Okay, great. Look, good afternoon. No, good morning. Sorry. Good morning, everybody. It's my pleasure once again to welcome James von Moltke, President and Chief Financial Officer of Deutsche Bank, to our conference. Thank you, James, for joining. Chris, it's a pleasure to be here. As I said last year, this is always punctuates the developments at Deutsche Bank. Yeah. also a memorable conference. We have gathered very successful in the last few days. It's been great so far, and it's good to have you back here again and sort of probably half tick you for Madrid at the beginning of June next year. Great. Look, the same format as other discussions. James and I have a few questions to run through here on stage. We have 35 minutes in total. Probably, you know, with about 10 minutes or so before the end, I'll turn to the audience to see if we have any questions from the group. Please do your best to sort of grab my attention, and we'll try and come to you as quickly as we can. Let's start with revenues. Thinking about revenue diversification. In Q1, we saw stronger than expected performance in the corporate bank and the private bank. Could you elaborate on the process regarding building out that more predictable, recurring stream of revenues within the business mix, and how durable we should expect those revenues to be heading into 2024, 2025? Is it too early to call sort of peak NII in those businesses? Yeah. Chris, it's a, it's a good place to start. Lots to talk about there. I'll try to be as brief as I can. First of all, I think the first quarter performance, and we see that same sort of development in the second quarter, as we talked about it back in January, February, it's evidence of how far we've come through the transformation. As we talked about the transformation since 2019, a lot of it was about building the resilience, the sustainable profitability of the company, the business mix, shifting towards what we've thought of as stable or more stable businesses, and somewhat away from the investment bank. You've certainly seen that, in the performance. The share of revenues of pre-tax profit now that are, that are comprised or contributed by the private bank, the corporate bank, and asset management, are quite a lot higher. I think that was one of the things that investors were looking for. In fact, in Q1, the investment bank was around a third of the total. That progress is there. Chris, as you say, part of it is driven by the change in the interest rate environment. Of course, the last 12 months have been dramatic in terms of that change, and naturally, that's benefited our corporate bank and private bank businesses. In a sense, the investment bank has gone from what I'd call overearning in the environment that we had, say, in 20 through 22, to a normalized, I think, still quite good and strong performance. That has helped the mix shift in the businesses. We do think we're making the investments to continue that progress over time. You know, you're seeing investments that we're making actually across the businesses, but perhaps less visible because it gets less, you know, attention in the press. Investments in our corporate bank business, investments in our private bank business, a strategy we're pursuing, and investments in DWS, our asset management business. We're quite sort of comfortable and confident about the future revenue trajectory that we're building across those businesses. To your point about peak interest rates, we do believe that we passed a peak in Q1, driven, and I want to be very clear here, we think there will remain a tailwind for the industry as we've gone from a negative and very adverse interest rate environment to a much more supportive, and over time, I think, normalized interest rate environment. That's a good thing. The peak is defined by what we call beta. The amount of retention, if you like, of the incremental interest rate increases that the banks have kept versus passing on to clients. As you've heard about from us and our competitors, that's been much more favorable over the past several quarters, 3 and 4 quarters, than our models would have suggested. We do expect that dynamic will shift over time, and we've consistently expected that to happen. It continues to be more slow than we'd anticipated. Mm. This, while I think there is competition for liquidity, competition for liabilities, you know, the progress, if you like, of convergence towards what the models would tell us, that we need to pass on is remains slower. That peak, while there is a downdraft in the next several quarters that we'd expect, it's actually coming in more mild than we would have expected to this point. In short, you're seeing, you know, I think, continued progress in terms of this underlying development for us around steady revenue growth, I think more constructive tailwinds in the environment, and, you know, and a mix shift towards the more stable businesses that we've been working on now for several years. You mentioned in the answer to that answer, the 30% or so of revenues in the investment bank. What is your current outlook for, you've already seen a degree of normalization there for the revenue trajectory within the IB. How much further normalization could there be to come, and what is your latest expectations, whether it's sort of already in Q2 or through the subsequent quarters on the shape and the timing of the recovery and Advisory? Yeah. Um- Really, also a fascinating question. Well, let me start, Chris, a