Deutsche Bank AG (DB) 2004 Q4 法說會逐字稿

We will start with the presentation by the Chairman of our Group Executive Committee Dr. Josef Ackermann, followed by a presentation on the financials by Dr. Clemens Borsig, Chief Financial Officer and Chief Risk Officer of the Bank.

I might ask you to hold your questions back.

After the two presentations; we will enter, as usual in the Q&A session.

We will refer to presentation slides, which we'll think that you have as a hard copy and which can be downloaded from the web.

With having said that, I think we should start Joe.

It's your floor.

Good morning.

Good afternoon.

I hope the (inaudible) are not as slippery as the platform is.

Let me say a few words about the achievements in 2004 and then clearly talk about the road map to 25% ROE.

First, the achievement in 2004.

I think you are all familiar with all of it now.

Revenues are up to 21.9.

What is particularly important is that the fourth quarter was actually stronger than many had anticipated.

Income before taxes is up 50% and I will show you that excluding some of the additional charges which we have taken it would have been better.

Same is true for net income which is 2.5 billion.

We are recommending to increase the dividend by 13%.

You remember we came from 1.30 to 1.50 last year and now 1.70.

We know that for investors dividend yield is becoming more important.

The ROE, we are up 7 percentage points to 17% and, as you know, the 25% is our goal.

Although I have to say that 25% is based on operating profit and here, of course, we have the restructuring charges in these numbers, although underlying would be more or less the same.

And EPS is plus 102%.

I think in a nutshell, it is fair to say that we had a much better debt result than most of you had anticipated.

Frankly speaking, we had planned as well.

Most people felt that 2004 would be down 15%, even 25% and I think we always said that the structure of our debt business as well as the regional component is becoming strong and stronger.

I think that really shows that we continue to deliver even in difficult markets.

The turnaround of the retail business is, for us, from a management point of view, very, gratifying because remember three years ago, a lot of people said divest it, sell majority, it's not a good business and I think we always said even in the German context, which is more challenging given the structure of the banking system and many other things, relatively slow growth pattern in general, I think we have proven that even in this context you can make good money and I think that is a very, very important message.

It also comes from Italy where we have seen very, very strong performance, in Spain and primarily here in Germany in absolute terms anyhow.

The strategic position, I think that is the key message we'd like to give you because it is always a valid statement to say, well if you are reducing headcount, if you are reducing cost, you are cutting too much and you are losing revenues.

And I think the retail business is a good example because people, for years, even in the executive board have always argued we cannot reduce one person in the German context because we will lose business or we cannot close any branches.

I think we have proven that this is absolutely not true.

If you have overlaps, inefficiencies, competing elements in an organization, get rid of it and you will see more revenues and you will see, of course, lower costs.

I think that is what you have to do in corporate banking as well as in asset management, which is a natural consequence in operations and on the infrastructure side in general, including risk management controlling.

In Germany, of course, we are gaining momentum and we continue to do so and I would say the same is true globally and this is exactly where we would like to see our future in Asia, in the US, and in other parts of the world as well.

Now we have done major investment in future growth, I will come back to that in a little bit and the business realignment program in general is well underway.

Next one.

Here, I just want to highlight a few things.

We are coming from 2.8 billion up to 4.1 billion.

These are the reported numbers.

Actually, I don't want to -- I want to say that we are better than what we report.

That's not my point.

My point is given a little bit support for the next step, if we had not done the business realignment program alone, we would be 600 million better.

In addition, we have changed the equity metrics which some of you will like because we have taken a higher tax proportion and lowered the deferred compensation part which will, of course, help us in the current year and going forward, but we have an additional 200 million in 2004.

So actually, without changing anything and without doing the restructuring, we would, of course, mortgage the future.

But in 2004 on a standalone basis, we could have had 800 million more.

So, actually if you like, starting point is not the 4.1, it is the 4.9 coming from 2.8 and what we need is a bit more than 1 billion plus.

Same is true for the ROE, 17%.

If you add all that I just mentioned, we are above 19%.

So, maybe the next step is not as big as it seems to be at first glance.

Next one.

Here you see that in both businesses, we have done well.

Now CIB is a little bit suffering from what I just described ,changing the equity metrics much more than the others because that is a key issue in investment banking.

The PCAM, as we heard, very strong on PBC side, private and wealth, asset and wealth management a little bit weaker.

Still on the relatively high level.

I must say many of your banks would be happy to have this contribution overall.

But the development, especially on the asset side is, of course, something we are working on, we'll come back to that.

Next.

Well, as I said, we want to increase dividend.

Capital return to shareholders, big issue Germany, and some newspapers say it's the right thing to do.

I think we have a different -- we are a different animal.

We had 12 billion of alternative assets.

We have old industrial holdings.

A lot of capital allocated to non-core businesses.

We have sold them, divested them and free up capital and part of it we have reinvested.

Part of it we have paid out in dividends and part of it we have retired.

So, and used for compensation purpose as well.

So, I think if we had not done anything and I just want to highlight it a little bit and we had kept all these industrial holdings in place, we would have destroyed value of about 80% -- 78%.

So, the value collapse of Allianz, Munich Re and many others has been traumatic and thanks God we did something.

Did we do enough, maybe not; maybe there we should have sold everything.

We kept part of it, which never got to the price level we wanted.

But we have sold others and by doing this reduced our value destruction if you like in the portfolio to 47%.

At the same time, if we had done nothing, we would have lost the cushions, but we would not have increased our Tier one.

So, the capital would have stayed where it was more or less.

And we have done a lot.

It would have been up to 12% without share buybacks and we did some share buybacks in order to be around the 9% level.

So, I think overall this is exactly what most analysts expect from us in financial markets.

There are always a few exceptions.

It's a controversial issue I mean.

All this makes sense.

If price multiplied by quantity, by number of shares gives you a higher number and this product can be discussed, whether it's happening like it.

We are of a strong conviction that higher return on equity gives you a higher price to book, gives us a re-rating, which is under way as you will see and should actually lead to a higher valuation.

But we could also run around with 12% Tier one and maybe lend more money.

Some may like it.

Or to do a big acquisition, which probably doesn't add a lot of value.

I was asked about three times this morning in the press, conference, why we're not buying HypoFrance Bank (ph) and I'm happy to answer that question.

If someone wants,

Next one.

And you have seen the - we have also directed capital to higher return businesses and lending is down, which is an underlying pretax ROE of 10%.

Corporate investments is down 20%, is a negative.

I said it many, many times some of our -- many of our private equity industrial holdings, real estate businesses have a negative return after funding.

So, that's certainly not in the interest of shareholders.

We have reduced asset and wealth Management, GPB, but we have deployed more capital to the CB&S so the investment banking business and to retail and that will continue because we want to go into more consumer lending and other things.

We will come back to that.

Next?

Our road map is 25%.

Let me first say -- I think it will be clear among this group of talents, but it is not our strategic target and it is not a life-and-death situation and even in the 80's when I sure was in (inaudible) 16% after tax ROE was almost standard.

Almost standard.

Now, if you have a 40% tax rate; you need 25% to achieve 15%.

And we have communicated that since I think '98.

We have never delivered and probably because we felt we are not going to deliver, it has not become a big issue.

In the last two years, since we said it after delivering on the cost side and the retail side, obviously people take it very seriously.

I think getting into a political discussion with 25 is social enough or not social enough.

My point is very simple as you see here.

Twenty-five percent is standard today among the best players and if you want to be among the best, you better achieve it.

And, therefore, it is our target, but it is not our strategic goal.

Our strategic goal is to be one of the top ten players in terms of revenues, which we are, in terms of profitability, in terms of market cap going forward and hopefully out of Germany.

That's our commitment to Germany.

And I think it will be a disaster if Germany had no global bank operating on a global scale.

Switzerland has two, Holland has two, France has probably two or three, Spain has one or two.

So, I mean, I think the largest economy in Europe should have at least one bank operating on a global scale.

