Slide 1: Performance overview and strategic initiatives
Performance overview and strategic initiatives Dr. Josef Ackermann Chairman of the Management Board 5 February 2009
Slide 2: Agenda
Agenda 1 Results in summary y 2 Drivers of fourth-quarter performance 3 Near-term strategic initiatives 4 Prospects for core businesses in 2009 Investor Relations 02/09 · 2
Slide 3: Results in summary
Results in summary Fourth quarter 2008: Net loss of EUR 4.8 bn Full year 2008: Net loss of EUR 3.9 bn Tier I capital ratio of 10 10.1%, 1% consistent with target Leverage ratio* ratio of 28 28, ahead of target Reduction of legacy g y exposure p in key y areas Significant Asset and exposu
Slide 4: 2008 in context of Deutsche Bank's management agenda
2008 in context of Deutsche Bank’s Bank s management agenda In EUR bn Net revenues Net income Tier I capital Mark-downs Net revenues 6.5 31.1 6.1 2.3 28.3 28.5 26.5 30.7 25.6 3.5 22 7 22.7 23.5 21 6 21.6 21 9 21.9 21.3 21.9 2.5 18.7 1.4 7.0 0.4 13.5 (3.9) ‘02 ‘03 ‘04 ‘05 ‘06 ‘07 ‘08 ‘02 ‘03 ‘04 ‘05
Slide 5: Agenda
Agenda 1 Results in summary y 2 Drivers of fourth-quarter performance 3 Near-term strategic initiatives 4 Prospects for core businesses in 2009 Investor Relations 02/09 · 5
Slide 6: Drivers of fourth-quarter performance in summary
Drivers of fourth-quarter performance in summary IBIT*, Business in EUR bn Key drivers Global Markets: Business model exposed to exceptionally turbulent markets CB&S (5.8) Corporate Finance: Leveraged finance write write-backs backs counterbalance declines in Advisory, ECM Record revenues driv
Slide 7: CB&S: Losses in specific trading businesses
CB&S: Losses in specific trading businesses Revenues, in EUR bn 4Q2007 4Q2008 CB&S Total 4Q2007: EUR 3.8 bn 4Q2008: EUR (3.8) bn Leveraged Finance CDO Subprime (0.1) write-backs (net): 0.8 2.3 RMBS (0.2) CRE (0.2) 0.9 0.9 0.7 0.5 0.6 0.6 0.3 0.2 0.3 0.1 0.1 0.0 0 0 00 0.0 (0.4) (0.5) (0.3) ((1.1)) (
Slide 8: Unprecedented conditions in the quarter
Unprecedented conditions in the quarter Basis risk Correlation CDS bond-basis funding spread, in bps EURJPY-Nikkei correlation, in % 300 .90 225 150 .70 70 75 .50 0 (75) .30 30 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q Volatility Liquidity EuroStoxx volatility 3M Euribor – 3M Eonia swap rate, in bps 100 200 150 50 10
Slide 9: These conditions impacted Global Markets' business model
These conditions impacted Global Markets’ Markets business model … Business model positioning Impact Investment into flow products and technology 9 Reaped benefits of “Flight to quality” Risk transformation and distribution model 9 Limited “toxic asset” writedowns Broad product and geographical foot
Slide 10: … leading to losses in key businesses
… leading to losses in key businesses 4Q2008, in EUR bn Business Revenues DB positioning 4Q challenges Breakdown / inversion of Credit Trading Bond-CDS basis ((1.0)) Prop Extreme illiquidity Relative value strategies Correlation to HF strategies Specific positions Convertible dislocation
Slide 11: However flow businesses performed well
However flow businesses performed well However, Revenue development, 2006-2008 Foreign Exchange Money Markets(1) x2.3 x3.6 2006 2007 2008 2006 2007 2008 Rates(2) +12% FX / MM / Rates 2007: ~30% of Global Markets revenues 2006 2007 2008 (1) Excluding prop (2) Core Rates Trading excluding municipals a
Slide 12: GTB: Another successful quarter and year
GTB: Another successful quarter and year Income before income taxes, in EUR m 2008 quarterly development 2004 – 2008 291 1,106 >4x 283 281 945 705 250 433 254 1Q 2Q 3Q 4Q 2004 2005 2006 2007 2008 Note: 2004-2005 based on U.S. GAAP and on structure as of 2006, 2006 onwards based on IFRS and on latest
Slide 13: AWM was impacted by asset impairments and exceptional items
