Deutsche Bank. environment. Chairman of the Management Board. Dr. Josef Ackermann. Deutsche Bank Investor Relations

Transcription

1 Responding to a challenging environment Chairman of the Management Board and the Group Executive e Committee Bank of America Merrill financial Lynch transparency. Conference London,

2 Agenda 1 A challenging environment 2 's response 3 Outlook financial transparency. 2

3 A challenging environment EU peripheral sovereign debt crisis Uncertain global economic recovery Dynamics in emerging markets Social unrest and political weaknesses Commodity price volatility financial transparency. 3

4 EU peripheral sovereign debt issues remain Public debt: High and rising Gross, in % of GDP, end of period Increase until 2012 Household indebtedness: A further challenge in certain key economies In % of GDP Greece Ireland Italy Portugal Spain Greece Ireland Italy Portugal Spain Source: Bank of Spain (Data as of June 2010), Bank of Portugal, (Data as of June 2010), Bank of England (Data as of September 2010), Bank of Ireland, (Data as of October 2010), Bank of Greece (Data as of October 2010), Bank of Italy (Data as of October 2010), IMF (Data as of October 2010), Eurostat financial transparency. 4

5 Continued solid global growth, but pace slowing down Downward revision of GDP growth forecasts in % June 2011 September 2011 Change of forecasts in ppt 2011E 2012E (0.2) (0.3) (0.5) (1.0) (0.4) United States Eurozone Emerging market World 2011 World 2012 Source: IMF World Economic Outlook financial transparency. 5

6 Emerging markets look resilient, but some risks on horizon Continued strengths... and emerging concerns + - Decoupling: EM growth broadly resilient since financial crisis Inflation: Increasing risk Hot money: Shifting from stable + Capital inflows: Strong and stable foreign direct investment (FDI) to volatile portfolio flows - + Bank capitalization and funding: High capital ratios; stable, depositheavy funding base - Credit quality / asset bubbles: Strong today, but losses may be looming financial transparency. 6

7 Civil unrest and political instability impacting oil prices, other commodities i similarly il l volatile Oil prices Metal and agriculture Price in USD Crude Oil Brent Crude Oil WTI Indexed, 1 Jan 2010 = Agriculture Precious Metals Industrial Metals Q 2Q 3Q 4Q 1Q 2Q 3Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q Source: Bloomberg financial transparency. 7

8 In addition to market uncertainties, banks face further sector specific challenges Growing capital and liquidity requirements Regulation Restrictions on banking business model and activities More constraining i accounting rules Balance sheet utilization Competitive dynamics Standardisation / commoditisation Scale and technology financial transparency. 8

9 Agenda 1 A challenging environment 2 's response 3 Outlook financial transparency. 9

10 's response Continue to execute our strategy Address emerging risks Increase CIB profitability with renewed risk and balance sheet discipline Focus on core PCAM business at home market leadership + Continue de-risking Focus on Asia as key driver of revenue growth Reinvigorate our performance culture Focus on capital and funding financial transparency. 10

11 Despite recent extreme market movements, CIB s recalibrated risk model has held up well Recent market movements vs. 4Q2008 VIX 60 5YR Corp. CDS spread Successfully recalibrated CIB business model Substantially reduced stress loss (1) 10 YR Treasury yield H 2H H 2H H 2H H 2H H 2H H 3Q 2011 (1) Estimated maximum traded market risk loss on a return to 4Q2008 conditions over a quarter, including offsetting revenues across businesses Source: Bloomberg financial transparency. 11

12 CIB has a strong and diverse client-focused franchise but is relatively l more exposed to a slowdown in Europe Top-3 position in 50% of markets Number of markets where DB ranks top 3, (1) 2010 / 2011 but more exposed to Europe FY2010 % of Sales & Trading revenues from Europe Bank A % 43% 42% Bank B 24 33% Bank C 23 29% 29% Bank D 19 24% 23% 19% Bank E Bank F Bank G Bank H 12 Bank B Bank F Bank D Bank C Bank H Bank E Bank A Bank G Note: Peers include Barclays, BoA, Citi, CS, GS, JPM, MS and UBS. Source: Greenwich Associates, Euromoney, Coalition Development (1) Top 3 rankings counted for each product and major region (Americas, Europe, Asia ex Japan, Japan). Products include a wide range of fixed income, equities and corporate finance products. Rankings generally on the basis of client market share, penetration or fees. Total of 73 markets analysed. financial transparency. 12

13 On track to deliver synergies from integration, but environment necessitates further cost control On track to hit CIB synergy target In EUR m 2011 synergy target 2011 target achieved 1H2011 actual in 1H % Future CB&S restructuring measures Significant unabating slowdown in client volumes and ongoing economic weakness 36% 58% While there is no overall change in strategy, further cost control necessary (1) ~125 Cost synergies ~175 Revenue synergies 500 ~275 IBIT (2) We will implement a ~500 net onshore CB&S headcount reduction during 4Q2011 1Q onshore headcount will be 11% lower than peak in 2010 (1) Excludes costs to achieve of EUR 150 m (Note: Total run-rate rate savings of EUR 500 m) (2) Includes costs to achieve of EUR 150 m for 2011 target, EUR 25 m for 1H2011 financial transparency. 13