That's exactly what we want to do.

But if you want to do that, you cannot have return on equity of 8%, as it is demanded by some journalist this morning.

You have to be as profitable as our peers.

That's the very simple explanation.

So, it is not-- it is a financial target and we are doing, if you want to climb the Mt. Everest, you are doing everything to get there.

If you have a tremendous snowstorm on the third highest camp, you may say it's not possible.

So, you're not committing suicide because of that.

But we are committed to reach the top.

And -- but it's not a life-and-death situation.

So, I just want to make it a little bit relative.

But let's not doubt.

It is our goal and we are doing everything to achieve it.

Next one.

What do we actually need?

Based on our model and here again, it's not a forecast, it's not a commitment, it's a model.

In order to get from 17% to 25%, we would need roughly a 4% revenues growth, revenue growth, which I think is plausible given the market positions we have.

We will have the cost cutting exercise and we come back to that.

Clemens will talk about it.

We are expecting as an assumption, as expected loss level provisions so the level will be roughly the 500 million, a little bit higher than this year where we were particularly proud of having delivered a better number but also benefiting a little bit from releases and from a very successful workout situations and the change of active equity.

We are not forecasting a huge growth in risk-rated assets.

A moderate growth and we do further.

And now let me say a few words about capital management because obviously someone in the press conference asked whether there was another restructuring program and I said no.

What we are presenting you, that's our restructuring program and then on Reuters it was said that I said there is no share buyback program.

Maybe there is a confusion between restructuring and share buyback.

Maybe, but let me make it clear.

We plan, and I think it is very important because for a while our share price came under pressure because we planned to bring the current program, third share buyback program to completion and we will ask the AGM or the Annual General Meeting for authorization of a fourth program.

Without this authorization, which is required under the term of corporation laws, we would not even have the flexibility to consider a fourth program.

I can only say we are asking for the approval.

I cannot say more because otherwise the Annual Meeting could not approve it.

But share buybacks, serve, first of all, very well equity compensation each, as you know, and are also important element of the efficient management of our capital.

So, in that sense, to say we stopped share buybacks is invented.

So I just wanted to clarify that.

Next one.

Well, I don't want to go through all the --I mean you have seen, but we continue to invest in our franchises and we are seeing a lot of potential in many, in many areas.

In global market, global banking.

Next.

On PBC, I think that's important that we were lagging, as most advanced European banks, US banks in consumer finance.

We are now the second largest consumer lender in Germany and we are not so weak in Italy and we would like to continue that.

That's, in our view, a profitable business.

We want to do more on the sales force side.

We have seen that clients are using more our products.

We always said there is potential in terms of cross selling and we want to expand our branch network in -- certainly in Italy and in Poland.

Asset management, it's a little bit of a turnaround situation.

I mean we are happy with the numbers we have in absolute terms, but the development is not good, especially the asset situation, primarily in the UK.

This is under strategic review.

DWS is performing fantastically well.

We gained about 20 billion in US.

It's already in the first quarter.

This is general some is coming back in DWS and some is in the institutional side.

So, I think we see better results.

But it is a little bit the cost-cutting exercise, too.

And we will work on that and I'm very confident that we turn this business around where we have difficulties.

We always have difficulties in UK and Scotland was always a challenge and we always had a stellar performance in DWS and now we want to add to the stellar performance of DWS, a better result in the other areas.

Private Trust Management.

We are actually seeing good development.

This is clear here we are not maximizing profitability in the short-term.

This is a mid-term buildup and we always said that this is a five-year plan and we will hopefully see the results at the end of this five-year buildup.

We are making money, we are making good money, but we are not maximizing, which will be easy because sometimes if you compare ourselves with other firms with the same revenues, they have a higher profit and we are saying no.

We want to further build up because I think what some of our Swiss colleagues can do, show us how attractive this business is.

Next one.

Well, I think this has been presented to you many times.

I don't want to go into any details.

If you have questions, we are here.

Next one.

Next one.

Well, here is just the important question.

I think I alluded to that many times.

Are we jeopardizing revenues?

And I think I said before we had a very in-depth survey being done by McKinsey asking or interviewing hundreds of clients on a global scale and on all levels.

So Chairman, CEO, CFO, and further down and what is the perception of the bank Deutsche Bank?

And what we really heard so many times was fantastic products, fantastic specialists, but your coverage is confusing.

We have too many people calling on us and telling us you are -- they are the relationship manager and so I think it's confusing clients, is probably eliminating revenue growth instead of pushing revenue growth and by simplifying that, I'm pretty sure we'll see more revenues and just lower costs.

I mean, that goes without saying but also higher revenues.

So, this are just eliminate the overlaps.

Nothing else.

Asset management, I said, this is primarily a restructuring case outside of DWS.

We want to grow our DWS business, too, out of Germany into a more international role.

I think we have very strong products and with 132 billion of assets with UBS, the biggest in Europe.

The regional management is something we need to do to strengthen our -- the regional element and we have been too product-driven and probably we have lost revenues and lost opportunities and by just combining the product competence with the regional element is probably something, which is very important and we see that already.

Not only from a regulatory compliance point of view but also from a client coverage point of view.

And I have to say that just up in Davos so many people told me what a difference since now you have one person, one face in the region.

And so I think that's a very important signal and it was taken up extremely well, not only in Germany, but also in other parts of world.

Next?

Infrastructure.

While we have actually for several reasons, three years ago when we did the first restructuring, not done so much on the infrastructure side.

For some reasons, we were not ready at the time.

And now I think we have much better systems, smart sourcing outsourcing becomes a bigger issue and I think we have also seen that efficiency now in the middle and back offices is something we can manage.

Which was three years ago was a little bit more challenging.

That's why we started without the measures first.

Next?

Well, concluding, I think for us it was a successful year.

What is important, we achieved all the goals we have set ourselves in terms of strategic buildup with the exception of asset management.

The asset situation in the UK, which is not -- I mean to say the least, it is not important from a profitability point of view, but it is embarrassing to see this media coverage of asset outflows all the time.

The second one is the -- in equities;

I think we have recovered well in the fourth quarter.

And we have changed to model, clearly reducing the proprietary side to a much more global market, old traditional global market style and I'm very confident that we see good results out of that already, by the way.

But, of course, convertible and DB (ph) advisor did not repeat the stellar results they had in earlier years.

But it also shows that overall sales and trading was very strong.

Corporate finance, very nice, very good development.

We are now with roughly 2 billion Euros, actually close to the biggest players in this field, which is sometimes underestimated.

Maybe a little bit different composition but I think we are very, very strong in most markets here.

The strategic positions in core businesses, just make it clear again.

We are in two businesses, one is investment banking, the other one is asset management, private banking and retail banking.

We have no other ambitions, no other aspirations, and here we want to be global on the CIB side and global on asset management and private wealth management and multi-country approach in retail, that's all.

And I think that's a much more focused ambition and goal than we had in earlier times.

The 25%, as I said, is not a strategy, it is a target, a financial target.

But it is a necessity in order to play with the most profitable and most attractive banks in the world.

And that's what we want to achieve and we are not jeopardizing that by making silly acquisitions or by adding risk-rated assets with a return which is clearly below our target.

And frankly speaking, this is not in the interest, neither of shareholders nor of the Bank as we have demonstrated many, many times.

So that's all as introductory remark.

Clemens will now get into more details and then of course I'm happy to answer any questions you have.

Thank you, Jo.

Good afternoon to you here in the room and to you on the call.

As Jo said, I want to present now the numbers.

My first slide, the summary, Jo already walked you through, so you know what the key messages are as far as our performance in the first quarter and entire fiscal year is concerned.

Good profit growths, strengthening of our strategic positions, this is very, very important and our business realignment program is well on the way.

Here you see the agenda of my presentation.

Before I discuss the group results, let me make a remark on our number.

That means on our reported and underlying numbers.

That means on our reported and underlying numbers.

