Deutsche Bank Ag · XETR:DBK
Deutsche Bank — Q3 2019 Earnings Presentation
43 slides from Deutsche Bank's earnings presentation, Oct 30, 2019
Slide 1: Q3 2019 results
Deutsche Bank Q3 2019 results 30 October 2019
Slide 2: Tangible progress on our strategic transformation
Tangible progress on our strategic transformation Disciplined execution – delivering on key milestones and targets Maintained robust balance sheet including strong CET1 ratio Core business revenues resilient with loan and AuM growth demonstrating franchise stability Strong start to deleveraging Capi
Slide 3: Conservatively managed balance sheet
Conservatively managed balance sheet 9M 2019 Comment Prudent management Common Equity Tier 1 capital ratio 13.4% of capital resources Reflects strong underwriting Provision for credit losses as a % of loans 15bps standards and low risk portfolios High quality and growing loan Loans as a % of deposit
Slide 4: Stabilizing revenues
Stabilizing revenues € bn, Core Bank revenues(1) excluding specific items(2) 5.7 5.6 — Revenues strong in Origination & Advisory and in Market sensitive Investment Financing Bank — Re-shaping of Rates and Emerging Markets businesses 1.8 1.7 IB (2.9)% well underway with improving momentum — Revenues
Slide 5: Progress deleveraging the Capital Release Unit
Progress deleveraging the Capital Release Unit € bn Risk weighted assets Leverage exposure – CRD4, fully loaded Prime Finance (retained as part of BNP Paribas transfer) 281 250 72 65 (73) (9) 56 177 52 ~(40) ~40 (4) ~20 34 137 119 9 2018 Q2 2019 Q3 2019 2019 2022 2018 Q2 2019 Q3 2019 2019 2022 targe
Slide 6: On track to reach adjusted cost targets
On track to reach adjusted cost targets € bn, adjusted costs(1) 7th consecutive quarter of annual adjusted cost(2) reductions Progress to 2019 adjusted cost target Transformation charges(3) (1.3) (0.2) 22.8 5.7 21.5 5.4 0.4 Q4 5.4 (0.4) 0.2 5.0 17.0 0.7 Bank 0.6 levies (0.2) Q3 5.5 5.2 5.7 5.6 5.5 5
Slide 7: On track delivering against key milestones
On track delivering against key milestones Executed on major changes in governance, organization and financial reporting Continued improvements in controls including better integration of non-financial risk functions Approved long-term IT strategy to support our transformation and group cost reducti
Slide 8: Q3 2019 Group financial highlights
Q3 2019 Group financial highlights € m, unless stated otherwise Change in % Q3 2019 vs. Q3 2018 Revenues 5,262. (15) Revenues of which: specific items(1) (182)( Revenues ex. specific items 5,444( (12) Noninterest expenses 5,774( 4. Costs of which: Adjusted costs ex. transformation charges(2) 5,240(
Slide 9: Q3 2019 Core Bank financial highlights
Q3 2019 Core Bank financial highlights € bn, unless stated otherwise Change vs. Group Core Bank Q3 2018 Capital Release Unit Revenues 5.3 5.5 (4)% (0.2) Revenues ex. specific items 5.4 5.6 (3)% (0.1) Adjusted costs ex. 4.7 (2)% 5.2 0.6 transformation charges(1) Profit (loss) before tax (687) 353 (57
Slide 10: Adjusted costs
Adjusted costs € m, FX adjusted Change vs. Drivers Q3 2018 Q3 2018 ex. transformation — Reduction in all cost categories 5,536 charges ex FX except IT, in-line with our strategic Compensation objectives (112) (4)% and benefits(1) — Decline in compensation and benefit costs primarily reflects IT cost
Slide 11: Capital ratios