14 Our strategy in classic banking pays strong dividends Classic banking contribution Reported NIBT in EUR m 429% 105% AWM PBC GTB 2,211 Growth 1H2009-1H % Significantly strengthened franchise GTB Strong performance across all major products Fee income remains robust and leading market position maintained #1 position in EUR clearing #5 in USD clearing (4) 158% 1,077 (3) 1, % PBC Firmly established in the European Champions League Transformed from outside of Top 10 to #6 in Europe amongst retail franchises 418 (1) H2009 1H2010 1H2011 (2) n.m. (1) AWM not shown due to negative NIBT contribution of EUR (258) m (2) Includes EUR 208 m negative goodwill from the commercial banking activities acquired from ABN AMRO (3) Includes EUR 236 m net HuaXia one-off gain (4) CHIPS, June 2011 Source: Company data AWM Turnaround in asset and wealth management Strong asset gathering momentum 6 th largest invested asset base amongst global integrated banks Reaping benefits from transformed classic banking financial transparency. 14

15 Significant investments in classic banking businesses starting to yield strong benefits In EUR bn Run-rate synergy target Timing Price paid Synergies 1H2011 actual Target achieved in 1H2011 Postbank PBC (1) >1.0 12% Sal. Oppenheim PWM ~0.2 45% ABN Amro 0.7 Netherlands ~0.1 GTB 19% Total 7.6 Total >1.3 (1) Current Postbank holding of 52%; 92% after the conversion of the mandatory exchangeable bond and exercise of the put / call option in February 2012 financial transparency. 15

16 ...contributing to a sustainably improved portfolio balance Share of income before income taxes Investment banking (CB&S) Classic banking (PCAM / GTB) (1) 71% 73% 60% <60% 29% 27% 40% >40% H E Continued rebalancing towards less volatile earnings (1) 19.99% stake after capital increase financial transparency. 16

17 Achievements in Asia Strengthened market position On track to achieve 4 bn target in 2011 CB&S (1) FX Fixed Income Cash Equities Corp. Finance 2008 Current #1 #3 #10 #7 #1 #1 #3 #3 Net revenues Asia / Pacific excl. Japan, in EUR bn 2 +21% p.a. 3 ~4 (3) GTB (2) Overall Cash Mgmt. #4 #3 #4 #2 PWM Overall #9 (1) FX excl. ANZ; Fixed Income excl. Japan; Cash Equities excl. Japan; Corp. Finance excl. Japan, ANZ (2) Overall excl. Japan, ANZ (3) Includes HuaXia one-off impact Source: Company data, Eurmoney, Greenwich Associates, Dealogic, AsiaMoney # E financial transparency. 17

18 Performance culture: Key initiatives represent EUR 2.3 bn of cost savings Of which achieved in 1H2011 Run-rate cost savings p.a. CIB integration Rationalised corporate coverage, risk and support activities Standardised cost and other policies EUR 0.5 bn 25% Postbank integration Harmonised processes, administration and reduced IT costs Standardised cost policies and joint sourcing EUR 0.7 bn 6% Complexity reduction programme Efficient infrastructure functions, optimised operating model and footprint, fewer legal entities, etc. Build a new cost culture across the bank EUR 1.1 bn 32% Total: EUR 2.3 bn Note: Figures may not add up due to rounding differences 23% financial transparency. 18

19 's response Continue to execute our strategy Address emerging risks Increase CIB profitability with renewed risk and balance sheet discipline Focus on core PCAM business at home market leadership + Continue de-risking Focus on Asia as key driver of revenue growth Reinvigorate our performance culture Focus on capital and funding financial transparency. 19

20 GIIPS exposure well-contained Net sovereign exposure In EUR m 31 December June 2011 (70)% Ireland 12, , (12) Portugal 997 2,283, 1, ,601 1,154 3,669 Italy Greece Spain Total financial transparency. 20

21 We have actively reduced legacy risk In EUR bn, as of period end x Change (in %) Level 3 assets Monoline exposure Derivatives Other level 3 assets CVA Fair value after CVA (48) (58) H H2011 Assets reclassified under IAS 39 IAS 39 maturity profile (1) Carrying value (33) (53) H (1) Where the asset is subject to prepayment risk, a weighted average life is used instead of legal maturity financial transparency. 21

22 Further building on strong capitalization Development of Core Tier 1 ratio ppt 8.7% 10.2% Basel 2.5 Basel 3 De-risking Retained earnings >8% (1) >9% (1) Dec 2010 Jun 2011 Jan 2013 Dec H June Core Tier 1 ratio of 10.2%, up 150 bps in six months EUR 26 bn RWA reduction EUR 3.3 bn net income (1) As per rules applicable in outlook EUR 90 bn RWA reduction identified to mitigate increased capital requirements from Basel 2.5 / 3 From Jan 2013 onward, significant further relief from roll-off of capital intensive assets Continued strong capital formation from earnings generation financial transparency. 22