The last two years have been characterized by a lot of one-offs resulting from corporate investment, impairments, sale of subsidiaries and so on and so forth, and in order to show you the underlying trend of the business, we had to do this exercise of reconciling our numbers from a reported basis to a underlying basis.

But as you may have observed during the last quarter's reported numbers and underlying numbers have come very closely together, so today and on a going forward basis, when we discuss the group results, we can go away with this underlying numbers and concentrate on the reported numbers.

So, I will discuss the reported numbers and I'll explain to you what is in the reported numbers.

And Jo's presentation already gave you a little bit of taste in this regard.

As far as the segmental reporting is concerned, segmental reporting for the time being, I'll discuss the underlying numbers because those are the numbers which I used when we discussed performance of our business, of our business internally.

But what's important is now we discuss reported numbers and explain what is in those numbers.

And this gets me right into our development of our pretax profit.

We had a pretax profit in the fourth quarter of slightly more than 400 million, exceeding some of the expectations and in those 400 million, we have restructuring charges and restructuring-related charges of together 600 million.

And this is -- I will explain this in a moment. 400 million qualified as restructuring charges under US GAAP, 200 million, 50/50 basically a vacant space charge and additional severance did not qualify as a restructuring charge, but is part of our reorganization, of our reorganization effort.

Even included that as Jo mentioned already, our pretax number of the entire year has improved significantly by 50% to 4.1 billion and this is, again, after the inclusion of those 600million.

For reference purposes, we -- I should say we don't have in the presentation the net income numbers, but I also would like to call your attention in the documents which we have to our net income number because the increase here is a staggering 87% and we also managed, thanks to the help of our colleagues in the tax department to manage our ETR down to 36%, which is a much better number than what we had last year when it was 48%.

Group revenue trend in the first quarter, we had very good revenue.

We had a very good revenue trend.

From the third to the fourth quarter, revenue went up by 5%.

As you know, the dollar declined during this period so the ForEx adjusted number is even better and is in the range of 8% to 9%.

So, very good revenue performance in the fourth quarter.

And also when you compare the fourth quarter this year with the fourth quarter last year.

For the total year, this gives us a ForEx in consolidation adjustment increase in our reported revenues by 7%.

Last time, I mentioned underlying, if you adjust the underlying for ForEx and de-consolidation, it is also a positive trend between 1% and 2%.

So, we have really performed well on the revenue side and I will discuss the driving factors of this revenue development in a moment.

Costs, costs went up in the fourth quarter to 4.4 billion.

After this consistent downwards trend, we had an increase of 400 million and I explain to you what is in this 4.4 billion.

The other reorganization charges, which didn't qualify for restructuring, 200 million and the change in the compensation model, Jo alluded to this already of 200 million.

I will explain this on my next chart.

You take this out, our OCB in the fourth quarter was absolutely consistent with the third quarter and we did hit our target of 16.5 billion.

I also can mention that in the 16.9 billion, there are some items which are at least I would like to mention because they were not in our plan, they were one-offs of about 200 million.

For example, sundry costs related to our dispositions, the project wave (ph) which we are in real estate, which we concluded in the fourth quarter.

Clearly there were some sundry costs involved and we also had an unplanned consolidation of our real estate closed-end fund which had a positive effect on revenues, clearly and the same negative effect on cost.

So, on a like-for-like basis, we clearly hit our cost target and that is very important.

Now on the next slide, you have an explanation of our deferred compensation or the equity-based compensation.

Equity based compensation is very important to us and is continuing to be very important to us.

However, we reduced the share of equity compensation to cash compensation a little bit and the effect of this reduction in the share of equity compensation is equivalent to around 200 million.

And this is what is explained here and when we disclose the (inaudible) you will see the detail.

But this gives you already enough detail and you can see exactly the amount of shares which we are trending right now as part of our bonus compensation.

Key ratios.

We see an improvement in our key ratios.

Our cost-income ratio is 79 and once again this 79 cost income ratio includes all the adverse factors which I just explained.

The compensation ratio, I'm very proud about this, that we really managed our compensation ratio this year in a very consistent way.

The increase in the fourth quarter is entirely driven by the change in deferred compensation and for the entire year, the comp ratio has come down.

The non-comp ratio is impacted here by our reorganization activities because under US GAAP, you include the restructuring charge in non-comp.

In the additional information, you also do find these ratios on an underlying basis and you observe two things.

Number one that for this year, on a reported basis, on an underlying basis, these ratios are basically the same, which is very good.

Next.

Return on equity, which is very important, increased to 17%.

Once again, after having included all those negative factors which I explained, on an underlying basis, return on equity is absolutely the same.

Jo alluded to if we strip out reorganization charges of 17% is rather 19%.

But we want to concentrate on the reported number and we do believe that the increase to 17% is quite a good result.

This comes from an improved cost income ratio, lower credit volume, so a substantially improved profit margin and also a better capital utilization expressed in a higher equity turnover.

So, let me now turn to the segment result.

In the additional information, you have all the numbers as far as the segments are concerned and I just want to discuss a few key factors, which have driven our performance in the segment.

CIB, as Jo alluded to, had a very good year and also had a very good fourth quarter, driven by strong growth in most of our products.

In the 567 million, of course the underlying pretax profit in the fourth quarter that is the effect of the change in the compensation model included, without that change that number would be higher by around 160, 170 million.

And the same applies to the full year pretax number of 3.26 billion.

It includes the higher cash bonus charge, which I just discussed.

Next slide.

As was said before, a key driver of our very good performance of CIB both in the fourth quarter and in the fiscal year was our debt sales and trading performance.

I don't have to repeat what Jo has said, that a year ago predictions for this business were totally different to our actual performance.

But I just want to emphasize this.

Against those expectations by some of you, our performance in debt sales and trading was phenomenal and, therefore debt sales and trading had another record year with very strong performance in almost all product area.

The total number for the year is now 6.3 billion in revenues.

And this, despite the fact that we have seen an appreciation of the Euro.

The close ForEx adjusted was 8%.

I had really to discuss with few of you last year you know that the only hope we had was that our revenues in 2004 would not drop below 5 billion and now the 5 billion which we discussed at that time and now we are at 6.3 billion.

So that's very, very gratifying.

Equity sales and trading.

Very strong rebound in the fourth quarter.

And this basically driven by strong performance in all product areas both in the flow business, cash equities, equity derivatives, prime services, but also a very good performance in our proprietary trading activities.

We talked about the challenging environment last year, particularly in the second and third quarter, as far as convertibles and DB advisors were concerned.

But I must say now after we have seen the full-year numbers in equity sales and trading, we can be very, very proud about what we have achieved in equity sales and trading.

If I just consider our flow business, revenues in the flow business on a ForEx adjusted basis grew by a double-digit number and this is quite a very good performance and it shows the strength of our equity platform.

And the growth was particularly strong in high-value added structured products and derivative, and this proves the effectiveness of our business model.

PBC -- No, sorry.

Origination and advisory, best revenues for eight quarters because we have got only eight quarters on the slide.

But indeed, I think it is the best quarterly performance for quite some time.

And strong performance, we have seen in the quarter and in the entire year, very strong performance in all three areas origination debt, origination equity and also on the advisory side.

And as Jo said with $1.9 billion, so almost $2 billion in this area, we are now really among the key players in corporate finance/investment banking.

Loan products, an improved performance, compared to last year, but also in the fourth quarter compared to the quarter before.

This improved performance fourth quarter over the third quarter, is very much driven -- is very much driven by lower hedge costs.

Year-over-year, clearly the decline of our loan book played a role.

A decline of our loan book partly is by design and partly is the result of the shift in exchange rate.

But what's also remarkable is that we have lower hedge costs, lower hedging costs.

We had lower hedging costs in 2004 compared to 2003.

However, we increased the hedge ratio to almost 50% and this in a way proves the very successful management of our loan exposure management group.

Next slide.

PCAM.

As said before, strong increase in profitability, driven by this very good performance in PBC.

