Deutsche Bank Aktiengesellschaft Q4 2024 Earnings Report

Deutsche Bank Aktiengesellschaft EPS Results

• Actual EPS: $0.16
• Consensus EPS: $0.43
• Beat/Miss: Missed by -$0.27
• One Year Ago EPS: N/A

Deutsche Bank Aktiengesellschaft Revenue Results

• Actual Revenue: N/A
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Deutsche Bank Aktiengesellschaft Announcement Details

• Quarter: Q4 2024
• Date: 1/30/2025
• Time: N/A
• Conference Call Date: Thursday, January 30, 2025
• Conference Call Time: 5:00AM ET

Deutsche Bank Aktiengesellschaft (NYSE:DB), a stock corporation, provides corporate and investment banking, and asset management products and services to private individuals, corporate entities, and institutional clients in Germany, the United Kingdom, rest of Europe, the Middle East, Africa, the Americas, and the Asia-Pacific. It operates through Corporate Bank, Investment Bank, Private Bank, and Asset Management segments. The Corporate Bank segment offers cash management, trade finance and lending, trust and agency, and securities services, as well as risk management solutions. The Investment Bank segment provides debt origination, merger and acquisitions, foreign exchange, and equity advisory and origination platform services. The Private Bank segment offers payment and account services, and credit and deposit products, as well as investment advice products, such as environmental, social, and governance products. This segment also provides banking, wealth management, other financial, and postal and parcel services; and supports in planning, managing and investing wealth, financing personal and business interests, and servicing institutional and corporate needs. The Asset Management segment offers investment solutions, such as alternative investments, which include real estate, infrastructure, liquid real assets, and sustainable investments; and various other services, including insurance and pension solutions, asset liability management, portfolio management solutions, and asset allocation advisory to individuals and institutions. Deutsche Bank Aktiengesellschaft was founded in 1870 and is headquartered in Frankfurt am Main, Germany.

Deutsche Bank Aktiengesellschaft Q4 2024 Earnings Call Transcript

Presentation

[Operator]

Ladies and gentlemen, welcome to the Q4 2024 Analyst Conference Call and Live Webcast. I'm Surgeon, the cross call operator. I would like to remind you that all participants will be in listen only mode and the conference is being recorded. The presentation will be followed by a Q and A session. The conference must not be recorded for publication or broadcast.

[Operator]

At this time, it's my pleasure to hand over to Johanna Patryniich, Head of Investor Relations. Please go ahead.

[Ioana Patriniche, Head of IR at Deutsche Bank]

Thank you for joining us for our Q4 and full year 2024 preliminary results call. As usual, our Chief Executive Officer, Christian Sewing, will speak first, followed by our Chief Financial Officer, James Von Macher. The presentation, as always, is available to download in the Investor Relations section of our website, dv.com. Before we get started, let me just remind you that the presentation contains forward looking statements, which may not develop as we currently expect. We therefore ask you to take notice of the precautionary warning at the end of our materials.

[Ioana Patriniche, Head of IR at Deutsche Bank]

And with that, let me hand over to Christian.

[Christian Sewing, CEO & Chairman of Management Board at Deutsche Bank]

Thank you, Johanna, and a warm welcome from me. Before we discuss our preliminary 2024 financials in detail, I wanted to offer you my perspective on 2024. This was a vital transition year for us, which has seen us deliver crucial building blocks in the transformation of our business model. We have moved past a number of legacy items, absorbing a series of non operating costs, predominantly litigation matters, which have masked the underlying strengths of our business. Our operating performance demonstrated execution against our plans, as our pre provision profit increased by 19% compared to 2023, if adjusted for certain specific items.

[Christian Sewing, CEO & Chairman of Management Board at Deutsche Bank]

Importantly, however, we are now set for a clean and significantly more profitable year in 2025 with the foundation now built for further improvements in the years beyond. Let me spend a bit more time talking through this turnaround work, which has resulted in a fundamentally different bank in terms of earnings power, in combination with a better risk profile and improved resilience, all of which are visible in our 2024 financials. Let's start with the top line. 1st and foremost, we have successfully positioned all our businesses to perform by strengthening our market position, reinforcing our focus on clients and working with deep dedication as their global house bank. Our business have clear momentum, which is visible through our revenue delivery of over €30,000,000,000 well above what we thought would be achievable when we first set our 2025 targets.

[Christian Sewing, CEO & Chairman of Management Board at Deutsche Bank]

And we are very pleased with the strong start of this year, which again demonstrates our clear franchise momentum. 2nd, on expenses, we delivered on our adjusted cost guidance of €5,000,000,000 each quarter when excluding the already guided exceptional items. We have continued to execute on our operational efficiency measures, which gave us room to make critical investments into business growth, technology and controls, while reducing redundancies in our cost base in line with our plan. We believe these investment decisions will strengthen our delivery in 2025 beyond. 3rd, importantly, we continue to improve our risk profile in 2024, which did come at a cost of €1,700,000,000 across 3 specific litigation items.

[Christian Sewing, CEO & Chairman of Management Board at Deutsche Bank]

And while these items, of course, impacted our reported results, moving forward, our position to deliver returns is not only strengthened for 2025, but also for future years, particularly given the supportive market backdrop for our businesses. Looking ahead,

[Christian Sewing, CEO & Chairman of Management Board at Deutsche Bank]

as

[Christian Sewing, CEO & Chairman of Management Board at Deutsche Bank]

we have continued to make conscious investments into our franchise, coupled with stickier inflation, we now expect to end 2025 with a cost income ratio of below 65%. We know we need to continue to focus on cost management in the near and medium term, and we have a clear management agenda to address this. Crucially, for this year, we expect to deliver strong positive operating leverage as we increase revenues by €2,000,000,000 year on year, while keeping adjusted costs flat. 4th, on distributions. We remain committed to capital returns.

[Christian Sewing, CEO & Chairman of Management Board at Deutsche Bank]

And today, we are announcing a €750,000,000 share buyback program in addition to a dividend per share of 0.68 euros in respect of 2024, which we plan to propose for approval at our Annual General Meeting. Together, this represents a total of €2,100,000,000 of capital distributions announced so far this year. As we have said before, we want to maintain a prudent approach to capital management and we will of course look to do more for our shareholders in line with our performance. Our strong CET1 ratio of 13.8% sets us up well for this heading into the rest of the year. And we remain committed to surpassing our total shareholder distribution target of €8,000,000,000 To summarize, 2024 has not been easy, but it was an important year for us as we took important management actions to secure our trajectory and cement our path to return on tangible equity above 10% for 2025.

[Christian Sewing, CEO & Chairman of Management Board at Deutsche Bank]

Beyond that, we have defined a clear management agenda for further developing our Global House Bank offering and sustainably increasing returns in 2025 and in the years thereafter. Let's now discuss each of these points in detail, starting with our operating momentum on Slide 3. We increased 2024 pre provision profit by 19% compared to 2023, if adjusted for 3 specific litigation items as well as the goodwill impairment in 2023. The specific litigation items in 2024 comprised the Postbank takeover litigation matter, elevated provisions for our Polish FX mortgages and the derecognition of the reimbursement asset for the Rus Chem Alliance litigation matter, which James will elaborate on further. Pre provision profit remained broadly stable on a reported basis as our operating strengths enabled us to absorb even large exceptional items.

[Christian Sewing, CEO & Chairman of Management Board at Deutsche Bank]

We have delivered sustained operating leverage of 5%, excluding the specific litigation items in 2024 and the goodwill impairment in 2023. Growth was driven by both revenue momentum and cost discipline. Revenues grow by 4% year on year, supported by our deep dedication and client engagement, and around 75% came from more predictable revenue streams in Corporate Bank, Private Bank, Asset Management and FIC financing. A well diversified revenue mix enabled us to grow through the interest rate cycle. Commissions and fee income increased by 13% year on year, in line with our strategy and driven by our strategic investments.

[Christian Sewing, CEO & Chairman of Management Board at Deutsche Bank]

Net interest income in key banking book segments and other funding outperformed our prior guidance and remained broadly stable year on year. Adjusted costs decreased 1% year on year to €20,400,000,000 or 2% to €20,200,000,000 excluding the pre guided real estate measures and U. K. Bank levy true up in the Q4. Excluding these items, we delivered 4 quarters of adjusted costs of around €5,000,000,000 in line with our plans.

[Christian Sewing, CEO & Chairman of Management Board at Deutsche Bank]

We have made steady progress on our efficiency program. This offset conscious investments in the franchise and inflationary pressures. We have now completed measures, which delivered our expected gross savings of €1,850,000,000 almost 3 quarters of our €2,500,000,000 goal with around €1,670,000,000 in savings already realized. As part of this program, we have removed 3,500,000 roads, primarily reducing non client facing roads, focused in high cost locations, while recent hires have been focused on technology and controls as well as revenue generating areas. Turning to Slide 4.

[Christian Sewing, CEO & Chairman of Management Board at Deutsche Bank]

Let us now look at the momentum we have created in each of our businesses against the goals set in 2022. At our Investor Day in March 2022, we set ambitious objectives for 2025. With 12 months to go, our business growth focused strategies are delivering strong results against these objectives. The Corporate Bank remains at the core of the Deutsche Bank franchise, and we have further enhanced its value proposition through a strengthening client franchise and investments in technology supported by our global network. As an example, incremental deals won with multinational clients have increased by around 40% since 2022.

[Christian Sewing, CEO & Chairman of Management Board at Deutsche Bank]

The division outperformed its revenue growth ambition despite normalizing interest rates and delivered a return on tangible equity of 13% in 2024, 3x its 2021 level. The Investment Bank is outperforming its revenue growth target and delivered a RoTE of 9% in 2024, cementing its position as a leading European Investment Bank. We are also particularly pleased we have outperformed the peer average for the full year as we continue to see our investments paying off. The business has demonstrated sustained revenue performance through the cycle since 2021, supported by further diversifying its income streams and increasing market share in Origination and Advisory by around 50 basis points in 2024. In fixed income and currencies, we have built strong market share and demonstrated sustained growth in financing, which is up 12% year on year in 2024.

[Christian Sewing, CEO & Chairman of Management Board at Deutsche Bank]

And we achieved significant year on year growth of over 60% in O and A in 2024 through considerable market share increases in a growing fee pool. Since 2021, the Private Bank created 2 distinct businesses to sharpen the commercial focus and to better serve clients' changing needs. We scaled up the Wealth Management franchise, successfully turning around profitability in core markets, while strengthening our number one positioning in Germany. In Personal Banking, we have launched a major efficiency transformation with a decisive review of our service model and branch footprint optimization. The business continues to leverage its leading market position with net inflows of €29,000,000,000 supporting non interest revenue growth of 5% last year in line with our strategy.

[Christian Sewing, CEO & Chairman of Management Board at Deutsche Bank]

Overall, the division grew revenues in line with Target since 2021. The business has made transformative efficiency gains since 2021, closing a further 125 branches in 2024, increasing the total to almost 400 closures since 2021, in addition to reducing full time employees by a further 1300 in 2024 alone. Looking at the 4th quarter more closely, adjusted costs were down 9%, reflecting delivery of savings despite ongoing inflationary pressures. Profitability and higher returns, especially in German Personal Banking, will remain top priorities, and we expect to deliver them via further streamlining of our branch network and the modernization of both our brands, while leveraging the synergies from our unified IT environment. In short, the private bank continues its path to sustainably transform the business, which we believe will translate into substantially better returns, which will be visible this year and beyond.

[Christian Sewing, CEO & Chairman of Management Board at Deutsche Bank]

Asset Management again grew assets under management in 2024 by €115,000,000,000 and surpassed €1,000,000,000,000 for the first time, boosted by net inflows of €42,000,000,000 into passive investments. Exceeding this mark shows the scale and competitiveness of our Asset Management division. Overall, the business demonstrated its strength and showed increased cost efficiency, leading to an RoTE of 18% in 2024. Driven by the benefits of higher AUM levels and revenue growth initiatives already in place, we expect the compound revenue growth rate in Asset Management to turn positive in 2025 and approach its original ambition. On Slide 5, let me now turn to the question why we feel confident in reaching our 2025 revenue growth ambitions.