little. You know, I'm sure others have talked about their sense of what the environment looks like. I mean, to me, the banking environment today is actually mixed. I think on the negative side the equation you have, you know, a slow economic growth, but probably a recession coming. There'll be some impact, of course, on credit costs that comes with that. You know, how severe that'll be, we don't know, both because the economic environment and interest rates, so refinancing costs that'll take place. You see in the investment banking business, particularly, you see a trailing off of volatility that has helped the macro businesses at the current moment. A couple of items that are a drag on the sector. On the positive side, this has surprised us this year to the upside, you have the continued benefit from interest rates. As I just said, beta coming still slower than we anticipated. You have actually asset markets that have maintained relatively strong levels, and that benefits us in a couple of our businesses, including asset management. You have a, I think, an overall environment that is, you know, where you haven't seen as dramatic an impact, for example, of the very rapid increase of rates. We could say LD, you know, LDI and the turbulence in March are a sign that there's been an impact in, you know, in terms of market confidence from the interest rate environment. I would still be on the side of the equation that says that that's been more. Mm. Modest in terms of impact than you might have expected for a move that is as far as we've last year. That's how I'd characterize the environment. Incidentally, by the way, in the stable business, asset growth is also influenced by the general environment and for loans, essentially. The investment bank, we came into the year expecting at some point there'd be a trailing off of the very strong macro product environment that we had especially last year. It was just a record year for the industry in macro products, we expected that to trail off. The question was: How quickly would the micro, so things like, well, credit in particular, but also financing transactions, leveraged at capital market transactions, M&A equity, begin to come back? Is there a bit of a sort of a trough in between those two things? We are seeing the trail off in the macro, actually still quite encouraging activity despite all the things we've been through, debt ceiling and what have you. You know, compared to this outstanding, especially Q1, Q2 for us last year, we're naturally gonna have a step back. I'd estimate that to be in a range between, say, down 15%-20% in our FIC product. Mm. area. What we call Origination & Advisory, so corporate finance advice, you know, underwriting businesses, we think we're starting to find the floor, which is encouraging. You've started to see at least Q4 to Q1, a sequential stabilization. As I think some of our peers have talked about, a beginning of to see more activity. Mm. April, by the way, was extremely quiet, so I think it sort of was carry over from the turbulence in March. We've seen it started to pick up, I certainly believe that we'll start to sequential increases in the pool, in the sort of the wallet, and activity generally. How quickly that comes back, how robust that environment is, will depend, but we certainly see that as encouraging. If I pull that all together for the quarter, I would say, you know, investment bank... O&A, by the way, we think is probably flat to up this year- Mm. relative to Q2 last year. Mm. In part, by the way, because of the non-repetition of leverage, that capital market, sort of. Mm T hat started in the second quarter of last year. That produces, I think, for investment bank, generally a sort of a down 15, maybe a little worse than that, quarter, for us. With some dynamics that continue to support, I think, a reasonably favorable outlook for us, just a shift in the- Mm I n the business mix, in the investment bank. On costs, you know, the progress in Q1 on costs was clearly quite encouraging, you know, obviously helped by lower SRF, but in one way or another, essentially the exact opposite of what we saw in Q1 2022. Yeah. How do you see the rest of the year developing, you know, in terms of trying to meet that flat cost target versus 2022, while also sort of encompassing the new restructuring charge? On restructuring charges that you announced in Q1, how would those feed into accelerating the strategy and, you know, ambitions that you have? You may be a bit more color on to specifically what those restructuring relate to. Sure. Lots of moving parts... Yeah O n it. Look, let me start with just the overall, you know, statement that our focus on costs remains very intense. Mm. I mean, it's something that we know we need to deliver on, and we're continually working to find new measures, execute on those measures, and maintain the discipline, while, of course, preserving this balance that we've talked about for the last couple of years around the needed investments in controls, technology, and what have you. That's the balance we're trying to strike. As you say, our guidance has been, and we'll reaffirm that, we're working to keep our expenses essentially flat at the top level. Mm in 2023 relative to 2022. In that, there are a number of moving parts. I think most importantly, our operating, what I'll call our operating expenses, so take SRF out for a second, what we've called adjusted costs. We've been talking about a range of monthly, you know, expensive