And PBC delivered on the target of very consistent performance.

Two things are very important in this regards.

First, clearly a very successful reengineering story.

Very successful reengineering.

But the performance is not only due to reengineering, it is also due to very successful growth initiatives and as I said before, we have seen, even in Germany, particularly since the middle of this year, consistent growth in our business, also, in Germany, but also in Italy.

And I do believe that this growth trend, which we have observed during the course of 2004 in PBC is very, very encouraging, particularly given the challenging environment we have had in Germany.

Growth here was driven both by investment activities, in life insurance -- for the sale of life insurance policy in Germany, fantastic performance also compared to the peers.

But we also managed during the course of this year to grow the loan book in a very disciplined way, in consumer finance and in retail mortgages, in Germany, and in other countries such as Italy.

So, the performance of PBC is not just the result of reducing costs, it is also the result of successful revenue growth initiatives.

Asset and wealth management is a bit of mixed picture.

We had, as Jo alluded to in asset management, quite some challenges.

But also 2003 was favorably impacted by the so called morph (ph) transaction, which was a real estate transaction for us which resulted in a $200 million gain.

Asset management and private wealth management were also unfavorably impacted by the shift in exchange rate.

Private wealth management had a very successful year.

We want to see them grow and they have delivered very good growth in Germany and globally and, therefore, they are very well on track.

Next.

So, that's the difficult chart to explain to you, but we want to be fully transparent so that you fully understand.

Invested assets in PCAM declined from 865 to 828 over the year. 24 billion related to the shift in exchange rate as a lot of our assets are denominated in dollars.

On the other hand, we had positive performance which over-compensated for the ForEx effect.

And then we had net money outflow in asset management.

The bulk of this coming from the situation in the UK, we talked about before and Jo already discussed it.

We also had an effect of a change in tax legislation here in Germany, which both affected asset management and PBC and that was the change in the tax and we had to advise our clients to redeem their money market -- their money market funds before the end of the year.

And that cost our PBC and asset management around 5 billion.

The good news is that private wealth management managed a positive net money in flow of 6 billion and the other business consolidation plan.

Once again, in asset management, it is very well focused as far as this money outflow resolving from the change in tax legislation is concerned, as Jo said, we are already seeing that money coming back.

And we were in institutional asset management.

We were awarded by Zurich Financial an additional 20 billion in assets from their German subsidiary so this should, on a going forward basis, clearly mitigate the picture.

Next slide.

Corporate investment continuous reduction in our exposure to alternative assets.

Consistent performance this year.

Corporate investment last year was quite a challenge for us.

This year it was a slight positive contributor to our performance.

You have the details as far as the development of alternative assets are concerned, in the additional information.

Next slide.

Risk and capital management.

Risk and capital management continued to be a very good story for us.

The slight decline in the loan book in the fourth quarter is entirely the result of the shift in exchange rate.

During the course of 2004, we really were confronted with a very slow demand for corporate loans.

The increase of the German piece of the pie is the result of our clear strategy to grow the loan book in retail and commercial in a very controlled way.

The emphasis being on consumer finance as Jo mentioned a moment ago.

Next.

Further decline in risk provisions so the risk provisioning story of this year, 2004, rather, was really a very good story.

And the good development really reflects the very effective credit risk management.

I'm not saying this because I happened to be the Chief Risk Officer, but I'm saying this because I have very high confidence in Hugo (ph) and my people.

We clearly benefited this year from the quality improvement of our loan book from good workouts so we saw some good recoveries, but also an upgrade of some loans, which resulted then in a release of provisions.

So this number of 307 is a number for the full year we are very proud about.

But we clearly benefited and we cannot extrapolate this.

Therefore, as far as our plans and the communication with you guys concerned, we now go back and say the expected loss in the portfolio is around 500 million and that is the best estimate we have at this point in time.

As we continue to grow our consumer finance business, clearly the expected loss will go up.

However, the margin in that business are such that we can easily afford an increase in our -- in the risk provisioning in this area.

Next slide.

So, problem loans have further come down.

They are now below 4.8 billion, the coverage is good.

The percentage of total loans also has come down.

Next slide.

The tier one ratio is in the upper end of our target range and this despite three, if you will, adverse factors.

Number one, provision for a higher dividend.

Number two, the effect of the shift in exchange rate, so-called currency translation adjustment, which is a negative to equity.

But particularly the continuation of our share buyback program.

And despite those three adverse factors, we managed our tier one ratio exactly in our target range and I would think this is another indication of our -- of the effectiveness of our capital management.

The VaR, something you guys -- some of you guys have been concerned about during the course of this year.

The key message here is we achieved this very good performance sales and trading in the fourth quarter and at the same time reduced the VaR to the level which we had at the beginning of this year.

Next one.

Share buyback program.

We continued our share buyback program.

The third share buyback program, which started the middle of 2004.

Under this program, we bought back 26.2 million shares.

We have is now in treasury traded 2.6 million shares, the difference is that was the inventory which we had when we started the third program.

And we talked about the continuation, the completion of the third share buyback program.

As of December 31, 2004, we had 19.4 million shares which we can buy back until this program is completed.

Shareholders have to participate in our performance, so we are proposing to the AGM an increase of our dividend to 1.70 Euros and we will have to then return share buybacks and the dividends.

Just a side remark on this.

The 925, this is the dividend for all shares outstanding.

However, by the end of last year, we had in inventory 26.6, as I mentioned before and you don't pay a dividend on the shares which are in treasury.

So, the amount of money which we have to pay out is significantly less than the 925 if we just take the 26.6 million shares in treasury end of the year.

This is a reduction of 45 million.

Next slide.

Now the business realignment program.

Something what I would like to emphasize, Jo already said it, but it cannot be enough emphasized and this is the main focus of the business realignment program is to repositioning the Bank to capture future growth opportunities, to shape the market, and to stay competitive in a changing market environment.

But it also opened up opportunities for cost savings and we clearly want to and we have to seize those opportunities.

You see here the five initiatives and you see what we want to achieve.

Next slide.

Now first, unfortunately a business realignment program, a reorganization program has implication on employment.

And this gives you here the implication on employment.

Within the program which we called the business realignment program plus ther the reorganization measures which is resulted in an additional 90 million of severance payment in the fourth quarter, actually 400 people left payroll, technically left payroll in the fourth quarter.

Many more left premises, but our statistics are based upon payroll.

So, 400 left. 400 million, 92 million for severance, 490 million.

Another 1200 people will leave the payroll during the early part of 2005.

In 2005, we expect 5100 people leaving payroll, so an additional 3900 and 900 then will leave so to speak as the tail end during the course of 2006.

So, all together, 6,400 full-time equivalent are impacted by our reorganization program and this gives you the cut.

Next slide.

The main focus clearly is on infrastructure, 3,700 people.

The biggest part comes from the IT side, followed by credit risk management, followed by controlling, followed by HR.

We do now employ much less people than we employed two years ago, so we have too much HR capacity, for example.

A key focus or key lever, if you will, on infrastructure cost smart savings is smart sourcing.

That means concentrating activities in regions with lower compensation costs.

And we will -- this smart sourcing activity applies in application, IT application software writing, in controlling and also in risk management.

The locations, which we do have already, are in the Far East and India, the Philippines, but can also be, for example, in eastern Europe and also in East Germany.

The business, and that's important for us, the reduction of headcount in the business does not impair in any way our ability to generate revenues.

But we do have in some businesses duplication and this is particularly in GBD, so for these 2700 people, about 50% do come from GBD.

Part of our -- what was mentioned before, some product areas are permanently under pressure, you know, because they get commoditized.

The only way to stay competitive in those business areas is by automation and reducing costs and this is here then also reflected.

Next chart.

On costs.

In the fourth quarter, we had already 574.

So, say, 600 million.

We expect for 2005 -- we expect the entire program to be expensed by the end of this year .

So, the total number is 750 million, plus or minus.