[Christian Sewing, CEO & Chairman of Management Board at Deutsche Bank]

Since 2021, we have delivered a compound annual growth rate of 5.8%, in line with our upgraded target range. In 2025, we expect continued franchise momentum and our capital light businesses to drive further growth supported by our investments, increasing the revenue CAGR to around 5.9%. We have a clear road map towards our 2025 target. In the Corporate Bank, we expect revenues to grow by around 5.5 percent or €400,000,000 largely from scaling of commissions and fee income predominantly in trade finance and fee based institutional business and repricing of existing clients. Resilient net interest income will provide further support.

[Christian Sewing, CEO & Chairman of Management Board at Deutsche Bank]

Investment Bank revenues are expected to grow by around 8% as we see encouraging trends in the market, good levels of corporate activity and confidence, solid financing conditions and pent up private equity dry powder. The main growth driver is expected to be O and A with an increase in revenues of approximately €600,000,000 reflecting growth globally, but led by the U. S. We have positioned ourselves well to benefit from these trends and grow market share further, supported by our investments reaching their full potential. We also expect FICC to show continued growth in 2025, driven by ongoing strength and further focused investments in financing.

[Christian Sewing, CEO & Chairman of Management Board at Deutsche Bank]

We will continue to develop our wider platform in both existing and adjacent businesses with a focus on the U. S. And Flow Credit. In the Private Bank, we expect revenue growth of around €400,000,000 or about 4%, driven by higher NII from continued business volume growth and the deposit hedge rollover as well as growing non interest income, harvesting benefits from higher assets under management and growth in investment solutions. Finally, we expect asset management to grow by around €300,000,000 or 12.5%.

[Christian Sewing, CEO & Chairman of Management Board at Deutsche Bank]

We expect the business to benefit from the growth in assets under management during 2024 and a strong equity market development this year, which should boost management fees in 2025. We furthermore expect continued growth in passive, including X Trackers and in alternatives. These drivers underline our confidence in achieving our revenue goal of around €32,000,000,000 in 2025 before FX benefits. At year end FX rates, we expect this number to be around €32,800,000,000 Importantly, all divisions are contributing to the substantial growth From both non interest revenues and NII, which once again reflects our well diversified business mix, around 75% of this growth is expected to come from more predictable revenue streams. Let me now turn to costs on Slide 6.

[Christian Sewing, CEO & Chairman of Management Board at Deutsche Bank]

In 2025, our goal is simple: deliver a significant normalization of non operating costs and essentially flat adjusted costs despite our ongoing investments into growth. Moving past significantly elevated litigation and other restructuring charges in 2024, we are planning with a clear reduction of €2,100,000,000 in non operating costs this year. Turning to adjusted costs. Since we presented our ambitions for 2025 at our Investor Day in 2022, we have navigated dynamically through a volatile and fast moving environment. And this resulted in some additional costs as we choose to make investments in technology, controls and business growth and with inflation proving to be more persistent than anticipated.

[Christian Sewing, CEO & Chairman of Management Board at Deutsche Bank]

In respect of the additional investments, we have positioned the bank for sustainable growth in 2025 and beyond by investing into 2 key areas: firstly, growing our franchise beyond our original revenue ambition to better serve our clients and deliver higher rewards for shareholders secondly, expanding our initially planned mandatory and strategic investments into technology controls and regulatory remediation. In 2024, we hired 1300 technology specialists and added 400 targeted revenue generating roads supporting long term cost improvements and growth. In 2024 alone, we also invested a further €1,200,000,000 into controls, taking the total since 2019 to more than €6,500,000,000 Some of these additional expenses will stay with us this year. However, we expect to offset much of the impact through our cost measures in line with our plan, which we expect to yield further benefits in 2025 and beyond. Our optimization initiatives in Germany are expected to generate savings of close to €200,000,000 Investments to reduce the complexity of our organization by improving technology and optimizing the workforce across infrastructure are expected to deliver a further €300,000,000 An optimization of processes alongside better alignment of our front to back setup should deliver of our front to back setup should deliver another €200,000,000 Our initiatives include the previously announced closure of additional branches in 2025, the implementation of new branch formats as well as decommissioning of further applications or moving them to the cloud.

[Christian Sewing, CEO & Chairman of Management Board at Deutsche Bank]

The net effect is that we expect to hold our adjusted cost base flat year on year while reducing non operating costs significantly. James will detail the year on year cost walk later. This combined with the anticipated revenue growth of €2,000,000,000 we just discussed will create substantial operating As a result, we now target a cost income ratio of below 65% this year, marginally higher than our original target, though this will further support growth and business momentum in and beyond 2025. As I said earlier, this does not compromise delivery of our greater than 10% RoTE target or our plans for capital distributions. Let me now turn to this, starting with the path to our return on tangible equity target on slide 7.

[Christian Sewing, CEO & Chairman of Management Board at Deutsche Bank]

We remain on a clear path to achieve our RoTE target of above 10% in 2025 driven by focused execution across all three delivery pillars of our Global House Bank strategy. As you saw, we have a business by business road map to grow revenues to around €32,000,000,000 in 2025, in line with our target growth of 5.5% to 6.5%. Operational efficiencies play a key role in keeping adjusted costs flat in 2025 and thereby reducing total non interest expenses as non operating costs normalize. Capital efficiencies have delivered cumulative RWA equivalent reductions of €24,000,000,000 close to our end 2025 goal of €25,000,000,000 to €30,000,000,000 In the Q4 alone, we delivered €2,000,000,000 of RWA equivalent reductions driven by data and process improvements. We are confident, we will reach the upper end of our target range by year end 2025 through further securitizations and data and process improvements.

[Christian Sewing, CEO & Chairman of Management Board at Deutsche Bank]

Delivering on these pillars gives us a clear path to our RoTE above 10% in 2025. The non repeat of significant litigation items in 2024 gives us a starting point of an adjusted RoTE above 7%. Firstly, reaching our around €32,000,000,000 revenue goal is expected to add more than 2 percentage points to our 2025 RoTE. Around 20% of this growth is expected to come from an increase in net interest income by roughly €400,000,000 primarily due to the rollover of hedges. Another 40% or roughly €800,000,000 should come from higher non interest revenues from more predictable income streams, including from scaling actions and monetizing client relationships in the corporate bank or the spillover effect from higher AUM levels in Asset Management and Private Bank.

[Christian Sewing, CEO & Chairman of Management Board at Deutsche Bank]

The remaining revenue increase is expected to come primarily from market share expansion in a growing fee pool in O and A. From a regional perspective, we expect increasing revenues in the Americas, supporting by an improving market backdrop and reflecting our targeted investments, while further growth is expected to come from Asia and the Middle East as well as Germany. Secondly, we expect an additional contribution of around 60 basis points from the reduction in non interest expenses we just discussed. Together, this would bring us already to our targeted RoTE level. And finally, we expect a contribution of around 40 basis points from the reduction of credit loss provisions in 2025 towards more normalized levels, in line with our guidance with our Q3 results.

[Christian Sewing, CEO & Chairman of Management Board at Deutsche Bank]

All in all, we see a clear path to achieving our RoTE target of above 10%. Let me now discuss the implications for capital distributions. The value we have created for our shareholders is visible in the growth in tangible book value per share by more than 20% since 2021 to almost €30. This was driven by strong organic capital generation and greater capital efficiency, which supported both rising shareholder distributions and business growth. We have received regulatory approval for a share buyback of €750,000,000 Additionally and as guided, we plan to propose a dividend per share of €0.68 for 2024 at our upcoming Annual General Meeting in May amounting to a distribution of around €1,300,000,000 Together, these initiatives result in shareholder distributions of around €2,100,000,000 announced so far in 2025.

[Christian Sewing, CEO & Chairman of Management Board at Deutsche Bank]

The announced distributions in 2024 would bring cumulative capital return to around €5,400,000,000 since 2022, in line with our promise back in July 2019 when we announced our compete to win strategy. Looking ahead, our guidance for a dividend of €1,000,000 per share in respect of financial year 2025 would equal roughly €1,900,000,000 With that, modest additional share buybacks this year or next year would be sufficient to get our €8,000,000,000 target. However, we are committed to surpassing this target as we have said before. And it remains our priority to reward our shareholders in line with our performance and we are confident that we will continue to deliver rising distributions in the coming years. Before I hand over to James, let me give you a brief outlook on our next phase on Slide 9.

[Christian Sewing, CEO & Chairman of Management Board at Deutsche Bank]

With the end of 2024, the foundation of the Global House Bank has been laid successfully. And as you heard, we are set to deliver the return target we have set ourselves for this year, supported by the momentum and operating strengths of our franchise. And of course, the management team also looks beyond 2025 towards our longer term ambitions, and we are committed to step up. We are already implementing measures today to elevate Deutsche Bank's performance beyond 2025, which will make us a more profitable bank. This focuses on client work, our own operations and the way we work and lead.

[Christian Sewing, CEO & Chairman of Management Board at Deutsche Bank]

In short, we want to be even more dedicated to our clients' needs while continuing to embed our clear purpose in our daily activities. This will drive further revenue growth. We are determined to make this bank more efficient, and that means changing how we do things. It starts with a simpler organizational setup and a smaller workforce, and it requires to become even more technology driven, which will also enhance client experience. We will put full focus on the productive allocation of capital to improve shareholder value and further balance out our earnings profile.

[Christian Sewing, CEO & Chairman of Management Board at Deutsche Bank]

In the end, we aim to become a much more profitable bank overall than our 2025 RoTE target. Our management agenda for 2025 and beyond focuses on 3 key points: growing value generation reengineering our target operating model and stronger leadership. Firstly, we aim to further grow value generation for our shareholders by sharpening our focus on capital allocation and RWA optimization at both business and client level to boost returns. We see tremendous potential from further improving resource productivity across the portfolio via repricing and reallocating capital to high return franchises supporting further revenue growth. We plan to drive higher resource productivity through capital light origination, in line with our strategy and accelerated asset rotation.

[Christian Sewing, CEO & Chairman of Management Board at Deutsche Bank]

We aim to boost the profitability of lower return business through front to back efficiency improvements and be disciplined in redeploying capital elsewhere, including making exits if necessary. We have already started these reviews in some lending portfolios such as mortgages and are seeing benefits of these choices. Secondly, we plan to achieve the next phase of operational efficiencies beyond our €2,500,000,000 goal by reengineering our target operating model. Our clear ambition is to operate the bank with a lower headcount, and we aim to run a much leaner platform as our investments in technology automation and controls mature. We are tackling inefficiencies by giving business leaders more control over their cost base coupled with further front to end streamlining of processes.

[Christian Sewing, CEO & Chairman of Management Board at Deutsche Bank]

We plan to actively reduce management layers and roads and integrate Teams as part of our workforce optimization initiatives, in particular scrutinizing those areas where we do not see the required efficiency improvements. Thirdly, our management agenda emphasizes strengthening risk management and accountability and evolving our culture through a purpose led framework we call This is Deutsche Bank. With our investments, we are well positioned to grow the global housebound model, make it more efficient and generate more capital for deployment in the business and shareholder distributions. Our management agenda provides significant scope to further improve our return profile and deliver sustainably growing earnings beyond 2025, unlocking the full potential of this bank. We will provide you with more details on our aspiration and actions beyond 2025 over the course of this year, but our immediate focus remains on demonstrating disciplined execution.

[Christian Sewing, CEO & Chairman of Management Board at Deutsche Bank]

With that, let me hand over to James.

[James Von Moltke, President, CFO & Member of Management Board at Deutsche Bank]

Thank you, Christian, and good morning. As usual, let me start with a few key performance indicators on Slide 11. Notwithstanding the items in the Q4 that improve our risk profile, we maintained a level of resiliency we could not have shown a few years back, underscoring the successful transformation to date. Our capital position remained robust with the CET1 ratio at 13.8% at year end, despite absorbing the specific litigation items throughout the year and the capital deduction for the €750,000,000 share buyback announced today. Our liquidity metrics remain sound.