EUR 1.6 billion-EUR 1.65 billion, and that produces sort of EUR 4.9 billion a quarter, essentially flat to the fourth quarter. As you say, that's something that we achieved in Q1. We're working to achieve in Q2. We think we're in line with that, even though FX, by the way, relative to Q1, has pushed us up a little bit in the range, just weakening euro again. Lots of moving parts, but working to keep that, you know, as flat as possible. On the rest, what I'll call non-operating expenses, as you say, Q1 SRF assessment was a bit better than we'd assumed and better than last year. That's helpful towards our overall full year guidance. What is a feature now, and we'll be reporting in Q2, is higher non-operating expenses than we might have anticipated when we started the year. As you say, that's partly with restructuring severance, that has been a deliberate decision. I'll come to the, you know, what we're trying to do with that higher restructuring severance. In this quarter, I would expect total non-interest expense... Total non-operating expenses to be in a range around EUR 600 million-EUR 700 million, of which the restructuring and severance would be somewhere around EUR 250 million-EUR 300 million. The balance reflects a litigation quarter that has been unusually adverse. You've seen the reports and the announcements. We've had some adverse surprises. I don't think it's representative of a normal quarter, and we can go into a little bit. That's driving non-operating expenses higher in Q2, not something we'd expect to see repeating in the balance of the year. There are, though, some offsets that have helped us towards the full year guidance. You mentioned SRF. SRF is one, there are others that are on our radar screen that we think will help continue the path towards the guidance for the full year. Excluding, by the way, Numis. Yeah. Which we'll talk about a little bit in July, but should close in the fourth quarter. That's a, you know, very helpful overview on cost for this year. If we think about the medium term, you know, frankly, consensus has a tough time believing the 62.5% cost-to-income ratio. It's sort of there on the revenue figures, I think, not there on cost. I think, what do you think is missing, I guess, in that consensus build? What can you give us in terms of color that would put a bit more confidence into that view that you can get down to a 62.5%- Yeah efficiency target? Well, look, the basic model that we laid out in March of last year, and we're continuing, I think, to show evidence of, is creating operating leverage by growing our top line and keeping the expenses essentially stable over time. What changed since March of 2022? Interestingly, the revenue environment is considerably better than we thought at that time. That, of course, is partly driven by the interest rate environment. As we've talked, it's given us an increasing tailwinds on the NII side, and that will carry through to 2025, and of course, is, you know, is quite visible and estimable for us. We're also obviously working on building the non-interest revenue base in the businesses- Mm-hmm. in the ways that I described. If we thought about a compound annual growth rate at the time, between 3.5% and 4.5%, we're running to date, you know, quite a lot higher than that. It's been sort of 7%, 6%, 5%, depending on the quarterly comparison, and a lot of those kind of drivers and tailwinds are very much in place. Now, expenses, we had a step-up last year because we, you know, made some decisions about, as I mentioned, technology controls relative to what we were looking at initially. But we think that's been more than compensated for by the increased revenue view. Mm-hmm. It means we need to be, you know, laser focused on expenses over the next several years, execute on the things that we've been working on. You mentioned the restructuring and severance. Mm-hmm. There, as I say, we upped our guidance for the full year to about EUR 500 million, recognizing that we, in essence, needed to do more to offset the impact of inflation, some of the investments we wanted to make, and the environment, overall, preserve this model of generating operating leverage. We've taken a number of actions. We're restructuring our mortgage platform, especially in Germany. We did a reduction in force. We've completed now the sort of exit from our Russia Tech Center. Mm. And working on a variety of other steps here in order to execute on a sort of a gross cost saving over that 4-year period, now of EUR 2.5 billion, rather than the EUR 2 billion that we talked about in March of 2022. That's the work we've been doing. You know, my colleague, Rebecca Short, now has even more sort of oversight and control of our cost base based on some management changes we made in April. I'm thrilled to have her, you know, ever sort of stronger as a partner in this expense journey. That should give you some sense of what we're trying to do and how it helps to deliver that overall model of operating leverage. Very clear. If we try and wrap the sort of revenue and cost comments you've made together into a profitability topic. You know, one of the numbers I thought was most remarkable in the first quarter was X, the SRF costs. You know, you delivered 10% return on tangible equity. It's tempting, you know, to ask: Why didn't you upgrade the targets with Q1 results? Maybe the other side of the question is: Could you speak a little bit about the things we should be watching to explain some of