We do expect that a big chunk of those 750 million will be taken into P&L in the first quarter and the rest then over the remainder of the year.

I cannot be at this point in time more specific.

Why?

For example, in Germany and Germany really is impacted and we're now in the negotiation with the Ruggels (ph) council and it depends so when we will be in a position to expense the charges, depends upon the outcome of those negotiations.

Once again, 1.3 billion is the total cost of the program.

It is predominantly comp related.

It is not only technically severance payments because some of those people do hold restricted equity units, non-amortized deferred compensation and making them redundant triggers immediately the full amortization of the outstanding non-amortized piece of their equity compensation.

Next slide.

But, and this is very important, the business realignment program produces very significant cost savings.

We do expect full run rate savings resulting from that program full run rate 1.1 billion to be fully achieved in the year 2006.

But we do expect that already in 2005 we can realize 8.8 billion.

And, therefore, the successful implementation of this program is very critical to us.

Next slide.

Yeah.

This basically concludes my presentation and the last slide once again is demonstrating our deliveries in 2004.

Thank you very much for your attention and we are now happy to answer the questions you may have.

Yes, thank you Clemens and thank you Jo.

We entered direct into the Q&A and ask you to give me a clear hand because the microphone will come to you then.

And please in the interest of our external attendees, please mention your name and firm before you ask your questions.

Thank you.

We'll start in the first row with Mr. Hein.

My name is Peter Hein (ph) from Frier Research (ph).

I would like to ask questions regarding two areas.

Firstly, your restructuring program and secondly to your asset management segment.

You said that you're expecting cost savings per year by around 1.1 billion your rose, by your restructuring measurements.

Do you expect to lose any revenues as well by this measurement and if you expect one could you give us a number on an annual base as well?

And then could you split up the gross staff reduction of 6400 people or maybe the net staff reduction of 5200?

Could you split up to the specific segments?

And regarding asset management unit, you presented us your reorganization of asset management.

I think you had two problems.

Firstly, you lost over the last two-year, 2003 and 2004, around 40 to 50 billion net money.

Do you expect to stop it this year and do you expect maybe a turnaround to get new money inflows this year as well?

And secondly, asset segment, your return on equity pretax was 8% for the year 2004 after 12% for the year 2003 and 7% of the year 2002 regarding slide number 12 in your supplement.

When do you expect to reach your pretax profit target of 25% in this segment?

Thank you.

On asset management, you mean?

I think as we said many times in asset and wealth management, we do have this goodwill allocated in there, which is a very substantial number.

So, of course, if you take that out, the return on equity will be much higher.

Our people would love to have that written down or taken out.

But I think that will not be right and so it is for me not that important that they get to 25% and I told them that is not your mandate.

Your mandate is to contribute as much as you can to the overall performance.

But you have to-- have the important number allocated in terms of goodwill and tangibles.

So I think that's the right response to asset management.

I will be happy if I could stop the outflow overall and that we can turn around the business into a more profitable situation again.

So, back to where we were about two years or one year ago with some exceptional items in it would already be a big achievement.

And we are starting from a relatively high level, as I said.

(off mic), because that wouldn't be appropriate as I said to you, negotiations are underway with the (inaudible) also and, therefore, I should not disclose those numbers before we have final agreements.

But I gave you some indications and I can just repeat those indications.

I said in GBD, we talk about 50% as far as the business is concerned, and I think it's fair to assume that the two divisions, which will also contribute, clearly in sales and trading as a result of their realignment and is quite a bit of reshuffling, but also in some very dedicated areas as far as asset management is concerned.

In the infrastructure side, which is a (inaudible) I said that in IT, IT makes up roughly 50% of the reduction.

The CFO which includes CRO, contribute about 30% and then the balance is the CARO and in this regard I mentioned it all.

I think this gives you a very good indication to headcount movement.

Let me say a few words about the revenues.

And maybe we go division by division.

On the PBC side, the retail side, private and business class, very little restructuring, it's all done already and there is certainly no revenue impact from any restructuring on the country. private wealth management is the same, it's a build up business as I said.

Asset management, there is some restructuring.

Is it crucial as DWS is so crucial in this sector anyhow and there will be a growth initiative and no restructuring.

I don't think we see any substantial impact on the revenue side.

On the corporate finance side, in many areas, buildup should build up.

I don't see any major revenues coming from the restructuring, they're coming from market.

Sales and trading is a little bit different in that sense that in the DB Advisor business, as you know, we have restructured and we are clearly refusing the proprietary piece in it since we had the old global markets model.

In that sense, there will be a loss of revenues from that side which is not that important compared to 2004, but will be more important compared to 2003.

Of course, we are of the opinion that we compensate -- I'll have to be careful now in how I phrase it.

I'm not giving any forward looking statements.

But that we have other growth initiatives in place which will be as important on the positive side.

So overall, I'm not concerned and that is in our model, we have the 4% revenue growth in our -- as we said in our, sorry, in the model which was presented to you by Clemens.

I can give you the microphone.

Next question.

Mr. Zinn (ph)

(inaudible) from Sal Oppenheim I would like to come back to page 10 of the Mr. Ackerman's presentation, please, if possible.

One question concerning cost savings, which you outlined was 1.2 billion.

Am I right to assume that basically the underlying cost savings will be only 800 million because you already have taken some 400 million charge in the fourth quarter of 2004, that's the first question.

And the second question concerning this slide, the 25% pretax target which you show on the right-hand side.

If I look to the modules on the below, on that chart, basically there is no talk about additional share buyback.

So, is it correct to assume that you're going to achieve the 25% without an additional fourth program?

And then one more question concerning the revenue increase, just to get better feeling on that 4%.

If you assume that you will lose some revenues as you already said due to this cost-cutting measure, the underlying revenue increase must be higher than 4%.

Could you tell us in which divisions you are going to achieve this cost-cutting or this revenue increases?

And then my last question is on the 25%.

I mean, hopefully you will achieve it in 2005.

What's next?

Well, let's answer the question about next year a year from now.

But I think it will be a tremendous achievement to 25% on a sustainable level and see what the next steps are.

In terms of share buyback, well, I think I gave you the answer.

I cannot say more because it is a decision of the AGM.

We complete the program and we will ask for authorization of a fourth program and see where we are.

What is so important, Deutsche Bank is not shrinking to glory and I said that three years ago.

We are growing.

We are growing in ways that we need less capital.

I mean, so it's simple that we had 12 billion in alternative assets and now it's down to a relatively small numbers you see.

We have many other things and we have sold non-core businesses, which we didn't have any profitability or return on it.

So, in that sense, we have streamlined the bank and now the question was only what to do with the excess capital.

Should we give it back to shareholders or should we invest in loan portfolios, which we decided not to do.

And not to do it in terms of acquisition, which is not adding value to shareholders.

But we are reinvesting into our businesses.

Unfortunately, we are more and more in businesses where we do not need that much capital.

Investment banking, 2 billion is not a capital intensive business.

PBC, the way we're doing it is not a capital intensive business.

That's why we have 16% return in equity.

So, from that sense, there is not more I can say to the share buyback.

Now in terms of costs.

Clemens.

That's why we have three factors basically which drive our cost, our OCB in 2005.

Number one is the effect of the business realignment program, which we penciled in at 1.8 billion (ph).

We had one off effect as mentioned of about 400 to $00 million and we also have certain initiatives which cost us money.

On the other hand, we have cost containment measures from 2004 which have a full effect in 2005 so that gives you -- that's basically a wash so the key drivers are not the one-offs which we have seen in 2004 and the business realignment program.

As far as revenues are concerned, once again this is not a prediction.

It is a model -- a model assumption.

But then something is very important, our performance during the last years, also on an underlying basis, clearly has been adversely impacted by the shift in exchange rate and in this model, we do not expected a further shift in exchange rate, number one.

Number two, we analyzedour revenue performance, our underlying revenue performance in 2004 to take out -- only take out our DB loss and convertibles, two issues which we had, on an ForEx and de-comp adjusted basis, had a revenue growth of 5%.