[James Von Moltke, President, CFO & Member of Management Board at Deutsche Bank]

The liquidity coverage ratio was 131%, in line with our target and the net stable funding ratio was 121%, at the upper end of our target range. Let me now turn to the Q4 highlights on slide 12. Group revenues were €7,200,000,000 up 8% on the prior year quarter. Provision for credit losses was €420,000,000 equivalent to 35 basis points of average loans, down €67,000,000 year on year. Non interest expenses were €6,200,000,000 up 14%, reflecting exceptional non operating and adjusted cost items.

[James Von Moltke, President, CFO & Member of Management Board at Deutsche Bank]

Non operating items were €945,000,000 in the quarter, including net litigation charges of €659,000,000 and restructuring and severance charges of €286,000,000 Adjusted costs were €5,300,000,000 including charges for optimizing the bank's own real estate footprint of €100,000,000 as well as a true up for bank levies in the U. K. Of €134,000,000 And despite the exceptional cost items, we generated a profit before tax of €583,000,000 and a net profit of €337,000,000 Our tax rate in the 4th quarter came in at 42%. Excluding the aforementioned litigation matters, the tax rate would have been 28%. We expect the 2025 full year tax rate to range between 28% 29%.

[James Von Moltke, President, CFO & Member of Management Board at Deutsche Bank]

In the Q4, diluted earnings per share was $0.15 and tangible book value per share was €29.90 up 5% year on year. Let me now turn to some of the drivers of these results and start with a review of our net interest income on Slide 13. NII across key banking book segments and other funding was strong at €3,300,000,000 up sequentially and broadly flat on the prior year quarter. Compared to the Q3, slightly higher deposit volumes, in particular overnight deposits, offset the expected beta convergence in the corporate bank. Private bank NII was up sequentially as we guided before and FICC financing continued to grow its loan portfolio with a corresponding increase in quarterly revenues.

[James Von Moltke, President, CFO & Member of Management Board at Deutsche Bank]

With that, let me turn to the full year NII trends and the outlook for 2025 on the next page. Given the stronger NII in the Q4, we outperformed our prior 2024 full year guidance of €13,100,000,000 reporting €13,300,000,000 across our key banking book segments and other funding. This is about €100,000,000 higher than 2023, reflecting the resilience of our NII even during an environment of falling rates and beta convergence. For 2025, we expect NII yet again to increase to around €13,600,000,000 a sequential increase of around €400,000,000 This is in line with our guidance provided last quarter, but reflective of the outperformance in the Q4. The key drivers of the rollover effect from our hedges supported by portfolio growth in the Private Bank, Corporate Bank and FICC financing.

[James Von Moltke, President, CFO & Member of Management Board at Deutsche Bank]

As a reminder, our hedge portfolio stabilizes our income by extending the tenor of interest rate risk, but it also protects us against a drop in interest rates. We provide further details in the appendix on slide 38. Based on forward rates at the end of December, we expect the income from the hedge book to grow by several €100,000,000 each year as we roll maturing hedges. In current rate conditions, we are more sensitive to the long term rate development and are less sensitive to short term movements in policy rates. Turning to slide 15, adjusted costs were €5,300,000,000 for the quarter.

[James Von Moltke, President, CFO & Member of Management Board at Deutsche Bank]

We've seen lower costs across all categories versus the prior year quarter and reduced adjusted costs excluding bank levies by 2% or €118,000,000 Bank levies were driven by the true up in the U. K. Of €134,000,000 In line with our guidance in earlier quarters, we managed adjusted costs excluding bank levies closer to €4,900,000,000 if adjusted for €100,000,000 from optimizing our own real estate footprint and the other unfavorable impact from exchange rate movements of around €60,000,000 We have included further details in the appendix on Slide 29. On a full year basis, adjusted costs excluding bank levies increased by around €100,000,000 on a constant FX basis as savings from streamlining our IT platform and lower spend for professional services were offset by higher costs for compensation and benefits driven by RAGE growth, higher performance related compensation and the impact from increased internal workforce. With that, let me turn to our cost guidance for 2025 on Slide 16.

[James Von Moltke, President, CFO & Member of Management Board at Deutsche Bank]

As Christian said earlier, a lot has happened since we embarked on our global house bank strategy in 2022. And while we have taken opportunities to not only create a more resilient franchise, but also to ensure that we are better positioned for sustainable growth, there have also been headwinds, which we have not been able to fully offset. Non interest expenses in 2024 included a number of specific items, which are either non recurring in nature or aimed at improving our risk profile and supporting target delivery in 2025. Total non operating costs were €2,600,000,000 driven by litigation charges for 3 specific items, which amounted to €1,700,000,000 Firstly, the POS Bank takeover litigation matter had a full year net impact of €906,000,000 reflecting the initial provision and the settlement agreements we entered into in the 3rd quarter. Secondly, the industry wide FX mortgage matter in Poland resulted in additional provisions of €329,000,000 in the 4th quarter to reflect our updated estimation of the impact of developments in the market.

[James Von Moltke, President, CFO & Member of Management Board at Deutsche Bank]

The total impact for the year was €500,000,000 And lastly, the RusChem Alliance litigation matter, which had an impact of €262,000,000 in the 4th quarter and affected the corporate bank. Recent developments led to the de recognition of a reimbursement asset as a recovery of the claim through an indemnification obligation could no longer be assessed as virtually certain. However, we believe we are in possession of a valid reimbursement claim and will vigorously assert our position. Other litigation charges of €366,000,000 were broad based across a number of smaller items. Additionally, restructuring and severance charges were elevated in the year at around €530,000,000 slightly higher than the €400,000,000 we initially expected for the year and included additional actions taken during the Q4.

[James Von Moltke, President, CFO & Member of Management Board at Deutsche Bank]

We made further progress, particularly in a private bank to support our strategic transformation, which is aimed at rationalizing our branch footprint in Germany, while improving the access to advisory solutions for our retail clients. Assuming a normalization of overall non operating costs, the non interest expense step off for 2025 would have been €20,900,000,000 For 2025, we expect overall adjusted costs to remain flat year on year at around €20,300,000,000 which translates to around €20,700,000,000 at year end FX rates. This is higher relative to our prior guidance, mainly driven by additional investments and business growth opportunities that we identified during our last planning cycle. These investments, particularly into our Corporate Bank and Investment Bank businesses, support our targeted revenue growth this year and position us for further growth beyond. We also see continued demand for control and remediation investments to ensure the bank fulfills all of its regulatory obligations and expectations.

[James Von Moltke, President, CFO & Member of Management Board at Deutsche Bank]

In line with our original target, non operating costs are expected to materially reduce to around €400,000,000 in 2025 as litigation and restructuring and severance charges normalize. As a result, non interest expenses in 2025 are expected to be around €20,800,000,000 resulting in a full year cost income ratio of below 65%, but delivering a significant implied operating leverage of 16%. The investments leading to a higher cost base will also support further operating leverage beyond 2025. In short, although the reported numbers for 2024 are higher than originally planned, Christian and I are encouraged regarding our trajectory going into 2025. Let us now turn to provision for credit losses on slide 17.

[James Von Moltke, President, CFO & Member of Management Board at Deutsche Bank]

In line with the guidance provided in October, full year provision stood at €1,800,000,000 equivalent to 38 basis points of average loans. Provisions were impacted by specific headwinds, including transitional effects from the Postbank integration, which continue to taper off, 2 relatively fast paced larger corporate events impacting provisions at a level unusual compared to historical standards and which were materially hedged, as well as a cyclically higher level of commercial real estate provisions, which we expect to decrease on a full year basis in 2025. You will find the full year update on transitory headwinds on Slide 42 of the appendix. When looking at the Q4, provision for credit losses was €420,000,000 or 35 basis points of average loans. As guided, the sequential decrease in provisions of €74,000,000 was due to a reduction of Stage 3 provisions as the corporate bank benefited from a larger recovery on a legacy workout situation.

[James Von Moltke, President, CFO & Member of Management Board at Deutsche Bank]

Investment bank provisions were lower benefiting from a further small reduction of provisioning levels in CRE. During the Q4, the bank completed the loan portfolio sale in the U. S. Stage 3 provisions decreased sequentially to €415,000,000 Provisions were mainly driven by the private bank, which included impacts from a small number of legacy cases in wealth management, as well as the investment bank where CRE remained the main driver. Stage 12 provisions were negligible as various portfolio effects were offset by slightly improved macroeconomic forecasts and overall recalibrations overlay recalibrations in the 4th quarter.

[James Von Moltke, President, CFO & Member of Management Board at Deutsche Bank]

Before we move on, a few remarks on asset quality. We maintain tight underwriting standards and continue to conservatively manage our loan book, including single name concentration risks through comprehensive hedging programs, with the total notional volume of hedges standing at €42,000,000,000 Our regular and comprehensive portfolio reviews show that overall credit quality remains stable and forward looking indicators such as rating migration and trends in our non investment grade portfolio as well as watch list ratios do not suggest a noteworthy deterioration in asset quality. We also see broadly stable developments in our domestic market as outlined on Slide 45 of the appendix and we are carefully monitoring the developments surrounding it. With that, let me turn to capital on Slide 18. Our 4th quarter common equity Tier 1 ratio came in at 13.8%.

[James Von Moltke, President, CFO & Member of Management Board at Deutsche Bank]

CET1 capital decreased primarily reflecting the deduction of the €750,000,000 share buyback from excess capital. As expected, market risk RWA decreased driven by SBAR and incremental risk charge from careful positioning into year end. The marginal increase in credit risk was driven by model changes, largely offset by reductions from capital efficiency measures. With respect to the CRR III go live effective January 1, 2025, our pro form a CET1 ratio was 13.9%, around 5 basis points above our ratio for year end 2024. However, the CRR III go live will also lead to around €5,000,000,000 of RWA equivalent impact from operational risk to come in the Q1.

[James Von Moltke, President, CFO & Member of Management Board at Deutsche Bank]

Hence, the total impact of CRR III is a CET1 ratio burden of around 15 basis points consistent with prior guidance. At the end of the 4th quarter, our leverage ratio stood at 4.6%, flat sequentially as the benefit from additional Tier 1 capital issuance in the quarter was offset by the CET1 deduction for the €750,000,000 share buyback announced today and FX effects. With regard to bail in ratios, we continue to operate with significant buffers over all requirements. In short, our capital position remains strong and already reflects our approved share buyback. And with that, let us turn to performance in our businesses, starting with the Corporate Bank on Slide 20.

[James Von Moltke, President, CFO & Member of Management Board at Deutsche Bank]

Corporate Bank revenues in the Q4 were €1,900,000,000 1% higher sequentially, driven by growth in deposit revenues from interest hedging and higher volumes offsetting ongoing margin normalization. In 2024, we have made good progress on our growth initiatives to offset the normalization of deposit revenues by further accelerating non interest revenue growth with 5% growth in commissions and fee income across all regions and a particularly strong contribution from our trade finance business. The deposit base remains strong throughout the entire year as deposits increased by €23,000,000,000 year on year, driven by higher site deposits in corporate treasury services and favorable FX movements. Provision for credit losses stood at €23,000,000 significantly lower driven by a larger recovery. Non interest expenses were higher driven by the Russ Chem Alliance litigation matter, while adjusted costs decreased by 6% year on year driven by lower direct costs and internal service cost allocations.

[James Von Moltke, President, CFO & Member of Management Board at Deutsche Bank]

This resulted in a post tax return on tangible equity of 7.1 percent and a cost income ratio of 81%. I will now turn to the Investment Bank on Slide 21. Revenues for the Q4 were 30% higher year on year on a reported basis with strong growth across the franchise. Revenues in fixed income and currencies increased by 26% with year on year improvements across all businesses. This represented the highest 4th quarter revenues on record.

