) 1,955 (5) (9) deposit margin c
Slide 24: Q2 2020 Private Bank revenue performance
Q2 2020 Private Bank revenue performance In € m, unless stated otherwise X% Excluding specific items(1) Change vs. Q2 2019 Q2 2020 year-on-year drivers Private Bank Germany: — Revenues declined on certain items related to strategy execution and higher funding cost Private Bank Germany 1,233 (5)% (5)
Slide 25: Asset Management
Asset Management In € m, unless stated otherwise Change in Change in % vs. % vs. Q2 2020 Q2 2019 Q1 2020 Q2 2020 year-on-year comments Revenues 549 (8) 6. Revenues — Revenues declined principally Revenues ex. specific items(1) 549 (8) 6. reflecting the non-repetition of periodic performance fees in
Slide 26: Corporate & Other
Corporate & Other In € m Profit (loss) before tax Change Change vs. Q2 vs. Q1 Q2 2020 101 2019 2020 Profit (loss) before tax (152) (254) (129) Funding & liquidity (53) (73) (6) Valuation & Timing differences(1) (42) (280) (232) (24) Shareholder expenses (107) 22 (16) Noncontrolling interest(2) 42 (8
Slide 27: Capital Release Unit
Capital Release Unit In € m, unless stated otherwise Absolute Absolute change vs. change vs. Q2 2020 Q2 2019 Q1 2020 Q2 2020 comments Revenues (70) (291) (11) — Revenues driven by de-risking and hedging Revenues costs partly offset by reversal of previously Revenues ex. specific items(1) (47) (269)
Slide 28: Outlook and conclusions
Outlook and conclusions Continue to navigate challenging environment while advancing on strategic path for each business Normalization of revenue environment likely in the second half of 2020 Reaffirm 2020 adjusted cost targets Provision for credit losses still expected to be 35-45 basis points of l
Slide 29: Appendix
Appendix Deutsche Bank Q2 2020 results 28 Investor Relations 29 July 2020
Slide 30: Sustainability at Deutsche Bank
Sustainability at Deutsche Bank Our key focus areas Recent achievements – Sustainable Finance target of at least € 200bn by 2025 announced Sustainable Finance – Inaugural green bond issued in June 2020 – Joined the German Financial Sector Collective Action on Climate: commitment to align our Policie
Slide 31: 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 32: 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 33: 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 34: 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 35: 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 36: 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 37: 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 38: 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 39: 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 40: Transformation-related effects
Transformation-related effects In € bn 2019 – 2022 expected % of total cumulative 2019 – Q2 2020 expenses Q2 2020 Deferred tax Deferred Tax Asset 2.8 0.0 3.4 83% asset valuation valuation adjustment adjustment Nonoperating Goodwill impairment - 1.0 100% costs(4) Restructuring & 0.2 1.8 56% Severance
Slide 41: Bridge from EU IFRS to IASB IFRS
Bridge from EU IFRS to IASB IFRS Profit (loss), in € m Q2 2020 — Deutsche Bank’s financial statements have historically 84 been prepared based on the International Financial Reporting Standards (“IFRS”) as issued by the 61 23 International Accounting Standards Board (“IASB”) and endorsed by the Euro
Slide 42: Deposit charging
Deposit charging Quarterly revenue impact, € m 45 32 — Well on track to achieve 2022 revenue plan for 16 passing through negative rates, predominantly <10 reflecting higher deposit retention than forecasted — 90% of charging agreements currently in the Q3 2019 Q4 2019 Q1 2020 Q2 2020 Corporate Bank
Slide 43: Indicative regional currency mix - Q2 2020
Indicative regional currency mix - Q2 2020 Net revenues Total noninterest expenses 9% 7% 8% 6% Other (1) 18% 12% Other (1) 15% 13% 19% 19% 7% 5% 0% 0% 22% 28% USD 26% USD 21% 20% 17% GBP 0% 14% 32% 40% 1% GBP 5% 18% 20% 0% 86% 86% EUR 64% 61% EUR 57% 58% 43% 46% 50% 42% 6% CB IB PB AM Group CB IB PB
Slide 44: 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 45: 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 46: Loan book
Loan book In € bn, period end Change vs. Q2 2019 459 Reported ex. FX 434 442 431 415 419 65 59 (11)% (11)% Global Transaction 66 66 65 66 15 11 Banking n.m. n.m. 5 4 Strategic Corporate Lending 5 5 50 50 49 50 5% 5% Commercial Banking 47 48 75 87 80 74 15% 15% Investment Bank 69 69 43 43 44 44 6% 6%
Slide 47: Loan book composition
Loan book composition Q2 2020, IFRS loans; € 442bn Capital Release Unit Other(1) IB Other(3) 1% 2% — Well diversified loan portfolio 6% Leveraged Debt Capital Markets 2% — ~ 50% of loan portfolio in Private Bank, German mainly consisting of German retail Asset Backed Securities 6% Mortgages 30% mort
Slide 48: 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 49: 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 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 331 331 71 Operational Risk RWA 71 1,248 1,192 Trading assets 116 116 34 Market Risk RWA 29 Credit valuation 5 Derivatives(1) 161 147 23 adjustments Lending 455 438 250 120 Lendi
Slide 51: Trading book Value at Risk
Trading book Value at Risk DB Group, 99%, 1 day, in € m, unless stated otherwise Stressed Value at Risk(1) Value at Risk Quarterly average 79 86 79 72 73 28 30 25 24 43 120 100 80 60 40 20 0 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 (1) Stressed Value-at-Risk is calculated on the s
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 Assets under Management 473 478 481 482 442 471 Private Bank Germany 207 211 211 213 197 209 therein: Deposits (1) 106 108 106 104 106 106 therein: Investment Products (2) 102 103 105 109 91 103 Private &
Slide 53: 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