So, what we are basically saying is an extrapolation of the growth which we have achieved in 2004.

That is the model assumption.

Okay.

Let's start over there.

Thanks.

This is Alistar Rhine (ph) from UBS.

The market is very focused at the moment about the impact of declining US yield curve on the profitability of debt comes to the markets operations.

Can you comment about how that's likely to be for Deutsche and secondly would rising US run rates, should they ever happen, be material for your business?

I was recently at a meeting in Boston (ph) actually and Grinspan (ph) said those who are not yet factoring that in should not be in our business anyhow.

So I mean, we're all expecting this kind of developments and we are prepared for that.

So, in that sense, at that time, in our case and many other cases as well, it's becoming so sophisticated that we are not benefiting from all the old formulas.

We are gaining market share in Asia, we are gaining market share in the US.

We are getting into the much more what we call as the intellectual capital business and frankly speaking, we see strong demand for it (inaudible).

Its really something we can cope with.

In that sense, I will be much more concerned if -- which is a serious issue that a lot of new competitors are seeing how attractive this business can be.

It is clear that some people, and I remember very, well, how CEO's three or four years ago told me they're getting out of this business because of the debt business and they're all coming back.

So, some are aggressively coming back.

The cost structure is an issue in this business and, of course, competitive pressure is becoming a pressure and the erosion of margins is clearly accelerating.

So, in that sense, this is much more -- the challenge here confronted with than whether markets are showing this or that.

I think we are expecting that and we are positioned accordingly.

Okay.

Should we start there?

That is the same company.

Could you pass on?

Thank you.

Derek Hammers (ph) from Stanford Equity Research (ph).

You mentioned a few times that consumer banking is of interest to you.

Would you be able to say a bit more about which markets you are thinking about.

Is it Germany, is it others, is it with existing business models or with something new and what's the proximate timing of this buildup?

I mean, as you probably know in the German banks as well, Swiss banks and others, especially, these two, about 15 years ago felt it's not an appropriate business for good banks and should not do it and then some started in Switzerland with subsidiaries under different names and we have clearly been very slow in building up this business.

I mean it's logically others that including CitiGroup for instance in German market makes a lot of money with it and we are now started already two years ago building it up.

I think we are now the second largest consumer lender in the German market.

We already have a position in the Italian market so we are primarily focusing on Germany and Italy and Spain maybe overtime.

But the retail business is something where we said we have a multi-country approach and we are open to explore other opportunities with the knowledge expertise we have if it would make sense, but right now we are focusing on these four countries.

We'll take one more question from this side.

Maybe -- can you come forward in the second row and then we go over to the left side -- maybe in the middle here.

Ken Olsen (ph) from JP Morgan.

Two questions.

One coming back to asset management as well as wealth management.

Alex Brown and Scudder you probably have about 1.5 to 2 euros of goodwill.

If I would be Kevin Parker and Peter Wreck (ph) I would demand that these assets are being sold otherwise I will never make a decent return and as for us analysts, we value them at zero any ways as they're not profitable in our view.

What is your long-term view especially in the US because you've talked quite a bit about UK and the institutional business.

And the second question is related to revenue growth.

Can you give us an idea of what you expect in terms of market growth generally and how you achieve the extra percentage which I assume on top of the market growth.

Where do you think you're going to gain market share relative to your competitors?

Let me start with Kevin and Pierre.

They are telling us the same of course.

There was laughter after.

But that's not as simple and Clemens alluded that.

I mean impairments or goodwill write downs are not just something you can do out of the blue and there's no reason that these good wills are impaired in anyway, given the reporting unit analysis we have.

So in that sense but Clemens will give you some more detail.

The Alex Brown brokerage business is not a big business as you all know.

We had a relatively good year in 2000.

We had an improved result in 2004, but it's still a loss making business, not dramatically but its lost business.

We said that we tried to fix it and maybe increasing a little bit the number of (inaudible).

My point is and I know there are different views on that giving that up and seeing 2000 markets coming back, people may well say we are not getting ideal mandates -- we're not getting other mandates because you do not have a distribution.

At least we do have a distribution.

It's not a big one, but there is one and therefore I am of the opinion we should fix it and we should see that this does not cost any money and hopefully if the IPO market is coming back it is an additional argument for us to get the mandate and if it is working.

It's already working this year by the way again.

Now, on the good will you mentioned you could sell it.

If we sold those business that fairly would take off the good will write down, as long as we keep, it business is profitable and the value of that business is much higher than our -- our value is much higher than the carrying value so there's absolutely no case for this good will to be impaired and therefore written down.

I also would like to say, the objective of this cover acquisitions was to buy a platform in the US, because we felt that a global harvest we need a platform in the US.

This objective was achieved.

We also knew that cover was of a structuring pace and that was the reason why we bought it relatively cheap and but we always knew that a lot of work needs to be done in order to fix the problems there, not the least to reduce the cost base and some of the business where they're not profitable.

Clearly in the US environment is now more challenging than what it was when we acquired it, but that doesn't mean that our objective cannot be achieved namely, after having a strong platform in the US and I would say the challenge really is to complete our homework, which we started when we bought it and complete the homework.

As far as DB Alex Brown is concerned, as Joe said, this is a very important distribution channel.

It is not making money at the time as you all know, but it isn't losing a lot of money.

We have seen good performance in this business during the course of 2004 particularly on the revenue side and if you take the value of this business -- institutional value of asset under management and so on and so forth, this is a valuable business and the challenge is to adjust the business model there and to make it a profitable business because we do feel that having this distribution channel has a strategic value to us.

Now the market growth rate is a bit difficult question because that would be different in every -- I mean on the retail side we are seeing 5% growth up to 9% in the European retail market.

We are seeing lower growth rates in Germany.

We have seen in the -- as demonstrated in the fourth quarter in Germany a profitable market growth for us, so obviously we are gaining market share.

We are improving our cross-selling and customer satisfaction is getting up which is very important.

So in that sense I think we are not budgeting anything which is substantially above market on the retail side.

Corporate finance as you have seen I would now like to analyze the first M&A transactions in the US, but it shows that there is momentum and I think the pipeline is good.

So it is good for us.

Same is true for ECM and for sales and trading.

It's always difficult to say the January month - the month of January is always a stellar one and you don't want to analyze it too early, so it in that sense it's difficult to say what's going to happen, but markets in general are pretty good.

We move with the mic to the left side of the audience.

Fuenna (ph)?

Can I ask questions in (inaudible).

One is on DB advisors and to what extent it helps the Q4 equity number.

What there a case that you actually saw an improvement in some of the positions because -- and also what are you actually doing with the portfolio?

Should we seen they go to zero and if we kind of look at '04 numbers DB advisors in terms of contribution, it sounds like its about $2 or 300 million, would I positive?

Would I be right on that?

And the secondary is kind of turnover in fixed income staff of CEO restructuring and you've had quite a lot of success on the fixed income side.

There are a lot of people hiring in fixed income.

Have you had an increase in turnover and are you worried?

Is that one of the reasons why you've increased the cash bonus for example?

Well the first question is that we did not -- that's not the reason we changed the equity metrics.

Not at all.

That was a decision by the compensation committee which was not influenced by anyone else.

No it was -- the only reason is to lower the mortgage that's going forward simple as that.

And I think we could afford to have it in fourth quarter.

Secondly, competitive pressure is high.

No doubt about that.

Have we lost any key people?

No.

Is there a risk?

Well, you never know in our business, but so far we have had a very, very stable platform in equities, in global markets, corporate finance and I'm very grateful for that.

And it also shows that people are more and more committed and are probably very proud of what they have achieved and in many areas we are market leaders so we don't like to go away and of course the equity compensation which we did not have six years ago when we lost a lot of people, now we have relatively -- but relatively important defer payments and you would probably leave a lot on the table and I'm not quite sure how many are willing to offer a sign-on bonus which is very important.