[James Von Moltke, President, CFO & Member of Management Board at Deutsche Bank]

Financing revenues were significantly higher, reflecting strong fee income across the business, combined with an increased carry profile. Rates revenues were significantly higher, whilst credit trading, foreign exchange and emerging markets increased benefiting from heightened market activity and client engagement. Moving to origination and advisory, revenues were significantly higher both year on year and sequentially with market share gains across business lines in a growing industry field fee pool. Advisory revenues were significantly higher, reflecting material market share gains year on year in a static industry fee pool. Debt origination revenues also increased and reflected strength in leverage debt, driven by strong pipeline execution in an active market.

[James Von Moltke, President, CFO & Member of Management Board at Deutsche Bank]

Non interest expenses were lower year on year due to the non repeat of a goodwill impairment in the prior year quarter. Adjusted costs were essentially flat when excluding the increase in UK bank levies mentioned earlier. Loan balances increased compared to the prior year, driven by the impact of FX translation, combined with growth in financing. Provision for credit losses was €101,000,000 or 37 basis points of average loans, significantly lower year on year due to the non repeat of Stage 1 and 2 model related provisions in the prior year, while Stage 3 provisions also decreased. Let me now turn to Private Bank on Slide 22.

[James Von Moltke, President, CFO & Member of Management Board at Deutsche Bank]

Private Bank is making progress both in creating revenue momentum and putting transformation related costs and transitory credit costs behind us. Revenues of €2,400,000,000 in the quarter reflect non interest revenue growth of 6% year on year on the back of higher investment product revenues. NII declined by 5%, driven by continued higher funding costs from the impact of minimum reserves, the group neutral impact of certain hedging costs, as well as a benefit from episodic lending revenues in the prior year quarter. Excluding these effects, 4th quarter revenues in the private bank would have been up 6% year on year. Personal Banking revenues were impacted by aforementioned higher funding allocations and hedging costs, partially offset by higher deposit revenues.

[James Von Moltke, President, CFO & Member of Management Board at Deutsche Bank]

Wealth Management and Private Banking revenues were essentially flat as higher investment product revenues and lending growth was offset by the non recurrence of episodic lending revenues in the prior year. The business attracted net inflows into assets under management of €2,000,000,000 supported by deposit campaigns in Germany. Outflows in investment products were mainly driven by specific and isolated client transactions. As outlined in the Q3, we see cost savings coming through as the private bank continues its transformation with a further 74 branch closures in the 4th quarter, bringing the total to 125 this year and accelerated headcount reductions of more than 1300 FTE in the past 12 months, mainly in Germany. The substantial improvement in adjusted costs of 9% reflects the benefits from transformation initiatives and lower regulatory as well as client service remediation costs, which are now effectively behind us.

[James Von Moltke, President, CFO & Member of Management Board at Deutsche Bank]

Non interest expenses declined by 5% year on year, despite higher restructuring and severance costs. Provision for credit losses reflects continued workout activities on a small number of legacy cases in wealth management, while transitory effects from operational backlog are taping off as expected. The overall quality of our domestic and international loan portfolios remains solid. Let me now turn to asset management on slide 23, which reached a key milestone during the Q4 by surpassing €1,000,000,000,000 of assets under management for the first time. Scale is becoming increasingly important in this industry and for the DWS franchise, favorable market trends support our strategic positioning, especially given our strong position in passive products.

[James Von Moltke, President, CFO & Member of Management Board at Deutsche Bank]

My usual reminder, the asset management segment includes certain items that are not part of the DWS standalone financials. Profit before tax more than doubled from the prior year period, driven by higher revenues. Revenues increased by 22% versus the prior year. This was primarily from higher management fees of €647,000,000 from both active and passive products, driven by growth in average assets under management. Additionally, performance fees more than doubled from the prior year period, primarily due to the recognition of a substantial multi asset performance fee.

[James Von Moltke, President, CFO & Member of Management Board at Deutsche Bank]

Other revenues principally reflected a negative revaluation of the fair value of guarantees and lower investment income, partly offset by lower treasury funding costs. Non interest expenses and adjusted costs were both essentially flat compared to the prior year. Passive products continued their strong performance driven by X Trackers with a further €14,000,000,000 in the quarter contributing to €42,000,000,000 of net inflows for the year. Cash, alternatives, quantitative solutions and multi asset also achieved good results with combined net inflows of €6,000,000,000 more than offsetting net outflows in active equity and fixed income products. Assets under management increased by €49,000,000,000 in the quarter, driven by positive FX effects and net inflows.

[James Von Moltke, President, CFO & Member of Management Board at Deutsche Bank]

The cost income ratio for the quarter declined to 67% and return on tangible equity was 21%, both improving from the prior year quarter. This morning, DWS communicated its outlook for 2025 and introduced new medium term strategic targets, including 10% earnings per share growth per year from the starting point in 2025 to 2027. For further details, please have a look at the DWS disclosure on their Investor Relations website. Moving to Corporate and Other on slide 24. Corporate and Other reported a pre tax loss of €621,000,000 this quarter, driven by the provision increase for foreign currency mortgages of €329,000,000 resulting from updates to the provision model parameters to reflect impacts of recent developments in the estimated cost of the legal risk.

[James Von Moltke, President, CFO & Member of Management Board at Deutsche Bank]

This compares to a pre tax profit of €104,000,000 in the prior year quarter, which included a provision release of €287,000,000 relating to legacy litigation matters. Revenues were negative €99,000,000 this quarter, primarily driven by retained funding and liquidity impacts. This compares to negative €64,000,000 in the prior year quarter, with a decrease driven by valuation and timing differences, which were positive €87,000,000 in the quarter compared to positive €143,000,000 in the prior year quarter. Pre tax losses associated with legacy portfolios primarily reflect the aforementioned litigation matters. At the end of the 4th quarter, risk weighted assets stood at €34,000,000,000 including €13,000,000,000 of operational risk RWA.

[James Von Moltke, President, CFO & Member of Management Board at Deutsche Bank]

In aggregate, RWAs have reduced by €6,000,000,000 since the prior year quarter, mainly reflecting a change in the allocation of operational risk RWA. Leverage exposure was €38,000,000,000 at the end of the quarter, slightly lower than the prior year quarter. For 2025, we expect a significantly lower pre tax loss for corporate and other of approximately €200,000,000 per quarter or €800,000,000 for the full year, mainly reflecting the non recurrence of legacy litigation matters. As usual, this includes some uncertainty, particularly associated with the valuation and timing differences. Finally, let me turn to the group outlook on Slide 25.

[James Von Moltke, President, CFO & Member of Management Board at Deutsche Bank]

We believe we are on track to deliver increased revenues of €2,000,000,000 to achieve this year's revenue growth of around €32,000,000,000 which translates to around €32,800,000,000 at year end FX rates. We remain committed to rigorous cost management and will manage our cost base to a cost income ratio of below 65% for 2025. Although this is higher than the level we were previously aiming for, we feel good that the level of investment in 2025 positions us for incremental opportunities and higher returns over time, while also further improving our control environment. We continue to expect an amelioration of provision for credit losses in 2025 as the transitory headwinds we called out previously subside. This should result in a reduction to around €350,000,000 to €400,000,000 of average quarterly provisions with further normalization expected in the following years.

[James Von Moltke, President, CFO & Member of Management Board at Deutsche Bank]

Our strong capital position gives us a solid step off for our 2025 and 2026 distribution objective. We remain committed to our capital distribution target. The €750,000,000 share buyback announced today and a dividend of $0.68 per share, which we plan to propose at our Annual General Meeting, brings us to €2,100,000,000 of capital distributions so far this year. Our full attention remains on delivering an RoTE of above 10% in 2025 driven by continued revenue momentum, cost control and balance sheet efficiency. And these are the levers to also deliver further improved profitability beyond 2025.

[James Von Moltke, President, CFO & Member of Management Board at Deutsche Bank]

With that, let me hand back to Joanna and we look forward to your questions.

[Ioana Patriniche, Head of IR at Deutsche Bank]

Thank you, James. Operator, we're now ready to take questions.

[Operator]

Ladies and gentlemen, we'll now begin the question and answer session. And the first question comes from the line of Nicolas Payel from Kepler Cheuvreux. Please go ahead.

[Nicolas Payen, Equity Research Analyst at Kepler Cheuvreux]

Yes. Good morning. I have two questions, please. The first one would be on revenues. And could you elaborate on the bridge to the EUR 30 €2,000,000,000 of revenues target, please?

[Nicolas Payen, Equity Research Analyst at Kepler Cheuvreux]

And in particular, what gives you confidence that you can reach €32,000,000,000 and how the start of the year position you toward this target? The second question will be on share buyback. You previously alluded to a share buyback annual growth of roughly 50%, which would put you at €1,000,000,000 share buyback versus the €750,000,000 that you announced. So the question is, can we expect more throughout the years and at what point in time during this year? And also, what are the performance criteria that you're looking at to potentially announce more?

[Christian Sewing, CEO & Chairman of Management Board at Deutsche Bank]

Thank you, Nicolas. It's Christian. Let me start with your questions and then James can obviously contribute. Look, what makes us confident is, first of all, the overall positioning and foundation which we have built over the last 4 or 5 years as a Dobel Hausbank to our clients. The momentum, the development in all four businesses, feedback from clients, To be honest, in all the last 3 or 4 years, we not only met our revenue targets, but even exceeded that in the years, really makes me confident that from the offering we have, from the positioning we have, is actually the right starting point also for the next years.

[Christian Sewing, CEO & Chairman of Management Board at Deutsche Bank]

And that feedback, Nicolas, we get continuously back from our clients, be it institutional clients, corporate clients and private clients. And let me also say that in particular, the geopolitical items which we are facing in this world in this regard, to be honest, supporters, people want our advice. Corporates talk to us on their amended networks. So the mandates we get from the corporate side, from the institutional side is again something which really makes me confident and is on a level which we haven't seen before. Now to the bridge from €30,100,000,000 to be honest to €32,000,000,000 what makes me confident and how do we see that?

[Christian Sewing, CEO & Chairman of Management Board at Deutsche Bank]

I would really kind of divide that in 3 parts. Number 1, it's CHF 400,000,000 coming from NII, and that is obviously reflecting the hedging which we have already put in place. This will, in particular, come from the PB and the CB side. And on top of that, we see also the growth in our fixed financing. So that is approximately CHF 400,000,000 which we will see also the good work which we have done on the treasury side with our business.

[Christian Sewing, CEO & Chairman of Management Board at Deutsche Bank]

So that is locked in. Now the next thing is and we always talk about, so to say, the more predictable business, we see, in approximately €800,000,000 if not even a bit more from the more the private bank, asset management and the corporate bank. Now in those, you have approximately €400,000,000 from the corporate bank. That again comes from active repricing, monetizing our existing clients, scaling the business which we have invested in. If you look into our investment, which we have done in 2023, in 2024, but in particular looking at the investment plan for 2025, a high degree and partially the highest amount in those years and in particular in 2025 goes into the Corporate Bank to really scale up our offering.

[Christian Sewing, CEO & Chairman of Management Board at Deutsche Bank]

And you have seen the overall development of the Corporate Bank, which is at the core of our franchise. And therefore, I can see at least these CHF 400,000,000 of uptick in the year 2025. And again, if I look at the mandates which we are constantly winning how the year started, I'm very optimistic here. The other €400,000,000 is in particular coming from the PB and Asset Management side. And here, a lot of pre work has been done.

[Christian Sewing, CEO & Chairman of Management Board at Deutsche Bank]

I think in the prepared remarks, we talked about the growth in the assets under management on both sides, the Private Bank and the Asset Management side. So obviously, with the fees generated out of that, we will see higher returns. There is no drag on the NII side. I talked about the initial €400,000,000 So therefore, we can clearly see with the increased volume higher revenues. Last but not least, I also said that in the discussions before, which we had on a quarterly side, there is a lot of momentum also in Germany actually in the retail bank.

