Deutsche Bank - Client & Creditor Presentation - February 2020 (including preliminary financials as of 31 December 2019)
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Deutsche Bank
Deutsche Bank – Client & Creditor
Presentation
February 2020
(including preliminary financials as of 31 December 2019)
Deutsche Bank
Investor RelationsA German bank with a global network
Deutsche Bank is present in
59 countries(1)
Largest bank in Germany
with approx. 20m clients(1)
Regional revenue split(1)
2,064 branches worldwide,
of which 1,409 in Germany(1)
APAC
12%
Americas Germany
21% 38% Managing over € 1.3tn of
wealth for clients(2)
EMEA
28%
Note: Throughout the presentation figures may not add up due to rounding differences
(1) Source: 2018 Annual Report
(2) Includes Private Bank and Asset Management, source: Q4 2019 analyst presentation
Deutsche Bank
Investor Relations 2Executing on our transformation
— Clear signs of franchise stabilization with stakeholder support for refocused strategy
Transformation
— ~70% of transformation-related effects already absorbed in 2019
progress
— Capital Release Unit to exit unprofitable businesses
Balance sheet — Transformation will create a materially smaller and less market sensitive bank
and — Existing balance sheet strength allows transformation using existing resources
fundamental — Capital and liquidity ratios well above regulatory requirements, comparing favorably to peers
strength — Low risk levels reflecting conservative business model and strong risk management
— € 112bn of total loss-absorbing capacity and the German bail-in law provide protection for
Creditor / depositors and counterparties of the Bank
Counterparty — Senior preferred Credit Default Swap as reference risk faced by derivative clients and trading
counterparties
considerations
— Rating agencies view the strategic transformation as rating positive
Deutsche Bank
Investor Relations 3Agenda
1 Transformation progress
2 Balance sheet and fundamental strength
3 Creditor / counterparty considerations
Deutsche Bank
Investor Relations 4Delivered on all objectives in 2019
In € bn, unless stated otherwise
2019 objectives 2019
Adjusted costs(1) € 21.5bn € 21.5bn
CET 1 ratio >13% 13.6%
Leverage ratio 4% 4.2%
Capital Release Unit
risk weighted assets
52 46
Capital Release Unit
leverage exposure
~140 127
(1)
Employees(2)Stabilizing the Core Bank
In € bn, unless stated otherwise
Adjusted profit (loss) before tax(1)
Refocus
Core
2.6 2.8 Bank
Exit loss making
businesses (1.4) Capital
(2.4) Release
Unit
2018 2019
Focus on market Revenues ex. specific items
leading businesses
24.6 23.2
and more 1.9
Capital (83)% 0.3
predictable revenues Release
Unit
Core
22.7 22.8
Bank
Enhance client 0%
focus
2018 2019
(1) Excludes transformation charges and transformation-related effects (incl. goodwill impairments, restructuring and severance). Reconciliation available under
https://www.db.com/ir/en/download/Deutsche_Bank_Q4_2019_results.pdf, pages 28/29
Deutsche Bank
Investor Relations 6Four market-leading businesses
Core Bank revenues excluding specific items, unless stated otherwise, in € bn
2%
11.0
10.8 — Integrated payments & FX solutions in 125 currencies
— #1 EUR & largest non-US domiciled USD clearer
Corporate
0% 2.6 CB — Banking network across 145 countries with deep rooted local presence
Bank
2.6 in Asia
— Trusted advisor to ~900k commercial clients in Germany
— #3 globally in Credit
Investment — #2 Globally in FX
3.0 7% 3.2 IB Bank — #1 Leveraged Finance in EMEA
— #3 in EMEA and APAC FIC
— ~22m clients worldwide
Private — ~ 490bn assets under management
Bank — ~ 230bn loan book
— Top 5 Euro GDP growth countries covered
4.1 (2)% 4.0 PB
— #1 Retail Asset manager in Germany
Asset — #2 Manager of ETF’s in Europe
Management — #4 Insurance Asset Manager globally
1.1 12% 1.2 AM — 81% AuM outperformance against benchmark