So, so far actually we are seeing competitive pressure increasing.

There are some, as I said, aggressive new entrants in this business but I think the influence have proven that we can do extremely well with very stable platform.

As far as product detail disclosure is concerned I guess we have gone as far as not one can go.

And we gave quite a lot of details by naming the individual product lines and whether they have contributed or not.

So I don't want to give you a number as far DB Advisor is concerned, but as always I mean your number or your estimate is not totally out of the range.

Maybe more conception.

What has it changed?

We had DB Advisor was a little bit combination of proprietary, fiduciary side-by-side and is not forbidden, lot of times do it, we don't want to have that, so we changed it, fiduciary, separated from proprietary on a much lower scale of course because the global market model is a different one and they don't want to get into the old equities model which was very successful, not critical of that, very successful, but it's a somewhat different.

So more into the flow monster model again to quote one of you and the side-by-side is one off.

Well we had more hands in that area.

Maybe Stewart, want to take it?

Yes, I have three questions please.

Two on slide 10 again.

I know it's only a model and it's not your target just illustrating it, but just to get a feel for your thinking.

The 4% revenue growth, do you need help from markets in that or can you do that, do you think with the initiatives that you outlined on slides 14 to 16.

So can you do it self-help or do you need a good fixed income market to support you, question one.

Question two.

The 4% revenue growth is about what $850 million of revenues.

I don't see any bonuses on that anywhere.

I presume that you have to pay bonuses or is that in the cost figures, the net figure or is that something that we should take off your figures your putting there?

And the third question is more strategic.

Is one of the 25% pre-tax ROE you've talked in the past, wanting to rebalance the group from CIB towards, PCAM, you're currently sell 70/30 and you want to go more 60/40.

But it sounds to me as if a lot of the gains from this program are going to come in CIB, GTB, IT infrastructure presuming those sorts of things are heavy usage in CIB.

So is this plan consistent with going towards a closer balance or don't you just end up being even more overweight CIB as a result of this program?

Well let me start with the first question and Clemens takes cost bonus issue.

I know as much as you do about -- based on what the aggregate revenue is in different businesses what you would need to have a 4% increase overall and where should it come from?

I mean there is clearly businesses -- growth rates might be higher or maybe it is not that important in terms of relative contribution, so sales and trading is for us very important piece as you all know and of course a collapse of the sales and trading business would clearly be a challenge, so I don't have to I think to say more.

It is important that the stabilize more or less sales and trading numbers is easier to see growth in other areas because its a stable business.

That's why we are pushing -- in coming to your third question, we are pushing to increase the peak hand side.

Now in terms of pre-tax I think asset management will see a quite a substantial restructuring primarily cost driven and private wealth management -- we are actually expecting to see better times ahead of us as you have now done the first build up and we have much more a critical mass and BBC the same.

As I said we -- I mean after so many years of uncertainty with the Deutsche Bank merger Allianz and divestments and whatever discussion was.

We have in the Deutsche Bank 24 as a separate unit with a lot of uncertainties and frustrations among clients to-- then the restructuring within last two to three years, then of course getting rid of many, many people in that business.

It was clearly a question of morale and clients were uncertain too.

We are measuring this thing and I have to say that the morale -- the motivation of our people is just going up like this.

Commitment in that is much higher than it was a year ago which is very important and client satisfaction is much higher than it was a year ago.

So in that sense, we are all seeing the positive signs and I will be disappointed if this did not lead to higher revenues as well going forward, but it is not the same momentum as we have in sales and trading, so sales and trading is an important piece.

And whether its 60/40 or not I always have to say we want to grow in both areas in absolute terms, where we want to grow faster in relative terms in peaking.

But if its -- we are now at 67/33, or something like that.

If its then 64/36 or whatever, it is not that important -- 60/40 is a target which we always said, but we would not slow down the development in CIB in order to catch up in peak hand.

That would certainly not be something we would like to do, but to have now $1.5 billion as pre-tax contribution from peak hand compared to relatively low number which we had four or five years ago is already a lot of stability.

Hopefully it goes up to $2 billion and plus and that's what we're working on, but it is not crucial that we get close to 60/40 in the next 12 months.

Certainly not in the sense that we are slowing down the CIB business.

That would absolutely not be the case.

Stewart on bonus, this is Clemens, the most interesting subject we have in an investment bank.

But as you rightly said, a lot of the revenue close is expected to come from GDB also from PBC in this area the pay allocation is a very low one.

Those in terms of percent of revenues and in percent of NIBBT.

As far as we are concerned the basis the NIBBT and (inaudible) they still have very low pay out ratios.

Clearly and I mentioned this, we factored into our cost planning for this year that an additional NIBBT out of revenue growth without an additional bonus accrual.

It is also clear that the cost savings which we intend -- which we plan to achieve on the infrastructure side must not relate to additional bonus accrual because if that was the case we could never make an infrastructure restructuring case being economically mild.

And of course, we have restruct on expensive people in the fourth quarter.

More questions.

Let's go in the middle, Mr. Cunners (ph).

Lodquire Cunners (ph) from WestLB.

I have one question here.

There was a number of questions there was quite a sharp cost increase in global transaction banking in Q4 compared to Q3, even if I take into account restructuring charges and then if you could give us maybe some more numbers on the consumer loans business.

What is the actual loan volume and what is the growth you achieved in the last year?

You're going into the details of the numbers we are -- the numbers we are monitoring closely do not show for the global transaction bank -- for the global transactions fund, an increase in costs in the past quarter.

So the underlying there might be a top up some way but according to our MIS as a matter of fact we have seen a very consistent development on the bonus side -- on the cost side and as far as the entire year is concerned we have seen a decline in costs.

We have to then -- we disagree we have to reconcile those numbers.

In consumer finance out of my head I guess it's about-

I think the answers is (inaudible).

Provision for off balance sheet positions are part of the expense line in US GAAP and we have the swing from minus 14 to plus 20.

I think that explains the cost increase.

In - as far as consumer finance concerned, I'll maybe have to double check it, is about 10 billion, slightly over 10 billion.

Biggest piece in Germany.

Second biggest piece in Italy and the loan book is growing by around 10%.

Okay.

If there would be additional answer, we'll come back to that.

Any further question -- I cut you short earlier.

It's your microphone now.

Thank you.

Philip Fisher (ph) from UBS.

Three questions, please.

Just assuming you wouldn't meet your target this year and mostly likely we'd be over revenue shortfall because the market wouldn't help you as much as you had hoped for.

And also in view of your positive comments on 2004 where, after the first quarter you have already had hoped that you would have reached the target in 2004.

Would such a shortfall of not meeting the target trigger a fundamental change in your thought process?

Like, would it just delay the target by one year and say the markets are better next year or would you say we're not going to make it with the present setup.

We either have to improve the investment bank to get it more balanced or we need to change more dramatically the PCAM contribution.

Second question, I know you've touched on the share buybacks, but just in general, has the reinvestment opportunities within the present business improved so that you would rather spend less on share buybacks and rather reinvest it in the company?

Or is it basically the same as it was in the previous 2 years?

And thirdly, just in terms of asset and wealth management, you had, in the second half of 2003, these real estate disposal gains in asset management, which, according to your underlying, at least which is valid at least for the division, underlying definition, you didn't flag it one-off.

And back then I remember a statement that they were rather recurring these high other revenues in asset management.

This wasn't the case in 2004.

You now think of those out at one-offs.

Should we expect rather low contributions from that side in the future?

Thanks.

Okay.

Let me - I do not - I never said and I know that so well because it was a question at the press conference last year.

We always said, because it's so nicely written -- 25 in 2005.

That's what I always said.

Never 2004.

But we were very close in the first quarter, yes.

You were right.

We were at 24%.

So, it was always a target for this year.

And some you, rightly so, said last year we have to do another business realignment program in order to achieve that.