Capital ratios € bn, except movements in basis points, period end CET1 ratio — Consistent with our strategy, CET1 capital ratio stable as de- 26 risking offset the negative impact of our transformation on earnings 13.4% 13.4% — Reduction in risk weighted assets reflects € 6bn lower 0 (28) operationa
Slide 12: Segment results
Segment results Deutsche Bank Q3 2019 results 11 Investor Relations 30 October 2019
Slide 13: Corporate Bank
Corporate Bank € m, unless stated otherwise Change in % vs. Q3 2019 Q3 2018 Q3 2019 year-on-year comments Revenues 1,318. 6. — Progress towards 2019 objectives – Revenues of which: specific items(1) -. accelerated revenue growth and continued growth in loans — Revenue growth driven by an increase in
Slide 14: Q3 2019 Corporate Bank revenue performance
Q3 2019 Corporate Bank revenue performance €m X% X% Excluding specific items(1) Change vs. Q3 2018 Q3 2019 year-on-year drivers Global Transaction Banking: — Cash Management revenues grew slightly and benefited from balance sheet Global Transaction Banking 978 8% 8% management initiatives, including
Slide 15: Investment Bank
Investment Bank € m, unless stated otherwise Change in % vs. Q3 2019 Q3 2018 Q3 2019 year-on-year comments Revenues 1,647. (5) — Progress towards 2019 objectives – reduced costs, reallocated resources towards core Revenues of which: specific items(1) (99) businesses and grew revenues in key areas Re
Slide 16: Q3 2019 Investment Bank revenue performance
Q3 2019 Investment Bank revenue performance €m X% X% Excluding specific items(1) Change vs. Q3 2018 Q3 2019 year-on-year drivers Fixed Income, Currency Sales & Trading: — Credit revenues essentially flat, as higher Fixed Income, Currency financing income and lower funding Sales & Trading 1,230 (13)%
Slide 17: Private Bank
Private Bank € m, unless stated otherwise Change in % vs. Q3 2019 Q3 2018 Q3 2019 year-on-year comments Revenues 2,054 (3) — Progress towards 2019 objectives - Revenues of which: specific items(1) 18 approx. € 150m merger related cost Revenues ex. specific items 2,037 (2) synergies in 9M 2019; grew
Slide 18: Q3 2019 Private Bank revenue performance
Q3 2019 Private Bank revenue performance €m X% Excluding specific items(1) Change vs. Q3 2018 Q3 2019 year-on-year drivers Private Bank Germany: — Growth in lending, investment and insurance products partly offset interest Private Bank Germany 1,285 (5)% (5)% rate headwinds — 6th consecutive quarter
Slide 19: Asset Management
Asset Management € m, unless stated otherwise Change in % vs. Q3 2019 Q3 2018 Q3 2019 year-on-year comments Revenues Revenues 543) (4) — DWS on track to reach 2019 net inflow and adjusted cost/income ratio targets Noninterest expenses 404) 3. — Third consecutive quarter of net inflows, mainly driven
Slide 20: Corporate & Other
Corporate & Other €m Profit before tax Change Q3 2019 vs. Q3 2018 101 Profit before tax (161) (139) Funding & liquidity (87) (74) (23) Valuation & Timing differences(1) 48. (46) Shareholder expenses (148) (47) Litigation (78) (74) (161) Noncontrolling interest(2) 36. 4. Q3 Q2 Q3 Other 68 97 2018 201
Slide 21: Capital Release Unit
Capital Release Unit € m, unless stated otherwise, period end Risk weighted assets (€ bn) 72 Change 65 vs. Q2 Q3 2019 2019 56 (4) (2) 52 Profit (loss) before tax (1,040) (268) (3) Revenues (223) (444) 34 Noninterest expenses 790. (212) Adjusted costs ex. transformation 580. (35). charges(1) Total em