[Christian Sewing, CEO & Chairman of Management Board at Deutsche Bank]

I think Germany, one of the biggest problems and challenges we have is actually with our pension plans in the next years. And more and more, these are the discussions which we have with our clients. And again, then applying that to 15,000,000 post bank clients now being on our IT platform is a huge opportunity for us and Claudio is banking on that. That brings us those 2,000,000,000 to 1,200,000,000. So you are kind of at €31,200,000,000 €31,300,000,000 Where's the rest coming from?

[Christian Sewing, CEO & Chairman of Management Board at Deutsche Bank]

€500,000,000 to €600,000,000 in particular in the investment bank from the O and A business. I think James and I talked a lot about that over the last 18 months. We did on purpose the investments in the middle of 2023, not only Numis, but in particular also the hirings of senior directors in the Corporate Finance business. I think we could show with the growth rates in 2024 that this started to pay off. I'm really proud what Fabrizio has done in that business.

[Christian Sewing, CEO & Chairman of Management Board at Deutsche Bank]

Look at the Q4 numbers in the O and A business, we clearly outperformed the market. And I can see that this momentum is going on. So we believe that actually in the O and A market, we can increase our market share by approximately 50 basis points to approximately 3 percentage points. And then I also do believe that actually the fee pool, in particular, given what is happening in this world with the growth momentum we see in the U. S.

[Christian Sewing, CEO & Chairman of Management Board at Deutsche Bank]

Will be higher next year. But the real impact, the majority of the €500,000,000 to €600,000,000 is clearly coming from now that the investments are fully paying off and that we increase our market share. Now that already brings us almost very close to the €32,000,000,000 I haven't talked about the FICC business because obviously, in particular, rum is not standing still. We have done significant investments, in particular, in Latin America, but also North America in our business. Watch the credit trading business also with the recent hires, which we have done summer last year, and obviously, which we are paying off more and more.

[Christian Sewing, CEO & Chairman of Management Board at Deutsche Bank]

And therefore, I do believe that we have also a chance to grow there. So in this regard, I that is the bridge for us from €30,000,000,000 to €32,000,000,000 Obviously, the confidence level, which James and I have and Fabrizio and Claudio, is also sparked by a first good month. Now we know we cannot rest here. 1 month is 1 month. But the overall momentum in this bank to drive this, the feedback from the clients also last week in Davos is clearly telling me this is achievable.

[Christian Sewing, CEO & Chairman of Management Board at Deutsche Bank]

And I'm sure we can show you that already at the end of April. 2nd part on the share buybacks. Look, I do believe that James and I have also have always managed this bank in a prudent and conservative way, I. E, in particular to your question, €1,000,000,000 to €750,000,000 First of all, I'm really happy with the starting point in which we start into this measurement year of 2025, 13.8 percent capital ratio gives us actually the ammunition on the one hand to grow business and have the right resources. That's all in our plans.

[Christian Sewing, CEO & Chairman of Management Board at Deutsche Bank]

But at the same time, obviously, also reward our shareholders. With the €750,000,000 which we announced and we should not forget that the 50% increase in dividends, we actually announced to the market already a distribution of €2,100,000,000 for this year. I think it's a wonderful starting point. And actually, if you move that up, we are now at SEK 5,400,000,000. If we think about our path, which we gave to the market, in particular with regard to growing our distribution and also the dividends, and you apply the next increase on the dividends for next year, you are already very, very close to the €8,000,000,000 Now I think and that's what our approach is.

[Christian Sewing, CEO & Chairman of Management Board at Deutsche Bank]

Let us deliver on our business execution in the next month to deliver the 10% return on equity. Of course, we will review our distributions in the course of the year on the basis of our performance as at the end of the day we know that we also want to reward the shareholders. But I think it's a good and prudent start into the year. And let me end also with one thing, absolute confidence that we will do that what we promised to you to distribute more than SEK 8,000,000,000 in the years 2021 to 2025, including the payouts in 2016.

[Nicolas Payen, Equity Research Analyst at Kepler Cheuvreux]

Thank you very much.

[Operator]

The next question comes from the line of Anke Reingen from RBC. Please go ahead.

[Anke Reingen, Banks Analyst at RBC Capital Markets]

Yes. Thank you very much for taking my question. I just wanted to ask about the costs. Can you please talk a bit more about the increase in your guidance of the adjusted costs to SEK 20,300,000,000? I mean, how much of this is a function of your revenue expectations in 2025?

[Anke Reingen, Banks Analyst at RBC Capital Markets]

And how much is this reflecting future investments? And then on the how should we think about it at the divisional level on how the higher cost base comes through in terms of also in terms of the cost income ratio target and in comparison you previously provided cost income ratio target at your previous Capital Markets Day? And then just the 62.5%, is that now a target that's not in reach? Or is it remain a longer aspiration, something you might potentially discuss in the course of the year? And then last question.

[Anke Reingen, Banks Analyst at RBC Capital Markets]

I mean, obviously, this is a bit of a disappointment on the Q4 performance. What should give us the confidence that Q4 2025 doesn't give us a similar disappointment? And then that aspect, I think the non operating costs at the €400,000,000 look relatively low. So if you can give us a bit more confidence that really these costs, I mean, ignoring FX effects, you would be able to deliver them. Thank you.

[James Von Moltke, President, CFO & Member of Management Board at Deutsche Bank]

Thank you, Anke. It's James here. And you said lots to talk about, but all the right questions on the cost side for sure. So let me go in a little bit of a mixed order. On the non operating costs, look, start with restructuring and severance.

[James Von Moltke, President, CFO & Member of Management Board at Deutsche Bank]

We have a significant amount sort of, I don't know, practically all, but we've come such a long way in terms of the transformation of the company, that there is not a great deal left to do and we control that number. When I say not a great deal, there's still some work that Claudio and his team are doing on the private bank. You've seen that. But of course, we've taken some into Q4 to enable us to take some actions already in 2025. But for practical purposes, we're through the major transformation of the company.

[James Von Moltke, President, CFO & Member of Management Board at Deutsche Bank]

On the litigation side, the way I think about it is that there's a funnel of matters that can result in outflows in any given period of time. And that funnel is simply emptied. Now not in the right way, obviously in 2024, we had some surprises. And there can always be unknown unknowns. But of the known items, the funnel is simply empty or nigh unto empty and the risks that we can see are remote both in terms of time and likelihood.

[James Von Moltke, President, CFO & Member of Management Board at Deutsche Bank]

So we feel really good about the trajectory now on the normalization of non operating costs and that counts that goes for Q4 next year. Obviously, we have every incentive not to deliver another quarter in which there's a kind of a messy Q4, another year in which there's a messy Q4. If I go to the Investor Day numbers, and this goes all the way back to 2022, but there actually I see really good progress. So if I look to the business sort of plans for this year or the business cost income ratios in our plan, really encouraging progress. Now these weren't formal targets, but definitely a guide for you.

[James Von Moltke, President, CFO & Member of Management Board at Deutsche Bank]

And we see the both Corporate Bank and Investment Bank within the range. Corporate Bank may be towards the high end of the range, Investment Bank towards the middle of the range. And Asset Management also very, very close to the top end of the range. So really good progress in those businesses. The Private Bank, at this point will clearly be above the range.

[James Von Moltke, President, CFO & Member of Management Board at Deutsche Bank]

But actually, the underlying performance of the Private Bank is very encouraging. In absolute terms, they're coming in very close to what we had factored in at the time. But they're carrying the burden of really 2 things at some of where the incremental investment of controls and technology has gone in the years. And also as we've refined our internal cost allocations, you remember we've talked about driver based cost management, it's tended to be shifted some of the expenses to the private bank. So overall, we're encouraged by what we see.

[James Von Moltke, President, CFO & Member of Management Board at Deutsche Bank]

And there's still work to do. We don't think the trajectory for the businesses or the group ends with 2025. That gets me to your second to your third question, sorry. No, we're not cashiering the 62.5 percent forever. We think that the operating leverage that we've built and will continue to see in the company will take the cost income ratio further down in the years to come.

[James Von Moltke, President, CFO & Member of Management Board at Deutsche Bank]

And so we absolutely think that that is within reach of the firm, but not in 2025. And so that then gets you to what has driven the costs up to the our current view of 20.3 on the old FX. Look, it's a bunch of drivers. And again, cumulatively since the last Capital Markets Day, I would probably bucket it as a third, a third, a third. It's sort of €600,000,000 or €700,000,000 over that time, if you express it in cost income ratio terms.

[James Von Moltke, President, CFO & Member of Management Board at Deutsche Bank]

And about a third has gone into business investments, about a third into control and the further third into technology, if I give you rough numbers, probably a little bit more weighted towards technology in that math. Now you've seen us make those decisions and we as we said in the prepared remarks, we think they're the right decisions for the company. Controls are the license to operate and back in 2022, we relatively quickly recognized we needed more investment to close out the control improvements to meet our own expectations and those of the regulators. And that investment has continued. On technology, that's been sustained over the past several years.

[James Von Moltke, President, CFO & Member of Management Board at Deutsche Bank]

And as you know, our business very much competes on the technology that you can provide across a whole range of activities, including the client experience. And we think it's the right decision, therefore, to continue and sustain that investment. On the business side, this really goes back to the 2023 investment opportunity we saw, particularly in the investment bank at the time. And we like how that investment is paying off and will pay off in the years to come. And so it's if you like the cumulative impact of those things that have carried into the costs for this year.

[James Von Moltke, President, CFO & Member of Management Board at Deutsche Bank]

If you're in the deep detail of why now and what wasn't visible to us last year, look, as we went through a planning cycle, I would say in addition to all of the above, inflation has run maybe $100,000,000 expressed just in 25 terms, higher than we might have expected at the time. And as I say, so cumulatively, those are the drivers that have driven us to where we are now. Again, a lot of that has been offset by the very good work we've been doing under Rebecca's leadership on the efficiency program. And as Christian mentioned in his remarks, we've made enormous progress towards the $2,500,000,000 goal in terms of cost takeout and there is more to come thereafter because I said in the last call, it's like Peony and onion, we see more opportunity as we get deeper into the transformation and deeper into some of the process improvements that we make.

[Christian Sewing, CEO & Chairman of Management Board at Deutsche Bank]

Anke go ahead. Sorry, Anke, just I mean 100% support what James is saying. Just to reiterate that, that obviously below €65,000,000 is not our endpoint. And for that, I simply also wanted to refer to Page 9 of our prepared remarks, where obviously we are now thinking with all the investments we have done what the outcome is. That goes beyond the SEK 2,500,000,000 which Rebecca is managing.

[Christian Sewing, CEO & Chairman of Management Board at Deutsche Bank]

But also here on purpose, obviously, we gave you a little bit of an outlook. So clear dedication and goal by the bank to go

[Christian Sewing, CEO & Chairman of Management Board at Deutsche Bank]

lower.

[Anke Reingen, Banks Analyst at RBC Capital Markets]

Thank you very much.

[Operator]

The next question comes from the line of Kian Abouhossein from JPMorgan. Please go ahead.

[Kian Abouhossein, Analyst at JP Morgan]

Yes. Thanks for taking my questions. I just wanted to come back to the cost line. So we should really look at €21,200,000,000 I would say is more realistic number. And in that context, can you just tell us what it also means in terms of revenues impact?

[Kian Abouhossein, Analyst at JP Morgan]

Is it around, I guess, dollars 400,000,000 roughly as well or slightly more, I assume? And in that context, can you talk a little bit about your ambition in Mittelstand? And if you have factored anything for expansion Mittelstand considering there's clearly some opportunities in Germany with 2 banks potentially targets in terms of Mittelstand growth from your perspective? Flexibility on cost of asset before, but clearly, with the higher cost guide and that's a topic that we get a lot of questions on. If you can talk about flexibility in case you don't get the €32,000,000,000 plus.