We knew that as well, but I was committed personally to our staff in saying we are not doing another program until the end 2004.

That was the reason.

And I think that was very important for the personal credibility.

And in addition, as you all know, we had some other issues last year, which made it almost impossible to do such a program.

So, we waited until 2004.

We could have done it earlier.

I admit that.

But it was never an '04 issue.

Secondly, what would we do if we don't achieve it?

Well, let's talk about it when we come to the bridge and we come close.

I think we are convinced and confident that we can achieve it.

But it's not, as I said at the beginning, it's not -- you're not committing suicide if you don't get there.

There are many -- UBS, in my old days, had a 10 billion Swiss franc net income objective and never did it.

And the many banks have speak.

But we are committed.

And whether you want to say it and we try to explain it, as someone said, it is not a forecast and not a -- it is a model.

We tried to explain and it's up to you to assess it whether it's plausible or not, what we can do on the revenue side, or we can do on the cost side.

I think so far, we always have delivered on the cost side.

Now, this year, we have this 400 million restructuring, which as not in our forecast.

We had 200 million additional out of this space, this position charges, which part of the restructuring, of course.

And we had to change in the equity metrics of 200 million.

So, the 800 million, all in all, was not.

But if you take that out, we are at the 16.5 which we committed or said we would achieve.

On the risk side, we have done better than what we expected and on the revenue side, we are a little bit below what we said.

We need in our model to achieve the 25%.

And so, we are doing this again with a different since then and people forget it a little bit.

The currency, the exchange rate has changed dramatically.

And when we showed in the last year model we had that versus 2003, I think we had a negative impact on net income of 300 million.

Since then, the euro has strengthened.

So this has an impact and you cannot take exactly the same numbers on every line because things have changed and we are very important.

Look at our revenue distribution, how much we generate in the US market or in the Asian market, which unfortunately has not developed as well in terms of euros as we would have liked.

Now, the share buyback reinvest.

We have reinvested money where we felt we can achieve high returns.

We have not seen much more opportunities in the last 12 months where we could invest part of our capital.

We don't need it in many areas.

We have rather reduced our risk appetite and, as you have seen, we had 12 billion of alternative assets.

Now we are down to 2 and something.

Industrial holding the same.

Real estate, because we were skeptical about the German real estate market.

We have sold a lot of it.

Some criticized us.

I think it was the right move and at the right time.

But this has all reduced our capital allocations, which is necessary to support this investment.

And we have reinvested parts and we have given it back to shareholders.

So, in that sense, I have not, although we have a lot of intelligent people from all your banks coming to see us with IDs, we have not found a investment opportunity which would have approved internally and you would have like it.

Now, that may change tomorrow.

We are constantly looking into projects.

But we also said we want to grow organically.

And that we are not doing bigger things yet, which message which we get constantly from our investors around the globe.

But if you had a private banking, small boutique as we had recently.

Yes, we are taking it and other things.

But very reluctantly.

Now, the real estate disposal gains, we -- okay.

Now, basically, 2 questions.

Number 1, the real estate gain last year, we highlighted that gain.

We said it was underlying, but it was a gain and we highlighted that.

So, and it's part of our business.

We are a real estate asset management company and therefore that is part of that -- of our business model.

But important as that last year -- same time last year we highlighted this case.

So, this is on the morph transaction.

The other, you had a similar question that was other revenues.

And clearly, other revenues in asset and wealth management, we always have other revenues.

The gain showed up in other revenues and that was the reason why, from quarter to quarter, other revenues increased by around 200 million.

That was the morph transaction.

Once again, part of our business model without, from an accounting point of view, in other revenues and we discussed that those other revenues -- you shouldn't be too concerned about this accounting treatment.

Those other revenues do come from different sources and are clearly part of the underlying revenues as they result from our business model.

In the very last row -- is the Jerry (ph)?

Yes.

Thanks very much.

I will just come back again onto this cost question in slide 10, if I may.

It's consensual amongst a lot of people to think that fixed income may not be as good this year and we might expect revenues down 10, 15, 20%.

In that scenario in which group revenues are not plus 4, but are flat or might even be down, just to be totally clear, would you expect greater than 1.2 billion cost reduction because you would also be saving, presumably, on bonus accruals.

That's my first question.

Secondly, on UK asset management, could you just say what sort of options are within the scope of the strategic review underway there?

And thirdly, to what extent is the US business, also the US asset management business also and strategic review at this point?

The last question is clearly a no.

We don't need that.

That's a good business.

We are turning it around.

It gives us a good platform in the US market.

The British business is fix or sell.

The first priority is fix.

The second question was the -- yes.

I mean, it's clear, if the revenue is -- and I think it is lower -- bonus is lower.

So, in that sense, we are not assuming lower bonuses in here.

Rather, higher bonuses.

First question focused on more of that, otherwise we might have time for two more.

If this here - oh, yes, in the second row.

I saw your hand before.

Sorry for that.

Yes, I guess we've finally sort of got away from costs and focused on revenues in the second part of these questions, which is kind of the intriguing part of what's going on at the bank, I guess.

And the one area which is obviously the fastest growing in financial services is in the private wealth management, which you have a nice business, but frankly, it's really small.

You did touch on, in your opening remarks, that issue.

What do you think you can achieve in terms of growing that business or making it a much more meaningful part of the group as a whole?

Or is it, do you think, something which really is probably always going to be something that will grow quite nicely for you, particularly in your domestic market.

But can't obviously get some level, which start to match some of the larger plays in this market.

First of all, we are not maximizing profitability yet in this business.

If you compare us with some other players, which we do.

I won't mention its names.

And you have the assets under management or have the revenues which we have, they are making much more profit out of it.

This is not our intention in the short term.

We said from the beginning and that was two years ago.

This is a 5-year buildup.

I hope at the end of the five years that we are somewhere around 500 million pretax.

That's what we always said and that's how we communicate internally.

We are getting closer to a substantial number.

But it will take some time because we are not pushing it to maximize return yet.

I'm a strong believer in this business.

We are seeing good inflow and we are seeing good customer response and we are recruiting people.

Actually, I got a phone call from one European bank a few weeks ago saying we are too aggressively recruiting their people, which may be true.

But it shows that our people are aggressively building up this business and that's good.

Well, if there are not more questions -- we take the last question before closing.

Yes.

I have a question with regard to the currencies.

You gave us a number for a revenue increase, currency adjusted.

Could you also give us a number for costs, currency adjusted?

So what would the cost savings have been for sale currency relative to exchange rates?

The second question is with regard to euro hypo (ph).

I assume that there was a loss in Q4.

Could you put a number on this loss and probably Q4 numbers would have been better without this loss.

Euro hypo cost in the year 2004 was on the HGB.

So their accounts had to be reconciled to our US GAAP accounts.

And clear, their HGB result is not indicative to our US GAAP result.

To make matters more complicated, they are now in the process to change to IFRS.

Therefore, they have on the -- in that changeover, they have to do a reconciliation between their HGB or US -- German GAAP accounts -- HGB German GAAP accounts and IFRS.

I can assure it was a -- so, I can assure you there was, during the -- neither in the fourth quarter nor the entire year, a significant impact from euro hypo on our accounts.

I think this is pretty far, isn't it?

Maybe to just -- private wealth management, I would like mention one more thing.

We have, contrary to others, we have private banking and private wealth management.

And actually, we should add it up, if you talk about private banking.

But private wealth management alone has 143 billion invested assets, which is quite a big number.

And then, in addition we would have private banking numbers.

So, we are already, in terms of invested assets, relatively big, I think top 5 or 6 globally.

250 ...

250 billion private banking invested assets, which sometimes I'm asked (inaudible) that how big we are in the Swiss market and we are actually one of the biggest.

Some of the well known names in private banks are smaller in terms of invested asset.

Okay.

On that note, I would like to close our analyst meeting.

We all thank you for your interest in Deutsche Bank and we are looking forward to continue the dialogue with you in the next phase.

Thank you.