Slide 22: Progress towards near-term objectives
Progress towards near-term objectives 9M 2019 2019 2020 Adjusted costs(1) €€15.9bn 16.5bn(1) € 21.5bn € 19.5bn Near-term objectives CET1 ratio 13.4% 13.4% ~13% At least 12.5% Leverage ratio (fully loaded) 3.8% 3.9% 4% 4.5% Credit and Market risk weighted CRU Derisking € 27bn ~€ 20bn ~€ 10bn assets L
Slide 23: Appendix
Appendix Deutsche Bank Q3 2019 results 22 Investor Relations 30 October 2019
Slide 24: Q3 2019 specific revenue items and adjusted costs
Q3 2019 specific revenue items and adjusted costs €m Q3 2019 Q3 2018 Q2 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 1,318 1,647 2,054 543 (76) 5,485 (223) 5,262 1,242 1,740 2,112 567 54 5,715 459 6,175 1,278 1,814 2,109 59
Slide 25: 9M 2019 specific revenue items and adjusted costs
9M 2019 specific revenue items and adjusted costs €m 9M 2019 9M 2018 Core Core CB IB PB AM C&O CRU Group CB IB PB AM C&O CRU Group Bank Bank Revenues 3,920 5,443 6,311 1,662 95 17,431 385 17,816 3,857 6,087 6,617 1,673 (111) 18,122 1,619 19,741 (1) DVA - IB Other / CRU - (126) - - - (126) (19) (146)
Slide 26: Q3 2019 impact of transformation effects
Q3 2019 impact of transformation effects € m, unless stated otherwise Excluding Transformation Reported transformation Comment effects effects Revenues 5,262 - 5,262 Impairment of software and accelerated depreciation of real estate assets, legal fees related to Adjusted costs(1) (5,426) (186) (5,24
Slide 27: 9M 2019 impact of transformation effects
9M 2019 impact of transformation effects € m, unless stated otherwise Excluding Transformation Reported transformation Comment effects effects Revenues 17,816 - 17,816 Impairment of software and accelerated depreciation of real estate assets, legal fees related to Adjusted costs(1) (17,051) (537) (1
Slide 28: Reconciliation Adjusted costs including transformation charges
Noninterest expense trends € m, unless stated otherwise Q3 Q2 Q3 Q3 YoY Q2 QoQ YoY 2018 ex 2019 ex 2019 2018 ex FX 2019 QoQ ex FX FX(1) FX(1) Adusted costs including transformation charges Compensation and benefits 2,762 2,833 (3)% 2,875 (4)% 2,771 (0)% 2,776 (1)% IT costs 1,130 939 20% 948 19% 1,33
Slide 29: Adjusted costs excluding transformation charges
Adjusted costs excluding transformation charges € m, unless stated otherwise Q3 Q2 Q3 Q3 YoY Q2 QoQ YoY 2018 ex QoQ 2019 ex 2019 2018 ex FX 2019 ex FX FX(1) FX(1) Adusted costs excluding transformation charges Compensation and benefits 2,762 2,833 (3)% 2,875 (4)% 2,771 (0)% 2,776 (1)% IT costs 962 9
Slide 30: Financials post restatement vs. pro-forma view
Financials post restatement vs. pro-forma view € m, unless stated otherwise 7 Jul ∆ 24 Jul ∆ 15 Oct Core Bank Core Bank Core Core Core Group CRU CRU CRU CRU CRU Bank CB IB PB AM C&O Bank CB IB PB AM C&O Bank Net revenues 25,316 22,783 2,533 A 2 569 - - - (570) 23,354 1,963 B (28) 103 55 1 (47) (84)
Slide 31: Q3 2019 indicative regional currency mix
Q3 2019 indicative regional currency mix Net revenues Total noninterest expenses 10% 6% 8% 5% Other(1) 20% 16% Other(1) 19% 14% 22% 5% 17% 5% 0% 1% 20% 27% 19% US$ 19% US$ 17% 29% 22% 14% GB Pound 0% GB Pound 9% 39% 17% 20% 1% 86% 30% 86% 0% Euro 62% 60% 54% Euro 56% 50% 47% 39% 30% Corporate Invest
Slide 32: Litigation update