23 Funding and liquidity strength continues Strategic shift to higher quality funding sources As at 30 June, in EUR bn Liquidity Reserves and funding markets access strong As at 30 June 2011, in EUR bn Post June % -48% > Higher quality funding sources (1) Wholesale funding sources (2) Increase funding from higher h quality sources Ongoing access to capital markets proven Recent issuance demonstrates market access even in volatile conditions 96% of funding plan completed YTD; average cost L+58bps Liquidity Reserves (3) Discretionary unsecured wholesale funding (4) Since 30 June 2011, Liquidity Reserves continue to increase Continued access to unsecured wholesale funding (UWSF) markets Increases in Liquidity Reserves exceed increases in UWSF (1) Includes capital markets & equity, retail, transaction banking (2) Includes discretionary wholesale, secured funding and shorts (3) The bank's Liquidity Reserves include (a) available excess cash held primarily at central banks, (b) unencumbered central bank eligible business inventory, as well as (c) the strategic liquidity reserve of highly liquid government securities and other central bank eligible assets. Excludes any positions held by Postbank (4) Includes Postbank financial transparency. 23

24 Agenda 1 A challenging environment 2 's response 3 Outlook financial transparency. 24

25 Not all assumptions for 2011 target have materialized Environmental Assumptions as of February 2011 No further major market dislocations Normalization of asset valuations Global revenue fee pool remains at level below 9M2007 annualized Margins remain higher than pre-crisis Interest rates remain at low levels Continued macroeconomic recovery: Global GDP growth of 4.0% in 2011 Development / current situation Challenging and instable market conditions in 2H2011 Equities down 10% or more 2011 YTD Unchanged Unchanged Unchanged Slowdown and growing concerns about sustainability of global recovery No significant further write-downs Impairment of Greek exposure Deutsche Bank Market share gains EUR 0.6 bn net savings from complexity reduction Unchanged Unchanged financial transparency. 25

26 EUR 10 bn target no longer within reach in 2011 Phase 4 potential H2011 Status Corporate Banking & Securities Significantly below plan Global Transaction Banking At plan Asset and Wealth Management Below plan Private & Business Clients Well above plan Total business divisions Note: Figures may not add up due to rounding differences financial transparency. 26

27 DB remains well-positioned against long-term trends Secular trends... Global asset accumulation...play to DB s strengths Pi Private retirement t World-class l investment t provisioning banking Emerging market Leading retail asset wealth creation manager in Europe Global connectivity Financial market integration Rebalancing of global economy Growth of cross- border capital flows Convergence to central clearing Increase volumedriven activity Unparalleled breadth of retail distribution in home market Strong clearing + settlement franchise Robust technology backbone financial transparency. 27

28 We have delivered for shareholders across the cycle 2002 / Phase I Phase II Phase III Phase IV Refocus business after internet excesses Profitable growth with balance sheet discipline Accelerate growth / share gain in the face of extreme competition Reposition / recalibrate after the financial crisis Average pre-tax RoE in % (1) 4 (1) DB Peers DB Peers DB Peers DB Peers Catching up with peers Outperforming peers (1) Includes up to 1H2011 Note: Until 2005, DB RoE calculated based on average active shareholder's equity; post 2005 DB RoE calculated based on NIBT attributable to shareholders and allocated book equity; Peers: Goldman Sachs, Morgan Stanley, Citigroup, JPMorgan Chase, Bank of America, Barclays, UBS, Credit Suisse, Société Générale, BNP Paribas; data for 2008 and 2009 not fully comparable due to differences in timing of accounting for financial crisis-related writedowns and other one-off effects Source: Company data financial transparency. 28

29 Cautionary statements This presentation contains forward-looking statements. Forward-looking statements are statements that are not historical facts; they include statements about our beliefs and expectations and the assumptions underlying them. These statements are based on plans, estimates and projections as they are currently available to the management of. Forward-looking statements therefore speak only as of the date they are made, and we undertake no obligation to update publicly any of them in light of new information or future events. By their very nature, forward-looking statements involve risks and uncertainties. A number of important factors could therefore cause actual results to differ materially from those contained in any forward-looking statement. Such factors include the conditions in the financial markets in Germany, in Europe, in the United States and elsewhere from which we derive a substantial portion of our revenues and in which we hold a substantial portion of our assets, the development of asset prices and market volatility, potential defaults of borrowers or trading counterparties, the implementation of our strategic initiatives, the reliability of our risk management policies, procedures and methods, and other risks referenced in our filings with the U.S. Securities and Exchange Commission. Such factors are described in detail in our SEC Form 20-F of 15 March 2011 under the heading Risk Factors. Copies of this document are readily available upon request or can be downloaded from This presentation also contains non-ifrs financial measures. For a reconciliation to directly comparable figures reported under IFRS, to the extent such reconciliation is not provided in this presentation, refer to the 2Q2011 Financial Data Supplement, which is accompanying this presentation and available at financial transparency. 29