H2 2018 H2 2019
Deutsche Bank
Investor Relations 7Improving efficiency and infrastructure
In € bn
Restructure
5.7
Adjusted cost(1)
5.6
5.5 5.4 5.3 5.3
5.2
5.1
Reduce adjusted cost
to € 17bn in 2022
Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019
Front-to-back cost
2019-2022 cumulative IT &
reductions reflecting
business exits
Control spend(2)
13
Preserve investments 4
in controls and
technology
Control IT
(1) Full-time equivalent as of quarter-end
(2) As presented in the strategic transformation announcement on 8 July 2019
Deutsche Bank
Investor Relations 8Freeing up capital
13.6
Return >12.5
11.6
Maintained robust
CET 1 ratio, in %
balance sheet
including
Maintain at least 12.5%
strong CET1 ratio
CET1 ratio through own
capital resources. Target
a 5% leverage ratio
Q4 2019 SREP Management
requirement 2020 target
70% of
transformation-
related effects
absorbed in 2019 56
CRU RWA, in € bn
46 Strong start to
38 deleveraging the
Capital Release 32 Capital
Unit (CRU) Release Unit
financing the
restructuring
Q3 2019 Q4 2019 2020 target 2022 target
Deutsche Bank
Investor Relations 9Agenda
1 Transformation progress
2 Balance sheet and fundamental strength
3 Creditor / counterparty considerations
Deutsche Bank
Investor Relations 10We are managing the bank conservatively
2019 Comment
Reflects strong underwriting standards
Provision for credit losses as a % of loans 17bps and low risk portfolios
Loans as a % of deposits(1) 76% Supports continued loan growth
Strong funding base due to structural
Most stable funding(2) 83% improvements in the balance sheet
€ 55bn excess above 100% liquidity
Liquidity coverage ratio 141% coverage ratio requirement
(1) Loan amounts are gross of allowances for loan losses
(2) Most stable funding as a proportion of the total external funding profile. Most stable funding is defined as funds from Capital Markets & Equity, Private Bank and Corporate Bank
Deutsche Bank
Investor Relations 11Significantly reduced and transformed balance sheet
After netting(1), in € bn
1,495
65
Around a quarter of net balance sheet held in Liquidity
Reserves
946 Trading assets significantly reduced to less than 30%
995 of net balance sheet
Liquidity
222 Reserves
Derivative book benefits from netting/ collateral and
Trading and strong stress testing capabilities
242 related assets(2)
201 Strong loan book quality with ~90% Investment Grade
434 Loans(3)
235
48 Other(4)
2007 2019
(1) Net balance sheet of € 946bn is defined as IFRS balance sheet (€ 1,298bn) adjusted to reflect the funding required after recognizing (i) legal netting agreements (€ 267bn), cash collateral
received (€ 43bn) and paid (€ 32bn) and offsetting pending settlement balances (€ 10bn)
(2) Trading and related assets includes debt and equity securities (excluding highly liquid securities), derivatives, repos, securities borrowed and lent, brokerage receivables and payables, loans
measured at fair value
(3) Loans at amortized cost, gross of allowances
(4) Other assets include goodwill and other intangible, property and equipment, tax assets, cash and equivalents which are not part of liquidity reserve, and other receivables
Deutsche Bank
Investor Relations 12Solid capital and leverage metrics
Q4 2019, in %
CET1 ratio peer comparison
— CET1 ratio is around € 6bn
17.0 above requirement of 11.6%
13.7 13.7 13.6 13.4 and well above peer average
12.7 12.1 12.0 11.5
— Expectation that regulatory
CET1 ratio requirement will
reduce based on announced
deleveraging activities
Leverage ratio
~5.0 — Improvements in leverage
4.5 ratio supported by balance
4.1 4.2
3.8 3.75 sheet reduction measures
0.75 G-SIB — Sizeable buffer on top of
future 3.75% leverage ratio
3.0
requirement
Pillar 1
requirement
Q4 2017 Q4 2018 Q4 2019 2020 target 2022 target 2021
leverage ratio
(1)
requirement
(1) Based on CRR II
Deutsche Bank