that quarter-to-quarter volatility that we're inevitably going to see through the year, through any year? Let me start with by saying hopefully less volatility- Mm. over time, you know, in the businesses. When we talked about this mix shift... Actually it was in 2021, and I think at this conference, and, you know, I started talking about us seeing a range of revenue performance on a monthly basis in the Investment Bank. Mm. that was becoming more consistent over time. That's in the range that I gave at the time, was EUR 2 billion-EUR 2.5 billion per quarter of revenues in the Investment Bank. Obviously, there's some seasonality, and there can be outliers in either direction, but that was basically the core of what we were seeing in the Investment Bank, and that's something that we're continuing to see and deliver on. Unlike the past, you have the other businesses really performing. Mm. You have the private bank at something approaching that same level, you know, well over EUR 2 billion. You have the corporate bank performing around a EUR 1.9 billion level of revenue. That gives us, I think, more and more confidence in terms of what we're doing. Sorry, there was another element of what you asked about. No, it's really just, you know, you did so well in the first quarter. There's always these volatile points quarter to quarter. Yeah Trying to stay on top of what those moving parts are. I mean, we've already talked a little bit about what to look through for the rest of the year. Mm. I sort of get the sense from. Oh, yeah, why not upgrade the target? Yeah. Which is a nice I should have, you know, a nice way to put the question. Well, look, we were obviously encouraged by what we saw in Q1. As you say, if you can either the SRF assessment is sort of an irritant because it, you know, it's the accounting says you've got to take it all in the first quarter, and we've struggled to estimate what it would be, and so but leave it aside. You can either spread it over the 4 quarters, or you can take it out entirely. What you saw in terms of underlying performance for the company, X, that was better than a 10% ROTE and well below a 70% cost-to-income ratio. Essentially, for us, that was demonstrating that all the work we've done over those four years was delivering against the goal that we'd set for ourselves. As you say, we need to continue that. Why not up the targets? I guess two things. One is we still need to go through a period of time now working out some of the uncertainties in the environment, so rates, recession, those things. We still have work to do on completing transformation steps that we've been working on. Mm-hmm W hether that's technology or controls and other things. Still some work to do, but good underlying momentum, and that's something that you're going to continue to see, we think, in the quarters ahead, given the way the mixes shifted. I think the second thing is it's a little early to start going after that. Mm. What you did see from us in Q1 was some statements and some indications of work we're doing to try to accelerate our path towards the goals we've set for 25, hopefully exceed those goals, but also build on that momentum for beyond 25. Mm. We've been hard at work with initiative steps, actions on the expense side, on the capital side, and on the business growth side, to try to, you know, continue building that engine of earnings growth and business performance. We're feeling really good about it, but it's probably a little bit early to talk more about what to see, and we need to work through, well, you know, the remainder of this year and into 2024, some of the things that are still, we're chopping wood still. My final question before I turn to the audience, you know, going down is around capital distribution. 1 of the questions, you know, I received a lot in the immediate aftermath of the Numis announcement, was, you know, why didn't Deutsche Bank just do a bigger buyback? I'm sure you had the same question. Maybe if you could help us understand how you think about the prioritization of capital use in terms of organic, inorganic distribution. We've also seen, you know, the specific dividend targets you gave previously. Since then, earnings expectations for yourselves and for many European banks have gone up a lot, other banks have, or some of your peers have taken up their distribution targets and their distribution ambitions. Maybe just a comment on how you think about distribution on a go forward. Yeah. Well, look, Chris, we're very, obviously very aware that investors want to be rewarded... Mm E specially having been through a journey with us. It's, believe me, not far from our mind that this is an important piece of what we're doing. I guess the first part of the answer is the core work we're doing is increasing the sustainable profitability of the company, the ROTE generation, the capital generation, which over time will support, I think, much larger distributions. Mm. While we're doing that, we've been focused on executing on a distribution path that we'd laid out, I think, reasonably clearly last March. That, again, is front and center for us. If you ask about the order of operations, I think it's generating the capital. First, regrettably, remains a capital build to support, I'll call it reg inflation. Whether it's model adjustments or preparing for Basel III, at the end of the day, that has to be the first priority that, you know, in terms of how we think about capital planning. After that, absolutely