Deutsche Bank Ag · XETR:DBK
Deutsche Bank — Debt Investor Presentation (February 2019)
34 slides from Deutsche Bank's debt investor presentation, Feb 4, 2019
Slide 1: Q4 and FY 2018 Fixed Income Investor Conference Call
Deutsche Bank Q4 and FY 2018 Fixed Income Investor Conference Call James von Moltke, Chief Financial Officer Dixit Joshi, Group Treasurer 4 February 2019
Slide 2: Agenda
Agenda 1 Q4 and FY 2018 results 2 Balance sheet 3 Liquidity, capital and issuance 4 Appendix Deutsche Bank Q4 and FY 2018 Fixed Income Investor Call 1 Investor Relations 4 February 2019
Slide 3: Executing on our objectives with a conservative balance sheet
Executing on our objectives with a conservative balance sheet Achieved first full-year net profit since 2014 Delivered on adjusted cost and headcount targets in 2018. Executed on strategy and further strengthened controls Committed to maintaining a solid balance sheet and working to improve funding
Slide 4: Delivered on targets in 2018
Delivered on targets in 2018 2018 target 2018 Adjusted costs(1) € 23bn € 22.8bn Employees(2) <93.0k 91.7k Common Equity Tier 1 capital ratio >13% 13.6% Note: Throughout this presentation totals may not sum due to rounding differences (1) Throughout this presentation adjusted costs are defined
Slide 5: FY 2018 Group financial highlights
FY 2018 Group financial highlights € m, unless stated otherwise Higher / FY 2018 FY 2017 (lower) in % Revenues Revenues 25,316 26,447 (4) Noninterest expenses 23,461 24,695 (5) Costs of which: Adjusted costs 22,810 23,891 (5) Cost/income ratio (in %) 93 93 (1) ppt Profit before tax 1,330 1,228 8 Pro
Slide 6: Continue to focus on our near-term targets
Continue to focus on our near-term targets 2018 2019 Post-tax return on tangible equity >4% Updated Adjusted costs € 23bn € 21.8bn Employees(1) <93,000 <90,000 Common Equity Tier 1 capital ratio >13% >13% (1) Internal full-time equivalents, end of period Deutsche Bank Q4 and FY 2018 Fixed Inco
Slide 7: Accelerated cost reductions
Accelerated cost reductions € bn, adjusted costs — Lower compensation costs from 2018 headcount actions — Disposals — Non-compensation reductions, e.g. vendor rationalization (0.8) 24.7 (1.1) 23.9 (1.0) 22.8 21.8 — Targeted headcount reductions — German retail merger synergies — Further non-compensa
Slide 8: Path towards improving our profitability
Path towards improving our profitability Post-tax RoTE, in % Includes: — Adjusted cost reductions (€ 1bn) — Balance sheet and liquidity optimization (>€ 300m) — Growth in stable businesses (including YoY loan >4% growth in 2018 of 5%) — Tax rate normalization (to ~35%) >1% Includes: — Assumes greate
Slide 9: Agenda
Agenda 1 Q4 and FY 2018 results 2 Balance sheet 3 Liquidity, capital and issuance 4 Appendix Deutsche Bank Q4 and FY 2018 Fixed Income Investor Call 8 Investor Relations 4 February 2019
Slide 10: Well positioned for regulatory requirements
Well positioned for regulatory requirements As of 31 Dec 2018 Comment Common Equity Tier 1 capital ratio 13.6% Above >13% target Excess above MREL Loss-absorbing capacity € 118bn requirement: € 21bn(1) Reflects strong underwriting Provision for credit losses as a % of loans(2) 13bps standards and lo
Slide 11: Conservatively managed balance sheet
Conservatively managed balance sheet After netting, € bn, as of 31 December 2018 Assets Liabilities & equity 1,010 1,010 Trading and 170 related liabilities(2) Liquidity reserves(1) (17%) (26%) 259 45 Other liabilities(4) (4%) Trading and related assets(2) 296 (29%) Deposits 565 (56%) 77% loan-to- d
Slide 12: Low risk, well diversified loan portfolio
Low risk, well diversified loan portfolio IFRS 9 loans at amortized cost, as of 31 December 2018 Corporate & Investment Bank (CIB) Private & Commercial Bank (PCB) — Well diversified, low-risk loan portfolio Global Transaction Bank — 2/3rd of the loan portfolio is in PCB, mainly German retail mortgag