[Kian Abouhossein, Analyst at JP Morgan]

And if I may just ask on last question on Page 9, on your return on, I guess, risk weighted assets or risk weighted asset by business where you give kind of the profit to risk weighted assets, very interesting chart clearly. And I'm just trying to understand what are the big buckets which we should look at in terms of underperforming businesses, so we understand what the opportunity is.

[James Von Moltke, President, CFO & Member of Management Board at Deutsche Bank]

Kian, thank you. Great questions again, lots to go through there. Let me start on the easy stuff, and I'll give Christian the harder questions. The FX impact, you're absolutely right to draw attention to it because what we wanted to do in our presentation was give you numbers that are consistent with what we've talked about for the past year. And hence, the presentation is largely is presented in what we would call Plan FX levels, where euro dollar was around $1.10 $1.11 and then we give you the translation into December FX, which was about $105,000,000 And so that difference creates on the revenue side, a number where 30 $2,000,000,000 translates to about $32,800,000,000 And on the expense side, as you say, dollars 20.8 translates to $21,200,000,000 In the relationship between euros and dollars, dollar strengthening actually helps our margin just a little bit.

[James Von Moltke, President, CFO & Member of Management Board at Deutsche Bank]

And here I refer to you to the currency breakout of revenues expenses on Page 36, where you can see that there's a little bit of asymmetry in dollar, euro where we have more revenues than expenses expressed in dollars and that drives therefore just a little bit of FX improvement on the margin. Now that relationship will change over the course

[James Von Moltke, President, CFO & Member of Management Board at Deutsche Bank]

of the year. So we'll continue to

[James Von Moltke, President, CFO & Member of Management Board at Deutsche Bank]

give you reporting that shows the year on year variances created by FX. One of the reasons that talking about absolute numbers is always challenging given that change. And just to complete the picture in case the question comes up, we do hedge the sterling risk. You'll see that there's also an asymmetry in sterling. We hedge that forward.

[James Von Moltke, President, CFO & Member of Management Board at Deutsche Bank]

It's rolling, so it's not forever, but that euro sterling currency differences don't really change the in year numbers a great deal. Kean, you had a follow-up?

[Kian Abouhossein, Analyst at JP Morgan]

No, I'm fine.

[Christian Sewing, CEO & Chairman of Management Board at Deutsche Bank]

No. Look, Kian, on the Mittelstand Germany sorry, it's Kian. I was on mute. On the Mittelstand Germany, very good question. Look, there are 3 or 4 areas where we are obviously enhancing our business and also making sure that our portfolio with the Mittelstand is not only growing, but that the profitability of that portfolio, like indicated by the way on Page 9, is further improving.

[Christian Sewing, CEO & Chairman of Management Board at Deutsche Bank]

Number 1, we are going through this portfolio also from an SVA point of view, clearly one where we can do better, where we have done already action. And in particular, Kieran, where our underlying process, which is also part of Page 9, I. E, how do we set up this bank front to back processes in the lending business, making sure that we don't have different processes for the various financing or payment flows that we are streamlining this. This is one area where actually a lot of investments of the corporate bank go in into the setup, into the platform, into streamlining the German setup. So it will add just from an efficiency point of view, we will see a very positive impact there.

[Christian Sewing, CEO & Chairman of Management Board at Deutsche Bank]

Number 2, of course, with the focus on the corporate bank in 2019, we also and I can say that here also with a little bit of pride, we absolutely regain credibility and trust in the German home market. And if I look at our market shares in not only obviously the DACHs company, but in the Mittelstand, be it the bigger family owned companies, the Mittelstand itself, but also in the small business areas, we have actually gained momentum. We increased the revenues because the clients are feeling that Deutsche Bank wants to do that business. That was different before 2018 and with the constant improvements also process wise, we obviously succeed. Thirdly, we have invested into our coverage.

[Christian Sewing, CEO & Chairman of Management Board at Deutsche Bank]

For Germany, if you want to really bank it in the best way, you need to be regionally. We have invested into our people here in order to make sure we have the right coverage. And firstly, yes, you alluded to that. Now obviously, I'm not talking in detail about that, but each situation in the industry is providing a huge opportunity. There is uncertainty in the market.

[Christian Sewing, CEO & Chairman of Management Board at Deutsche Bank]

You know what I'm talking about. And that obviously is a chance and opportunity for us. And we have started to work on this and I'm sure more to come. So Mittelstand, Germany is from a profitability point of view, efficiency point of view and from a growth absolutely a focus. And let me also say, because I'm sure I get the next question, but we are not doing that at any price.

[Christian Sewing, CEO & Chairman of Management Board at Deutsche Bank]

We also need to take into account the situation, the economy. And therefore, we will not alter our underwriting standards because that would bite us. And therefore, we keep the underwriting standards which we had. But doing this, we can see a clear growth here at home.

[James Von Moltke, President, CFO & Member of Management Board at Deutsche Bank]

Kian, maybe just very briefly on you're pointing to Slide 9, the chart on the right. It's what we can now work with over the next several years in a more fine tuned way than previously with each of the businesses looking at the drivers of their SVA or profitability against the resources that they deploy. It means we can grow revenues through things like repricing and just business growth. We can manage the expenses down, leveraging some of the tools we've built over the years, including driver based cost management. And we can also work with the businesses to reduce the capital burden.

[James Von Moltke, President, CFO & Member of Management Board at Deutsche Bank]

And there, the efforts we've gone to create resources efficiency on the RWA side is also helping. To give you an example of where we are using these tools to make decisions, we talked about the mortgage product and especially in our home market and the deemphasis over the past couple of years of that product. It's in part because at various prices, the product didn't meet its hurdles. Middle market lending equally in Germany is something we need to improve the profitability of. As Christian says, it's strategically critical, but it needs to sort of carry itself from a profitability perspective as well.

[James Von Moltke, President, CFO & Member of Management Board at Deutsche Bank]

There are other portfolios all around the company that we're working with the businesses very closely on and the level of engagement in this work is extremely high, which gives us a lot of optimism about how these levers can be pulled over the next several years to drive a very significant impact in bringing each of the units up and also the average.

[Kian Abouhossein, Analyst at JP Morgan]

Thank you.

[Operator]

Next question comes from the line of Thora Bockart from Barclays. Please go ahead.

[Flora Bocahut., Co-Head of European Banks Research at Barclays Investment Bank]

Yes, thank you. Good morning. The first question I wanted to ask is actually a clarification regarding the buyback, the EUR 750,000,000 that you announced today. Just to understand when you intend to launch that buyback? Are we talking just a few days?

[Flora Bocahut., Co-Head of European Banks Research at Barclays Investment Bank]

Or are we talking several months before this gets launched? And then on the questions, first, is actually coming back to the CET1 trajectory and distribution plans. And thank you, Christian, for clarifying how the performance is going to play into potentially more distribution. But I also wanted to draw the attention on the regulatory risk here because my understanding is that the Basel IV first time implementation is now expecting to cost you just €5,000,000,000 additional RWA, so not the €7.5 €1,000,000,000 that had initially been guided. Obviously, there is discussion ongoing on whether FRTB implementation in Europe is going to be delayed.

[Flora Bocahut., Co-Head of European Banks Research at Barclays Investment Bank]

I know no decision has been made yet, but assuming this would get delayed by another year, could that mean also upside risk to your distribution plans for 2025 beyond the actual performance itself? And then a word on provisions that we haven't discussed too much yet. I think the guidance you provide for 2025 points to €1,400,000,000 to €1,600,000,000 of provisions, consensus is right in the middle at €1,500,000,000 So just if you could discuss where's the risk on that number, whether to the upside or the downside? What gives you the confidence, the visibility on that number with a special word also, if you can, on the U. S.

[Flora Bocahut., Co-Head of European Banks Research at Barclays Investment Bank]

Commercial real estate portfolio, especially U. S. Offices after the Fed is more likely now to keep rates higher for longer? Thank you.

[James Von Moltke, President, CFO & Member of Management Board at Deutsche Bank]

Thank you, Flora. Also great questions. And for the others, I won't say great questions again. So don't be insulted if I don't repeat that. So briefly on the start of the buyback program, look, every year we start with the buybacks that offset employee share deliveries against previous year compensation.

[James Von Moltke, President, CFO & Member of Management Board at Deutsche Bank]

So it actually takes a little while until we complete that. And so we would only start the $750,000,000 once that is done. It takes a little bit of time, but we are in the market really for most of the Q1 with the former buyback. As is last was the case last year, I can see some of this amount slipping into the early part of Q3, but we would expect to get the bulk of it done earlier than that. On the I'll talk about the trajectory on CRR III.

[James Von Moltke, President, CFO & Member of Management Board at Deutsche Bank]

Look, it's more or less where we thought it would be. And yes, there are some bits still to come. So there's a bit of a round trip in the Q1, because in the technical details of CRR III, the op risk RWA doesn't hit you January 1, but only really March 31. But the net number of about 15 basis points down, there's a it's about 5 basis points up in our estimates on January 1 and then 20 basis points to come on oprisk RWA. There are some modest adjustments also in CVA and credit risk that come into it.

[James Von Moltke, President, CFO & Member of Management Board at Deutsche Bank]

That trajectory is encouraging, but as Christian says, we need to continue kind of seeing how the year develops to and actually the calculations are relatively new and fresh. And On FRTB, that is an opportunity. Naturally, we need to plan with the expectation that, that will be implemented in January of next year. And we would stick with the estimate of around 7 really $7,500,000,000 of impact in RWA from the 1st of the year, 2026. I think there's a decent likelihood it will be delayed just because I think we all believe and so do some of the legislators that creating a competitive disadvantage for the European banks in this area waiting until FRTB implementation comes to the United States and the UK would be unnecessarily damaging.

[James Von Moltke, President, CFO & Member of Management Board at Deutsche Bank]

And hence, we do think that's an opportunity and at a point in time where it's more certain it can enter into our capital trajectory and thinking. I would add that there are some other potential changes in our requirements going forward that can impact, say, MDA. And then lastly, on CLP, it's a relatively wide range. I think if you asked us today, we'd probably say closer to the top end of the range. Given that we still have to see, as you say, commercial real estate, the moderation take place, we're looking at the domestic middle market portfolio as we've talked about in the past in the economic environment that's still uncertain.

[James Von Moltke, President, CFO & Member of Management Board at Deutsche Bank]

But we do and hence the confidence about a non moderation, we do think we're at the back end of this credit cycle. So from what we see today, we're quite confident about the improvement. Dollars 1,600,000,000 so the high end would represent about 33 basis points, which as you know from our prior years and also prior guidance would be relatively at a higher end for us. But obviously, there's a lot still to kind of water to pass under the bridge between now and the end of the year. Hopefully, that covered all your questions, Flora.

[Flora Bocahut., Co-Head of European Banks Research at Barclays Investment Bank]

Yes. Thank you. Can I just clarify when you just said that the CLPs could be closer to the top end of the range, you mean EUR 1,600,000,000?

[James Von Moltke, President, CFO & Member of Management Board at Deutsche Bank]

Yes. Or the EUR 400,000,000 on a quarterly basis. Look, I think a little bit like last year, we would expect maybe to start the high the Q1 or 2 at the higher end and then ameliorate as the year goes by. Again, we'll have to see how that plays out both in each of the quarters and the year. Hence, we gave you quarterly guidance rather than the full year.

[James Von Moltke, President, CFO & Member of Management Board at Deutsche Bank]

But just the widest end of the range, therefore, is would be the ends of the range of 1.4 to 1.6.

[Flora Bocahut., Co-Head of European Banks Research at Barclays Investment Bank]

Okay. Thank you.

[James Von Moltke, President, CFO & Member of Management Board at Deutsche Bank]

Incidentally, actually just to come back on one thing, Flora, you're right, we looked at the consensus and really consensus is in line with our guidance and thinking on most line items and of which credit loss provisions is 1. Obviously, the cost is another prior to any adjustment for FX, as Kian pointed out, and the gap is really on revenues.

[Operator]

Next question comes from the line of Julia Aurora Muuto from Morgan Stanley. Please go ahead.