delivering for investors on the promises that we've made around distribution. As you've seen with the, you know, the efforts around share repurchases, also sort of something that we take very seriously and want to work on and deliver. Then we also need to balance all of that with business growth. Mm and investing in the future, and hence, Numis. That by the way, hence, organic business growth, an important part of how we think of capital planning, but also, in these instances where opportunities present themselves that we think are going to drive real value for our business franchise, for our shareholders, you know, we are open to inorganic steps. You can always ask whether that capital could have come out in a distribution. As you've heard me say, I don't think of them as entirely fungible, this idea of capital applied to an inorganic move versus distributions. Either way, you know, we think we've struck a good balance in terms of investing in the future, and we think the Numis acquisition will really support the earnings and capital generation over time, creating an attractive profile for investors. Very clear. Okay, I think this is the point at which we wanted to come to the audience and see if there are any questions. Wanted to put your hand in the air. Right down here at the front, we have a question. Probably it's not very significant, but have you benefited from the Credit Suisse debacle in terms of hiring and creating new positions and less competition? Yeah, I'd say we have. It's always hard to measure these things, but we've been focused on sort of client acquisition, on hiring some bankers. As you've seen, there's been some press on it in a targeted way. we think there are benefits for us. We're a natural home for clients seeking to diversify their relationships, especially in wealth management, obviously investment banking, but within investment banking, again, corporate finance, Origination & Advisory for us. Thirdly, also in corporate bank, you shouldn't disregard that Credit Suisse was a major service provider in the DACH region and Switzerland. we see benefits hard to measure, and it'll take some time, but benefits for us. Just there. Going back to Credit Suisse, you found yourself among the banks that were particularly targeted, especially in the debt markets. I guess maybe there's some false perceptions, but how do you intend to address that issue, that whenever there's market upheavals, the securities from Deutsche Bank found themselves under pressure? Yeah, look, I think just continued delivery. I mean, it is our goal, believe me, you know, going through an environment like March, to be in a place where it just never comes into consideration that you might be vulnerable. Very present for us. Frankly, what's gratifying is, after the market took a look, quite quickly, and by the way, without us necessarily having to speak for ourselves, the market saw that we didn't have the vulnerabilities that the market was concerned about, whether it was interest rate risk or stability of deposits, and on and on. These were all things the market was looking at. I think the executing on our strategy, building sustainable profitability, also risk management is key. You know, one thing that's been quite present for us is. Well, first of all, we would like to think we've built a good track record on risk management, and that that track record is visible to all of you. Hence, you know, investors, you know, take that into account in their thinking. What I think March showed, and in a way, the other events over the last several years, I mean, we've been through COVID, we've been through the Russia war, we've been through Archegos, we've been now through this. Each of those crises tested a different vector, if you like, of risk or dimension of risk that banks have and banks need to manage. It means that you need to run a bank at all times prudently, or you need to manage those risks that you, both, by the way, non-financial and financial risks, really carefully, because you never know which is going to be tested at, in any given sort of market environment. I, again, I think we showed that in, not just in March, by the way, but over the years. Again, after going through that experience, what was gratifying for us is the market took a look, and based on knowledge that investors have and the disclosures we have out there, people concluded, "Yeah, Deutsche Bank should be okay." First prize is never the market never taking a look. Halfway down in the middle. I was just wondering, with the economic backdrop, if you've seen anything change on the consumer side of things, either from a function of higher rates or how they're thinking about their savings? We have. Well, actually, let me start on one thing, which is going back to March a little bit, you know, stability of the deposit base. One of the things that I think investors looked at was how stable is the deposit base? In our case, about EUR 600 billion, I think a very good split between retail and corporate deposits, very stable insurance, all those good things that lead to a, you know, a stable funding base anchored by the deposits. German retail is obviously an important part for us. We have seen in the segment sort of really two dynamics. One is in the sort of the lower-income household segment, this run out, this inflation impact on household savings, the runoff of sort of excess savings coming out of COVID, that's present and has continued. Then you are also seeing more