Slide 13: Level 3 assets – a small, but natural part of our business
Level 3 assets – a small, but natural part of our business € bn, as of 31 December 2018 Assets (total: € 25bn) — Level 3 assets characteristics: Mortgage backed securities Equity securities — Arise from the bank’s activities in various 1 1 markets, some of which are less liquid Other 3 9 Derivative
Slide 14: Materially reduced non-strategic legacy assets in CIB
Materially reduced non-strategic legacy assets in CIB € bn Risk weighted assets excluding operational risk ― € 15bn of IFRS assets as of 31 December 2018 (32)% Background ― Non-strategic portfolio created to facilitate the run- 10 down of residual ex-CIB assets from Non Core Operating Unit (NCOU) an
Slide 15: Agenda
Agenda 1 Q4 and FY 2018 results 2 Balance sheet 3 Liquidity, capital and issuance 4 Appendix Deutsche Bank Q4 and FY 2018 Fixed Income Investor Call 14 Investor Relations 4 February 2019
Slide 16: Development of liquidity metrics
Development of liquidity metrics Liquidity Coverage Ratio(1) (LCR) 148% 140% 140% — Liquidity Coverage Ratio decreased by 7ppts, reflecting growth in business volumes, 128% € 66bn above including commitments for our deal pipeline 119% 100% require- — Liquidity Reserves decreased by € 8bn to ment € 2
Slide 17: Increasing balance sheet productivity
Increasing balance sheet productivity € bn Deploy liquidity reserves Optimize liquidity composition Highly liquid securities(1) Cash and cash equivalents (7)% 280 280 259 259 58 31% 76 222 (17)% 184 Q4 2017 Q4 2018 Q4 2017 Q4 2018 — Revenue benefit from redeployment of cash into — Reduce revenue dra
Slide 18: Capital ratios
Capital ratios CRD4, fully loaded, € bn except movements (in basis points) CET1 ratio — Higher risk-weighted assets (RWA) driven by: 14.0% — Market Risk RWA of € 7bn in CIB, as a result of higher 13.6% VaR and Stressed VaR and a temporary increase in the (29) (2) Incremental Risk Charge (11) — Credi
Slide 19: Minimum Requirement for Own Funds and Eligible Liabilities (MREL)
Minimum Requirement for Own Funds and Eligible Liabilities (MREL) € bn, unless stated otherwise, as of 31 December 2018 Deutsche Bank available MREL categories 118 — Deutsche Bank has a loss absorbing capacity of Plain-vanilla 1(2) € 118bn, € 21bn above MREL requirement(6) senior preferred debt(1) —
Slide 20: 2019 issuance plan and contractual maturities
2019 issuance plan and contractual maturities € bn Issuance plan Maturity profile Covered Bonds Senior Structured / Preferred Senior Non-Preferred Tier 2 Contractual maturities(1) 24 23 20-25 Collateral 22 22 20 currently 2 5-6 4 used for 3 4 17 TLTRO 2 4 8 6-8 11 4 1 10 16 16 4 1 4 9 9-11 8 6 4 1 F
Slide 21: Preliminary Additional Tier 1 (AT1) payment capacity
Preliminary Additional Tier 1 (AT1) payment capacity €m 2018 unaudited 2017 2016 Comments Final ADI subject to Management Board’s decision to allocate Available Distributable ~1,100 397 514 ~ € 500m of ADI to general reserves. Remaining ADI sufficient Items (ADI) to pay proposed € 0.11 per share com
Slide 22: Agenda
Agenda 1 Q4 and FY 2018 results 2 Balance sheet 3 Liquidity, capital and issuance 4 Appendix Deutsche Bank Q4 and FY 2018 Fixed Income Investor Call 21 Investor Relations 4 February 2019
Slide 23: Regulatory capital requirements
Regulatory capital requirements SREP(1) vs CET1 Ratio Total capital requirements CET1 AT1 Tier 2 Contribution from legacy G-SIB buffer Pillar 2 Requirement X.X Tier 1 instruments Countercyclical Buffer Pillar 1 Requirement Capital Conservation Buffer 17.49% 15.32% 1.77% 13.55% 2.00% 2.17% 0.86% 11.8
Slide 24: AT1 and Trust Preferred Securities outstanding