Investor Relations 13Strong liquidity metrics
Deutsche Bank’s liquidity reserves (in € bn)
280
259
219 222
>200
— Investments in technology and
79% 71% processes allow for better
60%
82% resource allocation
— Switch from cash towards
21% 29% 40%
18% securities, supporting
2016 2017 2018 2019 Target
revenue generation
Cash and cash equivalents Highly liquid and other securities — Reduction of overall
liquidity reserves, but
maintaining a ratio of
Q3 2019 Liquidity Coverage Ratio (LCR, in %) ~25% of funded balance
sheet
189
— Liquidity coverage ratio is € 55bn
151 above 100% requirement and
140 139 137 136 136 134
121 116 115 113 above most peers
100
Deutsche Bank
Investor Relations 14Conservative market and credit risk management
Q3 2019
Value at Risk (in € m)(1)
— Value at Risk measures the
potential loss of Fair Value
74
positions due to market
movements that should not be
47 49 50
44 exceeded with a defined
31 34 likelihood during a period of time
25 29 29
23
13 — Reduced Value at Risk by 2/3
since 2007, at the lower end
peers
Credit Loss Provisions (CLP)(2) — Strong track record in managing
119 credit risk evidenced by low
credit loss provisions as a % of
loans
68 — Historically good quality of credit
63
51 portfolios proved resilience
40 through the cycle, specifically
31 34
25 versus US peers
16
5 9 — Macro outlook likely to lead to
normalization of CLP (Deutsche
Bank 10 year average ~20bps)
(1) Applying a 99% confidence level and a one day holding period
(2) Annualized, in bps vs gross loans
Deutsche Bank
Investor Relations 15A low risk, well diversified loan portfolio
(1)
Capital Release Unit Other
IB Other
1%
7% 2% — Well diversified loan portfolio of €434bn
Asset Backed Securities with high underwriting standards
6% German Mortgages
— More than half of the loan portfolio is in
Commercial Real Estate 31%
Private Bank, mainly consisting of
4%
German retail mortgages and Wealth
2% Management
— More than a quarter of the loan
Commercial Banking 9% portfolio is in the Corporate Bank, with
loans in Global Transaction Banking
and Commercial Banking
— The loans in the Investment Bank
10% comprise well-secured, mainly asset
16% Wealth Management backed loans, commercial real estate
Global Transaction Banking loans and collateralized financing
11%
Private Bank Other(2)
Private Bank Investment Bank Corporate Bank
Capital Release Unit Other
Note: Loan amounts are gross of allowances for loan losses
(1) Mainly Corporate & Other
(2) Includes International Mortgages, Consumer Finance and Business Finance
Deutsche Bank
Investor Relations 16Level 3 assets – a small but natural part of our business
€ bn, Q4 2019
1,298
1.8% of — Level 3 classification is an accounting
total indicator of valuation uncertainty due to
assets lack of observability of at least one
valuation parameter
24 — Variety of mitigants to valuation
Total assets uncertainty (e.g. exchange of collateral,
prudent valuation capital deductions,
hedging of uncertain input)
Level 3 asset composition — A significant portion of the portfolio is
turning over on a regular basis
Equity securities Mortgage backed securities
Other — The Capital Release Unit accounted for
10
2 approx. € 7bn of the Level 3 Asset balance
Derivative
Debt 9 Assets
securities 5
8
Loans
Deutsche Bank
Investor Relations 17Agenda
1 Transformation progress
2 Balance sheet and fundamental strength
3 Creditor / counterparty considerations
Deutsche Bank
Investor Relations 18Depositors and counterparties are protected by € 112bn
loss-absorbing capacity(1)
Loss absorbing capacity as a % of RWA
Deposits ≤ €100k /
short-term liabilities(2) (Q3 2019)
Deposits > €100k of natural
Loss persons / SMEs
participation
only if TLAC is Other deposits(3), operating
liabilities, senior preferred 51
exhausted notes and other(4)
43
Plain-vanilla 34 33
56 senior non-preferred 31 30
notes and other(5) 27