[Giulia Aurora Miotto, ED - Equity Research Analyst at Morgan Stanley]

Hi, good morning. Thank you for taking my questions. First, a clarification. James, I think I heard you saying potential changes in requirements that can impact the MDA. Can you elaborate on this?

[Giulia Aurora Miotto, ED - Equity Research Analyst at Morgan Stanley]

What did you mean? Did I understand you correctly? And then secondly, on the Private Bank on Slide 4, I appreciate you are on a journey, but still 5% ROE is still incredibly low. What for a retail bank in Europe, it should be at least double. What RoTE do you have in mind?

[Giulia Aurora Miotto, ED - Equity Research Analyst at Morgan Stanley]

And what concrete actions are you taking to significantly boost the RoTE here? Thank you very much.

[James Von Moltke, President, CFO & Member of Management Board at Deutsche Bank]

So, Julie, I'll start with the first on MDA and Christian will talk to the private bank. Look, MDA has gone up for us to around a little bit over 13.3%. And that therefore drives our views on the level of CET1 that we need to run at with an appropriate buffer against that. And of course, the 13.8% is a good place to be in that regard. There will be some changes as we talked about FRTB denominator impact, but also potentially some changes in MDA.

[James Von Moltke, President, CFO & Member of Management Board at Deutsche Bank]

One example would be our OSII positioning might take a year, but given our relative score in terms of G SIFINESS, call it, we would expect to be coming down in our GSIB over time, as an example. The second is inside our numbers, you have the mortgage sectoral buffer, which is already which is also impacting how we're capitalized. So what my point is that the level of capitalization that we operate at now and the gap to MDA that's implied by it, is a conservative point, let's put it that way, on both numbers.

[Christian Sewing, CEO & Chairman of Management Board at Deutsche Bank]

Sure. Thank you for your question. On the private bank, first of all, you're right. I mean, a 5% RoTE is obviously not sufficient at all. But therefore, we are doing this full transformation.

[Christian Sewing, CEO & Chairman of Management Board at Deutsche Bank]

And by the way, if we digest and really divide the private bank, the real challenge which we are working on is in Retail Germany. Now when you look at the levers, first of all, as I said at the start, we see a good revenue momentum in the private bank, by the way, also in Retail Germany. So overall, the private bank will grow by approximately SEK 400,000,000 year over year. Secondly, one of the largest cost takeouts also in absolute numbers is next year again in the private bank in Germany. Or that what James also said where we put restructuring costs for the further fallout, so to say, in a positive way from the IT technology transfer from Postbank to Deutsche Bank is paying off.

[Christian Sewing, CEO & Chairman of Management Board at Deutsche Bank]

So also there from a cost point of view, it's another and not only low three digit million number where actually Claudio is reducing costs in the private bank. And thirdly, James gave you another example from an RoTE point of view, we have certain portfolios or some portfolios in the private bank, where from an SVA methodology, we are simply not rewarding our shareholders and at the end of the day our capital in a sufficient way. And that is the 3rd lens where with repricing, but also with reallocating capital, we are improving the picture. One bit only that you also see there is full attention on and we are working on it. If you just look at Q4 2024 and you look at Claudio's private bank costs versus Q4 2023, we had a reduction of 9%.

[Christian Sewing, CEO & Chairman of Management Board at Deutsche Bank]

That shows you that there is full focus on that transition that we know we need to get the costs down. The plans are there, implementation is underway. But fortunately, it's not only that, it's revenues and SVA.

[Giulia Aurora Miotto, ED - Equity Research Analyst at Morgan Stanley]

Thank you. Can I just follow-up? What is the difference in ROE between Germany and the rest within the private bank?

[Christian Sewing, CEO & Chairman of Management Board at Deutsche Bank]

It's in particular from a legacy point of view, the structure of the platforms, the IT platforms we have. So as we did fortunately the transfer of the IT last year or in 2023 from Postbank to Deutsche Bank. We are again in a constant way obviously pulling off applications, closing applications. Then we have obviously from a simply location point of view, we have the largest number of branch closures. Obviously, also the largest numbers of people where we're streamlining the processes, going more into a digital offering, in particular in the retail bank, you see most of the transformation and also the efficiency gains in the private bank.

[Christian Sewing, CEO & Chairman of Management Board at Deutsche Bank]

So Germany in this regard from the legacy point of view system, location, branches, integration of Postbank is in this regard the one where most of the work is on.

[Giulia Aurora Miotto, ED - Equity Research Analyst at Morgan Stanley]

Got it. But I was wondering just the ROE number between Germany and the rest within the private bank?

[James Von Moltke, President, CFO & Member of Management Board at Deutsche Bank]

We don't publish that number, but I mean the wealth management and personal banking and private banking is double digits. So it is we can definitely converge into well into the double digits as we address the issues that Christian just alluded to in the German retail personal banking segment.

[Giulia Aurora Miotto, ED - Equity Research Analyst at Morgan Stanley]

Thank you.

[Operator]

The next question comes from the line of Chris Hallum from GS. Please go ahead.

[Chris Hallam, Managing Director at Goldman Sachs]

Yeah, morning, everybody. Just 2, I guess, sort of modeling questions left for me. Firstly, on the growth in FICC. So if I take the guidance, the CHF 200,000,000 or so growth that you're guiding to for FICC in 2025, how does that shake out in terms of financing versus non financing? If I look at the solid performance in Q4 financing revenues, if I just sort of run rate that through 2025, that's obviously imperfect, but that would sell for effectively all of the €200,000,000 increase year over year in the guidance.

[Chris Hallam, Managing Director at Goldman Sachs]

So just any kind of color you can give in terms of Fit growth on a line by line basis? And then secondly, deposit growth was quite strong in the private banking Q4. So what are you assuming in terms of deposit growth in 2025 within that $300,000,000 banking NII guidance? Thank you.

[James Von Moltke, President, CFO & Member of Management Board at Deutsche Bank]

So Chris, the FICC financing revenues are in the more predictable revenue stream buckets. So the 40% in Christian's Slide 7, so contributing to that 800,000,000 dollars Thick markets to your point would be the $200,000,000 or $300,000,000 of contribution in what we characterized as the remaining revenue streams. In thick financing, however, there's as you know, it splits between carry and revenues. We're quite encouraged given the 12% growth we had now just in the Q4 about our ability to continue growing that revenue stream. So it should do at least 100,000,000 dollars maybe some more in NII and then earn additional fees, I would think fee growth.

[James Von Moltke, President, CFO & Member of Management Board at Deutsche Bank]

But just to clarify, in the buckets, the rest of FICC Markets, so rates, credit and emerging markets would and FX would be the balance of the remaining revenue stream number. In terms of deposit growth, we've seen quite strong deposit growth. And actually what's been encouraging is it has shifted back into site deposits from term. And that's, as we talked about, being helpful for the margin on the deposit side. We are expecting considerable growth in both of the deposit businesses in 2025.

[James Von Moltke, President, CFO & Member of Management Board at Deutsche Bank]

I can't give you precise numbers. But we see liquidity in the marketplace and the ability to put on liabilities at attractive prices and SBA. The one caveat I do want to mention though is we talked last quarter about a couple of relatively concentrated deposit levels. So we're sort of as those wind down, we are offsetting the runoff of a couple of concentrated deposits and hence you'll see the net of those 2 in the numbers over the course of the year. Also Q4, as we had a year actually 2 years ago, represents a relatively high print.

[James Von Moltke, President, CFO & Member of Management Board at Deutsche Bank]

So I would see us sort of recovering to the Q4 level over the course of Q1, maybe into Q2, and then more of that growth flowing through into the back half of the year.

[Chris Hallam, Managing Director at Goldman Sachs]

Okay. That's very helpful. Thank you.

[James Von Moltke, President, CFO & Member of Management Board at Deutsche Bank]

Thank you, Chris.

[Operator]

The next question comes from line of Stefan Starmart from Autonomous. Please go ahead.

[Stefan Stalmann, Partner at Autonomous Research]

Yes. Good morning. Thank you very much for taking my questions. I would like to start with a strategic question, please. There's quite a lot of M and A activity these days in European Asset Management between P&P and AXA and Natixis and Generali.

[Stefan Stalmann, Partner at Autonomous Research]

Does that change anything in the way that you look at your Asset Management strategy, please? And then would you be willing to consider M and A here? And then just 2 number questions, please. The first on market risk weighted assets. From what you say about the trajectory in the Q4, it seems that your market risk weighted assets must now be around €19,000,000,000 or maybe even a bit lower, which I think is the lowest level since you started disclosing this.

[Stefan Stalmann, Partner at Autonomous Research]

Is there any possibility that this is snapping back? Or is there something more structural at work here? And finally, you mentioned not only this time, but also previously that you have benefited from credit hedges. So some of your credit loss provisions have been offset by revenue elsewhere. Can you maybe give us a rough sense of how much revenue was actually generated from these hedges in 2024, please?

[Stefan Stalmann, Partner at Autonomous Research]

And in which line items and which revenue line items we would find them? Thank you.

[James Von Moltke, President, CFO & Member of Management Board at Deutsche Bank]

Thanks for the question, Stefan. Just briefly, we love our asset management business. We think DWS is really well positioned in today's markets. And having now exceeded the €1,000,000,000,000 or dollar level, we can see that it has scale and profitability and also growth prospects. And so while we obviously see what's going on strategically in the market around us, we think we're well positioned.

[James Von Moltke, President, CFO & Member of Management Board at Deutsche Bank]

On the market risk RWA side, you're absolutely right, dollars 19,000,000,000 is correct and it represents a relatively low level. Two reasons, one is year end is often just like seasonally below. And secondly, you will have seen in the VAR numbers relatively low VAR, some of which reflects the volatility in the market and not so much the book. And hence, we would expect some amount of recovery, if you like, or an increase in market risk RWA during the course of the year. As it relates to the credit hedges, I'd need to double check the number, but it's sort of orders of magnitude around 100 $1,000,000 a little bit more I think in the businesses, mostly reflected in remaining income in the businesses and some in interest income.

[James Von Moltke, President, CFO & Member of Management Board at Deutsche Bank]

So a bit of a split depending on whether you see it in the investment bank or the corporate bank. And those hedges, we've talked about, I think, dollars 42,000,000,000 of total sort of, if you like, hedges, those hedge volumes, we well, we'll look to grow from here given what we said about SRTs and the market availability. But these are ongoing programs that we have. So you can assume that that type of protection and probably growing from here. Going forward, we manage concentration risks as well as capital usage with those instruments.

[Stefan Stalmann, Partner at Autonomous Research]

Great. Very helpful. Thank you very much.

[Operator]

The next question comes from the line of Andrew Coombs from Citi. Please go ahead.

[Andrew Coombs, Analyst at Citigroup]

Thanks for taking my questions. I have 2, please, both follow ups. Firstly, you said that there were 2 key areas of investment in your earlier commentary. 1 was the tech controls and remediation. The other was growing the franchise beyond the initial revenue ambitions.

[Andrew Coombs, Analyst at Citigroup]

And I think you have given a few points of where that has been over the course of the call, but perhaps you can just give more granular examples of which areas you have expanded beyond your initial ambitions? And given you haven't changed the revenue guidance for 'twenty five, but you have the costs, what is the payback period on those investments? Do you think you're going to see that come through in 'twenty six, 'twenty seven? That would be useful. And then my second question is just on that revenue bridge.

[Andrew Coombs, Analyst at Citigroup]

Thank you for the very granular answer you gave earlier around the core divisions and see how that adds up to €2,000,000,000 But at the same time, James also gave guidance on the Corporate Center for a €200,000,000 loss per quarter, which would seem to suggest you would have much lower revenue contribution from the corporate center given how much that contributed in Q2 and Q3 of 'twenty four. So what's the offset there? Thank you.

[James Von Moltke, President, CFO & Member of Management Board at Deutsche Bank]

Thanks, Andrew. I think it was slightly distinct of the line, but I hope I caught everything. So in reverse order, the corporate center and I think something interesting to point out on Page 5 of the deck, we talked in earlier quarters that there can be some volatility that's created by the corporate center. But I'd said at the time that it ultimately it typically nets to 0 over the course of the year. And that was the case in 2024 and we expect it to be the case in 2025.