AT1 and Trust Preferred Securities outstanding(1) Original Regulatory Capital Current Nominal Next call Subsequent Issuer ISIN issuance treatment(1) recognition(1) Coupon outstanding date call period date DB Contingent Capital Trust II AT1 / Tier 2 100% / 100% US25153X2080 6.550% $ 800mn 23-May-07 2
Slide 25: Minimum Requirement for Own Funds and Eligible Liabilities (MREL)
Minimum Requirement for Own Funds and Eligible Liabilities (MREL)(1) SRB methodology (% RWA) Requirements Pillar 1 minimum requirement — MREL requirement calculated by the Single Resolution Pillar 2 requirement Board (SRB) as a % of risk-weighted assets (RWA), Combined buffer requirement(2) Market C
Slide 26: Capital Markets and Equity to MREL reconciliation
Capital Markets and Equity(1) to MREL reconciliation € bn, as of 31 December 2018 Covered 196 bonds 22 (22) Structured notes 24 (24) Plain-vanilla 1 senior preferred (19) +1 (17) 118 Plain-vanilla +1 1 Plain-vanilla 72 senior senior preferred non-preferred Plain-vanilla 55 senior non- AT1 / Tier 2 1
Slide 27: Current Ratings
Current Ratings part of loss-absorbing capacity senior to loss-absorbing capacity Counterparty obligations (e.g. Deposits / Structured A3 BBB+(1) A- A (high) Notes / Derivatives / Swaps) Senior Preferred(2) A3 BBB+ A- A (low) Long- term unse- cured Non-preferred Baa3 BBB- BBB+ BBB (high) Tier 2 Ba2
Slide 28: Rating landscape – senior unsecured and short-term ratings
Rating landscape – senior unsecured and short-term ratings Moody‘s S&P Operating company / Preferred Senior(1) Holding company / Non-preferred Senior(2) Rating scale EU Peers Swiss Peers US Peers Short-term Long-term BAR BNP HSBC SOC CS UBS BoA Citi GS JPM MS P/A-1 Aa2/AA P/A-1 Aa3/AA- P/A-1 A1/A+ P
Slide 29: Specific items - FY 2018
Specific items - FY 2018 €m FY 2018 FY 2017 CIB PCB AM C&O Group Group Revenues 13,046 10,158 2,186 (73) 25,316 26,447 DVA (CIB) 126 - - - 126 (348) Change in valuation of an investment (CIB) 140 - - - 140 - Gain on sale in GTB (CIB) 57 - - - 57 - Valuation of legacy RMBS portfolio (CIB) - - - - - (
Slide 30: Adjusted costs trends – FY 2018
Adjusted costs(1) trends – FY 2018 € m, unless stated otherwise YoY YoY ex FX(2) FY 2017 FY 2018 FY 2017 abs in % abs in % ex FX(2) Compensation and benefits(3) 11,611 12,130 (519) (4)% 11,965 (354) (3)% IT costs 3,822 3,816 6 0% 3,776 46 1% Professional service fees 1,530 1,750 (220) (13)% 1,723 (1
Slide 31: Net interest income sensitivity
Net interest income sensitivity € bn, hypothetical +100bps parallel shift impact First year Second year 1.9 1.7 0.9 0.9 1.0 0.8 PCB CIB Group PCB CIB Group > 3M 0.3 0.1 0.4 > 3M 0.6 0.1 0.7 EUR EUR ≤ 3M 0.5 0.6 1.1 ≤ 3M 0.4 0.6 1.0 > 3M 0.0 0.0 0.1 > 3M 0.0 0.1 0.1 USD USD ≤ 3M 0.0 0.1 0.1 ≤ 3M 0.0
Slide 32: Provision for credit losses and stage 3 loans under IFRS 9
Provision for credit losses and stage 3 loans under IFRS 9 Provision for credit losses € m Stage 3 at amortised cost under IFRS9 € bn Corporate & Investment Bank (CIB) Purchased or Originated Credit Impaired assets (POCI) Private & Commercial Bank (PCB) CIB (ex-POCI) PCB (ex-POCI) 525 Group Stage 3
Slide 33: Litigation update
Litigation update € bn, unless stated otherwise Litigation provisions(1) ― Deutsche Bank has now partly or wholly resolved 19 7.6 of the 20 most significant matters as measured by financial risk at the beginning of 2016 5.5 ― The bank made further progress on litigation matters in Q4 2018 including:
Slide 34: Cautionary statements
Cautionary statements The figures in this presentation are preliminary and unaudited. Our Annual Report 2018 and SEC Form 20-F are scheduled to be published on 22 March 2019. This presentation contains forward-looking statements. Forward-looking statements are statements that are not historical fact
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