Litigation update € bn, period end Litigation provisions(1) 1.2 1.1 1.2 1.1 ― Provisions decreased by € 0.1bn predominantly due to settlement payments ― Provisions include approximately € 0.2bn related to settlements already achieved or agreed in principle Q4 2018 Q1 2019 Q2 2019 Q3 2019 but not yet
Slide 33: Loan book
Loan book € bn, period end Change vs. Q3 2018 Reported ex. FX(2) 431 8% 6% 415 419 398 405 392 395 6% 2% 71 69 71 Global Transaction 65 67 67 Banking 65 48 8% 6% 46 47 44 44 46 Commercial Banking 43 71 22% 17% 61 66 67 Investment Bank 54 55 58 43 9% 5% Wealth Management 37 39 39 40 42 41 Private Ban
Slide 34: Loan book composition
Loan book composition IFRS loans at amortized cost, 30 September 2019 Private Bank Investment Bank Corporate Bank Capital Release Unit Other(1) — Well diversified Loan Portfolio Capital Release Unit — Around half of the loan portfolio is in Private Other Bank, mainly consisting of German retail IB O
Slide 35: 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 2.4% 2.3%
Slide 36: Net interest income sensitivity
Net interest income sensitivity € bn, hypothetical +100 bps parallel shift impact First year Second year 1.5 1.8 0.9 1.0 0.8 0.6 Retail Non-retail Group Retail Non-retail Group Maturity Maturity > 3M 0.3 0.1 0.3 > 3M 0.5 0.1 0.6 EUR EUR ≤ 3M 0.3 0.7 1.1 ≤ 3M 0.3 0.7 1.0 > 3M 0.0 0.0 0.0 > 3M 0.0 0.1
Slide 37: Leverage exposure and risk weighted assets
Leverage exposure and risk weighted assets CRD4, fully loaded, € bn, period end Leverage exposure Risk weighted assets 344 344 79 Operational Risk 79 1,304 1,291 Trading assets 162 137 Market Risk 31 37 Credit valuation 6 177 adjustments Derivatives 177 27 Lending 417 250 427 114 Lending commitments
Slide 38: Level 3 assets
Level 3 assets € bn, as of 30 September 2019 Assets (total: approx. € 25bn) ― Level 3 assets arise from the bank’s activities in various markets, some of which are less liquid Equity securities Mortgage backed securities 1 0 ― Level 3 classification is not an indicator of risk or asset Other 2 quali
Slide 39: Trading book Value at Risk
Trading book Value at Risk € m, unless stated otherwise, DB Group, 99%, 1 day Stressed Value at Risk(1) Value at Risk Quarterly average ∅ 74 ∅ 95 ∅ 87 ∅ 79 ∅ 86 ∅ 25 ∅ 30 ∅ 27 ∅ 28 ∅ 30 120 100 80 60 40 20 0 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 (1) Stressed Value-at-Risk is calculated on the same
Slide 40: Assets under Management – Private Bank
Assets under Management – Private Bank € bn Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Assets under Management (1) 472 478 475 451 478 483 487 Private Bank Germany 204 205 207 198 209 213 213 therein: Deposits(2) 102 103 103 103 107 109 107 therein: Investment Products(3) 102 103 104 95
Slide 41: Reconciliation of Asset Management segment to DWS
Reconciliation of Asset Management segment to DWS € m, profit before tax Q3 2019 163 1 9 34 105 0 15 Asset Management Sold & DB group Noncontrolling Transformation Other perimeter DWS Reported reported discontinued allocation / minority interest charge adjustments businesses Funding charges Q3 2018
Slide 42: Employees
Employees Full-time equivalents, period end Change vs. Q3 2018 Of which Q3 2019 Q3 2018 Absolute Q4 2018 Q1 2019 Q2 2019 disposals Corporate Bank 7,516 7,356 161 (7) 7,352 7,439 7,499 Investment Bank 10,256 9,991 266 - 9,899 10,189 10,239 Private Bank 38,100 38,794 (694) (74) 38,415 38,140 37,983 AM
Slide 43: 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