AWM was impacted by asset impairments and exceptional items Income (loss) before income taxes, in EUR m 242 188 4Q2008 specific items (95) Assett Management: A M t Impairment DWS Scudder (302) Impairment RREEF infrastructure asset (270) Seed capital impairments impairments* (164) European mo
Slide 14: PBC: Lower investment product revenues and rise in provisions
PBC: Lower investment product revenues and rise in provisions Income before income taxes, in EUR m 328 304 262 4Q vs. 3Q2008: Operating items: Lower revenues from investment products and deposits & payments (175) Higher provision for credit losses (47) 51 Specific items: Severance related to e
Slide 15: Agenda
Agenda 1 Results in summary y 2 Drivers of fourth-quarter performance 3 Near-term strategic initiatives 4 Prospects for core businesses in 2009 Investor Relations 02/09 · 15
Slide 16: Summary of near-term strategic initiatives
Summary of near-term strategic initiatives CB&S Recalibration of the investment banking business model GTB Continued growth initiatives AM: Reengineering business model to current market levels AWM PWM: Efficiency program / selective growth opportunities Growth G and efficiency ff program
Slide 17: Global Markets: Historical revenue composition
Global Markets: Historical revenue composition Illustrative Revenue breakdown Examples Highly illiquid Credit Prop trading ~20% 15% ~15% positions iti Equity Prop trading Equity derivatives ~20% ~15% ~60% Money markets derivatives ~60% 60% ~60% Medium / FX d derivatives i ti ~55% high liqu
Slide 18: We have moved swiftly to recalibrate this model
We have moved swiftly to recalibrate this model Significant reduction in proprietary risk Continued management of legacy exposures Notional Capital EPT EPT* U S RMBS exposures U.S. Hedges SABA* Net exposure (90)% (50)% Aug 07 Jan 08 Jun 08 Sep 08 Dec 08 Dec 07 Mar 08 Jun 08 Sep 08 Dec 08 Aggressive
Slide 19: Resulting in a shift in the Global Markets business model
Resulting in a shift in the Global Markets business model Shift in business model (revenue mix) Key actions Illustrative De-risk Highly illiquid Scale-back / eliminate illiquid prop activity ~5% 5% Sharply reduced retention of structured un- ~15% positions iti hedgeable risk Significant curtai
Slide 20: Corporate Finance: Recalibrating our platform
Corporate Finance: Recalibrating our platform Commercial Real Estate Reposition Reengineer Leveraged Finance Sectors: Financial Institutions, Natural Resources Countries: Selected Europe, China, Brazil Invest Products: M&A and ‘rescue’ advisory Maintain commitment to German mid-cap p A
Slide 21: Global Transaction Banking: Continued growth agenda
Global Transaction Banking: Continued growth agenda Increase penetration of existing client base in core markets Expansion into Leverage ‘flight to quality’ opportunities new markets Monitor opportunities to expand by bolt-on bolt on acquisition Target profitable lower mid-cap corporate clie
Slide 22: AWM: Market conditions impacted full year 2008 results
AWM: Market conditions impacted full year 2008 results Income before income taxes Net new money In EUR m Reported In EUR bn (30)% Before specific items 646 27 15% 267 13 207 ARP/S 10 settlement EUR (0.1) bn Specific items In EUR bn DWS Scudder impairment (0.3) Infrastructure impairment (0.3) I
Slide 23: AWM will reposition its platforms to a changed environment
AWM will reposition its platforms to a changed environment Reengineer platform to restore operating leverage at current market levels: Reposition exposure to European money-market fund business Right-size RREEF / infrastructure Asset Downsize D i h hedge d ffund d platform l tf Management Ce
Slide 24: PBC: Respond to shifts in revenue mix, and leverage 'flight to quality'