25 25 24 24
€ 112bn of
TLAC 12 AT1 / Tier 2 / Adjustments
44 CET1
Q4 2019
(1) Total loss-absorbing capacity (TLAC) is the amount of equity and bail-in debt available to absorb losses in order to protect counterparties and depositors
(2) Insured deposits and deposits by credit institutions and investment firms with original maturity € 100k of large caps, all remaining deposits of financial institutions and the public sector
(4) Other includes structured notes money market instruments and LOC’s
(5) Other includes Schuldscheine >1 year (unless qualified as preferred deposits)
Deutsche Bank
Investor Relations 19Senior preferred CDS spread closer to peer average(1)
200
DB Senior non-preferred CDS
DB Senior preferred CDS
160 Core peers
120
80
40
0
1 March 2019 1 May 2019 1 July 2019 1 Sep 2019 1 Nov 2019 1 Jan 2020
(1) Peers include UBS, BNP Paribas, Société Générale, JP Morgan, Bank of America, HSBC, Citigroup, Credit Suisse, Barclays, Morgan Stanley and Goldman Sachs
Deutsche Bank
Investor Relations 20Current Ratings
Moody‘s Investors S&P Global
Fitch Ratings DBRS
Services Ratings
Counterparty obligations (e.g.
Deposits / Structured Notes /
A3 BBB+(1) BBB+ A (high)
Derivatives / Swaps / Trade
Finance obligations/ LOC‘s)
Senior Preferred(2) A3 BBB+ BBB+ A (low)
Long-
term
unse-
cured Non-preferred Baa3 BBB- BBB BBB (high)
Tier 2 Ba2 BB+ BBB- -
Legacy T1 B1 B+ BB- -
AT1 B1 B+ B+ -
Short-term P-2 A-2 F2 R-1 (low)
Outlook Negative Stable Evolving Negative
Note: Ratings as of 12 February 2020
(1) The Issuer Credit Rating (ICR) is S&P‘s view on an obligor‘s overall creditworthiness. It does not apply to any specific financial obligation, as it does not take into account the
nature of and provisions of the obligation, its standing in bankruptcy or liquidation, statutory preferences, or the legality and enforceability of the obligation
(2) Defined as senior unsecured debt rating at Moody‘s and S&P, as preferred senior debt rating at Fitch and as senior debt at DBRS
Deutsche Bank
Investor Relations 21Rating landscape – senior debt ratings
Moody‘s S&P
Operating company / Preferred Senior(1)
Holding company / Non-preferred Senior(2)
Rating scale EU Peers Swiss Peers US Peers
Short-term Long-term BAR BNP HSBC SOC CS UBS BoA Citi GS JPM MS
P/A-1 Aa2/AA
P/A-1 Aa3/AA-
P/A-1 A1/A+
P/A-1 A2/A
P/A-2 A3/A-
Baa1/
P/A-2
BBB+
P/A-2 Baa2/BBB
P/A-3 Baa3/BBB-
Note: Data from company information / rating agencies, as of 12 February 2020. Outcome of short-term ratings may differ given agencies have more than one linkage between long-term
and short-term rating
(1) Senior debt instruments that are either issued out of the Operating Company (US, UK and Swiss banks) or statutorily rank pari passu with other senior bank claims like deposits or
money market instruments, derivative claims, LOC’s
(2) Senior debt instruments that are either issued out of the Holding Company (US, UK and Swiss banks) or statutorily rank junior to other senior claims against the bank like deposits
or money market instruments (e.g. junior senior unsecured debt classification from Moody’s and senior subordinated from S&P)
Deutsche Bank
Investor Relations 22Cautionary statements The figures in this presentation are preliminary and unaudited. Our Annual Report 2019 and SEC Form 20-F are scheduled to be published on 20 March 2020. 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 Deutsche Bank. 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 22 March 2019 under the heading “Risk Factors.” Copies of this document are readily available upon request or can be downloaded from www.db.com/ir. 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 Q4 2019 Financial Data Supplement, which is accompanying this presentation and available at www.db.com/ir. Deutsche Bank Investor Relations 23
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