competition for deposits on pricing in the German market. As I said earlier, I don't think that competition for deposits on pricing is outside of the norm at this point, and arguably a little bit inside of the norm of what our models would tell us. There's a competitive marketplace now, and so, depositors are getting new money offerings that naturally will shift a little bit between the providers and the market back. Those two dynamics are present. We're doing okay, by the way. We've had some deposit campaigns. We're, you know, protecting our deposit base, but it's a little bit today sort of running to standstill, in that environment, and that's not unexpected for us. Maybe just on the regulatory side, with all the turbulence we've seen in the U.S. and here with Credit Suisse, have you had any conversations with the supervisors or with the regulators as to any adjustments you might need to see on liquidity or funding metrics or anything at all, really? Well, look, going back to the times in March, you know, any crisis environment, like the one we lived through, is one where you're very intensively involved with your supervisors. I think in a positive way, you know, they have very clear understanding of what each bank is going through. They can see how well you're faring, not just in terms of the balances and liquidity, but also, are you in control of your shop? Do you have the data, do you understand where things are? In a sense, it's sort of a bonding experience that when you go through these together with them. They're also, through all of that, they're getting some good insight into what's working in terms of the models, the liquidity drivers, you know, how different customer segments behave, and what have you. It's a good, real-world test. To start with what we do internally, every time we go through one of these experiences, we step back and look at that data set that's provided and challenge our internal liquidity stress test models. Are they accurate? Are they conservative enough? What do we do? We're going through that process naturally, and it tells us something about the various sources of liquidity that are out there, and client behavior. When you switch to the regulatory metrics, I don't have the sense there's that there need for... That, at least speaking for the European regulators, there's a concern they somehow fail. I just don't think that's the case. I don't think there's evidence to support that they did. I don't see the need is they're not thinking too hard about that, but you never know. You never know what happens. As I've said in some calls and what have you, one problem I think we have as an industry, Credit Suisse, unfortunately, started to undermine confidence in the things that we talk about, which are CET1 ratios, principally as the measure of solvency, and LCR, principally as the measure of liquidity resilience. What the world doesn't really see is just how conservative those measures are today. Therefore, how well-capitalized, how liquid the banks are, and resilient in their ability to deal with stress. My own view is these are good tools. Mm. They're well-functioning, they're appropriately conservative, and as we test them, we always learn. Just not to go on for too long, but if I go back to COVID, what was really fascinating is there was one liquidity driver that went close, I won't say to its max, but started to go towards its max, and that was draws on unfunded liquidity facilities. That was the behavior that was happening at the time. Every corporate was drawing on their funding to make sure that they were okay. There was a test of that liquidity driver, but we never kind of went through the peak of it. We also saw that pretty much everything else was pretty stable. You saw an overall LCR that was tested, but only in respect of one of the drivers, meaning all the other buffers for every other form of liquidity, outflow, or stress, was essentially unused. That's kind of interesting, and we saw something similar now in March, that there was only a handful of the liquidity risk drivers that were really being showing any kind of indications of stress, so the overall edifice is pretty solid. Okay, the clock's telling us we're basically- Yeah A t time, but just one quick fire question to finish with. You know, looking ahead, what gives you cause to be optimistic? What gives you cause for concern? How do you strike the balance between the two in the end? Well, look, have to be on the concern side, as I mentioned, about the risk management. We just have to make sure that there are no vectors that are. Asset quality is one. We've talked about commercial real estate, where we've gone through another you know, effort to stress test our portfolio and do all of that work. Mission one is make sure we are well protected on those risk vectors. Incidentally, completing this work on reg remediation, very high, and control improvements, very high on our agenda. Still work to do there. Also building for the future and this making sure that our businesses are performing in a way that has real momentum, value for our clients, you know, gaining market share, you know, as in some areas where we think we can. Building that franchise for the future, while it's secondary to the risk management, is front and center for us, and is undergirds some of the optimism that we have in answer to your earlier questions. Perfect. James, once again, thank you so much for joining us and sharing your perspective. Thank you. Thank you.