PBC: Respond to shifts in revenue mix mix, and leverage benefits of ‘flight to quality’ Shift in revenue mix Substantial capture of new clients and deposits Net revenues, in EUR bn Total clients, in m x Deposits(2), in EUR bn Germany 5.8 5.8 83 +19 Investment (15)% 64 products 0.8 14.6 13 8 13.8 Con
Slide 25: PBC: Implementation of 'Growth and Efficiency' program
PBC: Implementation of ‘Growth Growth and Efficiency Efficiency’ program Advisory banking: Position for recovery in PBC investment products via selective investments Business Advisory Consumer Consumer banking: Position for margin model Banking Banking compression via cost-efficiency Efficiency
Slide 26: Business initiatives will be complemented by Group initiatives
Business initiatives will be complemented by Group initiatives Complexity Realign infrastructure complexity to recalibrated front-office requirements reduction Reap full infrastructure savings from front-office simplification Improve efficiency of outsourced functions Offshoring Additional o
Slide 27: Agenda
Agenda 1 Results in summary y 2 Drivers of fourth-quarter performance 3 Near-term strategic initiatives 4 Prospects for core businesses in 2009 Investor Relations 02/09 · 27
Slide 28: CB&S: Outlook and prospects
CB&S: Outlook and prospects Environment Implications and opportunities for DB Lower revenue pool Leverage continued flight to quality Further industry concentration Opportunity O t it for f share h capture t Global Competitor dislocations Advantage for ‘intact’ platforms Markets Sustai
Slide 29: Global Markets: Opportunity to gain share, despite lower revenues
Global Markets: Opportunity to gain share, share despite lower revenues Sales & Trading: Global revenue pool pool* Significant market share up for capture In EUR bn Equity DB Merged or exited Remainder Fixed Income ~(17)% Current 134 136 DB rank 112 U.S. IRD #2 82 EM Bonds #2 EU Investment #1 Grade
Slide 30: Harvest benefits of recent strategic investments
Harvest benefits of recent strategic investments Example: Commodities Example: US Cash Equities Revenues in EUR bn McLagan Cash Equities market share Best Equity House In North America Commodity Derivatives +85% 7% (June 2008) House of the Year (Jan 2009) 6% 16 1.6x 5% 4% 3% 2006 2007 2008 2Q06 4Q06
Slide 31: Improved margins and industry concentration favour Deutsche Bank
Improved margins and industry concentration favour Deutsche Bank Higher bid bid-offer offer spreads (indexed) Higher volumes, greater concentration Interest Rate Options 300 Interest rate 230 options ti 160 FX swaps/fwds utstanding ((index) 100 150 140 me asing volum 130 Before crisis During Current
Slide 32: AWM: Outlook and prospects
AWM: Outlook and prospects Environment Implications and opportunities for DB Reengineer to restore operating l leverage Asset Lower equity valuations Efficiency gains Management De-leveraging impacts alternative Value of franchise strengths (Global asset classes and diversified product off
Slide 33: PBC: Outlook and prospects
PBC: Outlook and prospects Environment Implications and opportunities for DB Near-term shift in revenue mix Leverage new clients and deposit flows – ‘Flight to simplicity’ Margin compression in deposits Efficiency gains Consolidation in German market Opportunities for share capture Pot
Slide 34: Summary: Looking forward in 2009
Summary: Looking forward in 2009 Capital ratios remain solid Reduced exposure to legacy positions Trading g assets in key y areas have been significantly g y reduced Strong liquidity and funding base Cost-efficiency measures underway Repositioning businesses to the current environment In
Slide 35: Cautionary statements
Cautionary statements Unless otherwise indicated, the financial information provided herein has been prepared under International Financial Reporting Standards (IFRS). (IFRS) It is preliminary and unaudited and may be subject to adjustments based on the preparation of the full set of financial state