[James Von Moltke, President, CFO & Member of Management Board at Deutsche Bank]

So at the very bottom of the chart on the left, you can see that's our current expectation. But some of it is hard to predict given, for example, valuation and timing differences are market related. But hopefully, that's a good indication. On the cost side, the walk I gave earlier to I say it was about a third of each of business investments technology and controls was sort of a multiyear view, going from our last Investor Day. More recently, what has been the places where we've put additional investment?

[James Von Moltke, President, CFO & Member of Management Board at Deutsche Bank]

I'd say, the Corporate Bank, probably the first destination in terms of some plans that we'd actually been working on for some time, but now have decided to implement, which is actually relatively broad based in the Corporate Bank, but as an acceleration of some hiring and also technology investments that David Lin and his team have identified and are ready to execute and have begun the execution of. In private bank, there are some technology investments that we had been kind of waiting to make decisions on, but feel are important to make, again, to keep pace with the industry where as you can all see in your own, I'm sure personal lives, there's a bit of an arms race going on in terms of the capabilities for digital banking, as well as some of the physical infrastructure there. And then a little bit sort of a reacceleration of hiring on the RM side in that business. And then lastly, we've talked about O and A. I think we've largely completed the build out in O and A, but there are a handful of additional hires that we've made and we've talked about also on the FICC market side, again, all of which we see as supportive of revenue, not just in 2025, but in the years beyond.

[James Von Moltke, President, CFO & Member of Management Board at Deutsche Bank]

And so I just do want to emphasize that management's decision making as we went through this most recent plan cycle has been not just about supporting performance in 2025, but making sure we're building the company to be sustainably profitable and growing in profitability in the years beyond, which actually one last thing to say, we look also at the 26 consensus where as you can imagine from the chart, especially Christian's Page 9, you can see an even greater divergence between what we believe the trajectory of the company is and what is currently in the consensus.

[Operator]

Mr. Combs, your line is still connected.

[James Von Moltke, President, CFO & Member of Management Board at Deutsche Bank]

Sorry, that last comment was indistinct. Can you repeat?

[Andrew Coombs, Analyst at Citigroup]

I don't think the last comment can be made. I'll just say thank you. Everything is in the upper right.

[James Von Moltke, President, CFO & Member of Management Board at Deutsche Bank]

Andrew, thank you. Much appreciated for your question.

[Operator]

The next question comes from the line of Jeremy Siggy from BNP Paribas Exane. Please go ahead.

[Jeremy Sigee, Analyst at BNP Paribas]

Thank you. I'll make it quick. Just on your ROE target, you're making the same ROE with heavier costs. I guess the offset is the balance sheet efficiency. So effectively, less profit but less capital.

[Jeremy Sigee, Analyst at BNP Paribas]

Is that the right way to think about the maths on that? And then secondly, we talked about in an earlier question the possibility of delaying FRTB and Basel IV implementation. Do you worry about the risk that the U. S. Actually cancels it or dilutes it completely?

[Jeremy Sigee, Analyst at BNP Paribas]

Would that leave you at a competitive disadvantage? Or is this now quite marginal for you as well?

[James Von Moltke, President, CFO & Member of Management Board at Deutsche Bank]

FRTB, well, sorry. FRTB, look, we're there are a number of different aspects of FRTB, how many portfolios you put in standardized versus modeled, how the models work and of course, when it's implemented. You have to assume that FRTB, once implemented, will be relatively sort of consistent across the world. That's not a given necessarily, but it's a major assumption that we need to make. But so yes, what we are concerned about is a disadvantage, competitive disadvantage if it's implemented in Europe only and not in the UK and the U.

[James Von Moltke, President, CFO & Member of Management Board at Deutsche Bank]

S. That's a situation that would create a significant sort of disadvantage for us.

[Christian Sewing, CEO & Chairman of Management Board at Deutsche Bank]

But let me just chime in there. First of all, it was a good sign and good decision that there was a postponement by 1 year. Actually, the level of attention at the EU Commission when it comes to FRTB and providing a level playing field is higher than ever before. It's clearly on the agenda, not obviously of the banks, but also of the EU Commission. So obviously, I don't know whether at the end of the day, it will be implemented here and not in the U.

[Christian Sewing, CEO & Chairman of Management Board at Deutsche Bank]

S. But at least we have, in my view, a completely level of attention at the EU Commission to listen to us and to make sure that the level playing field is not lost on that point.

[James Von Moltke, President, CFO & Member of Management Board at Deutsche Bank]

And to your first point about capital, yes, capital efficiency has certainly helped. I mean, it's a walk of revenues where we're significantly higher than where we expected to be when we did the IDD with you. Actually credit costs at this point in the cycle also higher than where we expected to be. Costs we've talked about and capital is more efficient. I will say AT1 coupons higher than where we'd assumed as well.

[James Von Moltke, President, CFO & Member of Management Board at Deutsche Bank]

So there are a number of different moving parts from the Investor Day 2022 that we can trace through, but the capital efficiency was certainly a supportive lever.

[Operator]

The next question comes from the line of Nimes from UBS.

[Mate Nemes, Equity Research Analyst at UBS Group]

Two quick questions from my side. I wanted to come back to Slide 16 and specifically look at the €900,000,000 in investments in inflation. I was wondering if you could split that €900,000,000 to mandatory investments, it's regulatory or those you feel clearly necessary in the tax stack? You mentioned perhaps the private bank. And some of the discretionary investments into growth, be it the corporate bank, be it the IB.

[Mate Nemes, Equity Research Analyst at UBS Group]

That's number 1. Number 2 is on loan growth. It seems like you're seeing some improvement in period end loan balances, both in the Corporate Bank and also in the Private Bank. Could you talk about what you're seeing in your business? Is this just a blip?

[Mate Nemes, Equity Research Analyst at UBS Group]

We shouldn't read too much into it. Or is this perhaps the start of a turning point? Thank you.

[James Von Moltke, President, CFO & Member of Management Board at Deutsche Bank]

So, Mate, the simple answer to your question is regulatory or sort of controls remated costs are most of, I'll call it, dollars 200,000,000 year on year in the sort of mandatory bucket. And then there is some additional expense that are still around remediation control improvements that we would see as not mandatory and where there would be some flexibility potentially to push out in time. So a reasonably considerable amount of pressure coming from that. I mentioned inflation, the $100,000,000 of inflation above our expectations sits on top of inflation that has been running sort of $300,000,000 to $400,000,000 for the past several years. So there's a considerable headwind from those two items.

[Christian Sewing, CEO & Chairman of Management Board at Deutsche Bank]

And on the financing side, we have seen the FICC financing, as also mentioned by James before, was actually a nice level of increase over 2024. We actually also see that going forward. That's clearly a business which we want to grow, I think, where we have competence like almost nobody else. And given also the international focus on this business, it's clearly growing. On the CB and PB side, slightly down, excluding FX.

[Christian Sewing, CEO & Chairman of Management Board at Deutsche Bank]

Now on the private banking side, it is also an effect of that what we discussed before, I. E, the SBA methodology that we are not entirely happy with all sub segments of that portfolio. James mentioned the mortgage portfolio where we on purpose actually said we don't want to allocate that much capital. Obviously, also the interest rate development in the run up to 2024 is obviously then also curbing demand a bit in Germany. And on the mid cap side, at the end of the day, you see in this regard a little bit of 2 different speeds.

[Christian Sewing, CEO & Chairman of Management Board at Deutsche Bank]

If you look at the loan demand of German corporates for investing in Germany, it's down. It's clearly down and that's also something which hopefully will be addressed when we talk about structural reforms which are needed in Germany. But the other hand is that also German corporates actually taking investments in order to invest internationally, that's clearly up. And that is again something where obviously we can position ourselves given our global approach.

[Mate Nemes, Equity Research Analyst at UBS Group]

Thank you. Very helpful.

[Operator]

The Next question comes from the line of Tom Helt from KWA. Please go ahead.

[Thomas Hallett, Director at Keefe, Bruyette & Woods (KBW)]

Hi, guys. Thanks for taking my questions. Firstly, I suppose, I would have thought confidence around the $32,000,000,000 guidance would have increased, given kind of what we've seen year to date and then steepening yield curve. So was there a temptation to raise that $32,000,000,000 target by any chance? And then secondly, on Slide 9,

[Thomas Hallett, Director at Keefe, Bruyette & Woods (KBW)]

your aspiration

[Thomas Hallett, Director at Keefe, Bruyette & Woods (KBW)]

is meaningfully above 2024 level, okay? And I just kind of want to know what the drivers of that would be. Should I be splitting that between half profit, half kind of RWA optimization? How should I think about that? Thank you.

[Christian Sewing, CEO & Chairman of Management Board at Deutsche Bank]

Look, Tom, let me take the first question. Look, my our confidence in the €32,000,000,000 obviously with the delivery of Q4 and the momentum we see also what we have seen in January has increased that we will meet that. But I think it's not the time now to further raise it. I think it is that what we have done before on revenues. We give you a number.

[Christian Sewing, CEO & Chairman of Management Board at Deutsche Bank]

We have full confidence in it and now we have to deliver. And it's all about execution. But in that execution capacity, again, how our businesses are positioned, I have full confidence. But at this point in time, I think we should first now deliver Q1 and Q2, and then we can talk about anything else.

[James Von Moltke, President, CFO & Member of Management Board at Deutsche Bank]

Just in terms of the line now, that chart on Page 9 is deliberately illustrative in part because with the business units themselves in terms of profitability and also capital usage are we don't disclose publicly. But you can work out the starting point average from our public accounts is about 1.5%, Given all that took place in 2024, we think there's scope to more than double that average level over the next couple of years. And so that is again underscores a little bit the confidence that we have about the trajectory going forward and the tools that we've built. Now some of that has to do with the costs, especially non operating costs from 2024 falling away, but a lot of it has to do with the levers for growth that Christian has talked about, steady kind of cumulative operating leverage across the businesses that we see. And then to your point, some amount of efficiency of the usage of the capital.

[James Von Moltke, President, CFO & Member of Management Board at Deutsche Bank]

We don't see RWA though declining from here. So I just want to emphasize the if you're at around about 360, over the years, we would give especially given CRR III and the other changes, that number would still grow by make up a number $20,000,000,000 even with the efficiencies that we're putting through. So it is a significant amount of impact from operating leverage over time and all the other levers we've talked about.

[Thomas Hallett, Director at Keefe, Bruyette & Woods (KBW)]

Okay. Thank you.

[Operator]

Ladies and gentlemen, there was last question. I would now like to turn the conference back over to Joanna Patrynich for any closing remarks.

[Ioana Patriniche, Head of IR at Deutsche Bank]

Thank you for joining us and for your questions. For any follow ups, please come through to the Investor Relations team and we look forward to speaking to you at our Q1 call.

Participants

Analysts

• Ioana Patriniche, Head of IR at Deutsche Bank
• Christian Sewing, CEO & Chairman of Management Board at Deutsche Bank
• James Von Moltke, President, CFO & Member of Management Board at Deutsche Bank
• Nicolas Payen, Equity Research Analyst at Kepler Cheuvreux
• Anke Reingen, Banks Analyst at RBC Capital Markets
• Kian Abouhossein, Analyst at JP Morgan
• Flora Bocahut., Co-Head of European Banks Research at Barclays Investment Bank
• Giulia Aurora Miotto, ED - Equity Research Analyst at Morgan Stanley
• Chris Hallam, Managing Director at Goldman Sachs
• Stefan Stalmann, Partner at Autonomous Research
• Andrew Coombs, Analyst at Citigroup
• Jeremy Sigee, Analyst at BNP Paribas
• Mate Nemes, Equity Research Analyst at UBS Group
• Thomas Hallett, Director at Keefe, Bruyette & Woods (KBW)