Deutsche Bank AG (DB) 2011 Q1 法說會逐字稿

Ladies and gentlemen, welcome to the first quarter 2011 conference call of Deutsche Bank.

I am your operator for this conference.

Please note that for the duration of the presentation, all participants will be in listen-only mode.

After the presentation, there will be an opportunity to ask questions.

At this time, I would like to turn the conference over to Joachim Mueller, Head of Investor Relations.

Please go ahead, sir.

Yes.

Good morning from Frankfurt.

This is Joachim Mueller.

On behalf of Deutsche Bank, I would like to welcome you all to our conference call on first quarter results.

Our CFO, Stefan Krause, will lead you through the presentation slides, which you will find on our website, along with all other documents we issued today.

Before we start, let me remind you of the cautionary statements regarding forward-looking statements at the end of this presentation.

And with that, I would like to hand over to Stefan.

Thank you, Joachim, and good morning to everybody.

I would like to highlight following features from our first quarter results before I go into the details that you will see on page 2 on my presentation.

We obviously have a strong capital generation and increasing risk efficiency that result in higher capital ratios in the quarter.

Solid CIB performance across all major business lines has demonstrated the strength of our global franchise, results of our focused investments, and the synergies from our CIB integration.

PCAM has had the best quarter ever, which reflects increased business volume in all products, and a significant Postbank contribution.

The integration of recent acquisitions is generating now already tangible results, with strong Q1 results across Asia Pacific, managing well through the volatility resulting from the Japanese situation.

We are on track to achieve the EUR4 billion revenue target for Asia Pacific as set out in our management agenda phase 4.

Obviously, some key risks remain.

The regulatory asymmetry, sovereign debt concerns, FX volatility, and the uncertainty in North Africa and the Middle East.

But on this basis of these good Q1 results, we are well on track to achieve our EUR10 billion target.

I would only like to remind everybody, [to the] some confusion that our EUR10 billion target is the sum of our business division results and not our Group pre-tax profit.

Let me now move on into the Group results on page 4.

I provide you here the usual profitability, capital and balance sheet overview.

I will comment on some of these numbers and ratios in the course of my presentation at different points, and therefore I will just make a few remarks here.

The pre-tax ROE according to our target definition, which in this quarter (technical difficulty), has come down to 22%, but has been earned on a substantially higher capital base, given our EUR10 billion capital increase in the fall of last year.

I would like to stress that our results are based on the continuously low level of value at risk.

The leverage ratio remains flat at 23 times equity.

I would also like to mention the fact that at EUR44.1 billion, our level 3 assets are down 88% of shareholders' equity, also down from 96% at year end of 2010.

On page 5 we show profitability.

Once again, Deutsche Bank, and we have demonstrated our earnings power, both in terms of pre-tax profits and net income.

Our quarterly pre-tax profit of EUR3 billion is above the level of the exceptionally strong first quarter of last year.

On that basis, we are able to generate quarterly net income of EUR2.1 billion.

The effective tax rate for the first quarter was 29%, and mainly benefited from the partial tax exemption of net gains following the change to the equity method of accounting for Hua Xia Bank, which I will come back to this when I talk about the Retail business.

Taxes for the quarter did not include any impact from the proposed non-tax deductible German and UK bank levies.

We expect our full-year 2011 tax rate to be approximately 32%, excluding the impact of the bank levy.

Let me now turn to our operating expenses.

Non-interest expenses were EUR7.1 billion, and increased EUR1.1 billion versus the first quarter of 2010.

The increase was mainly due to the three acquisitions we made last year.

We are pleased to see that for the first time in quite a while, G&A expenses have come down versus the preceding quarter, and this is despite the fact that Postbank has now been included for three months versus one month in the fourth quarter of 2010.

The decrease reflects some typical, mainly discretionary, year-end spend in the fourth quarter of last year, but it's also a sign that our various efficiency measures are beginning to bear fruit on the non-comp side.

First quarter [step] expenses were again impacted by the acceleration of deferred expenses related to career retirement rules, which were applicable to the February 2011 [grant].

Total impact was EUR369 million in the first quarter of 2011.

Compensation ratio in the first quarter was 41%.

Excluding the acceleration of deferred awards, the ratio would have been 37%.

We anticipate that starting in the second quarter of this year, expenses could be impacted by the bank levies in Germany and the UK.

Let me now provide you with some more details on the cost development versus the first quarter of last year on the next page.

As you can see, the bulk of the increase, EUR877 million, was due to the three acquisitions we made last year.

Other reasons were an increase in performance-related pay, as well as costs relating to the Cosmo investment.

The complexity reduction program is nicely progressing in line with our plan.

Sustainable savings of more than EUR150 million have already been realized.

Based on the progress we made compared to the fourth quarter of 2010, and due to the further development of the program, we expect to achieve approximately EUR800 million in savings in full year '11, with a net contribution of EUR600 million to our cost base after investment spend.

We are confident that by the end of this year, we will have achieved our communicated target of EUR1 billion of ongoing savings per year, reaching the full contribution to our cost base in 2012.

Compared with the fourth quarter of 2010, the increase in total expenses by EUR800 million after adjusting for acquisitions, the aforementioned career retirement effect, and the non-comp cost reductions, is due to higher performance related accruals, as the first quarter saw an increase in revenues by 41% versus the fourth quarter, and the quadrupling of pre-tax profits.

Let me now move on page 8 to our capital ratios.

The Tier 1 capital ratio came in at 13.4% at the end of the first quarter.

The core Tier 1 ratio, which excludes hybrids, was at 9.6%, up by almost 100 basis points versus year-end 2010.

You may have noticed on this slide that we're not referring to a 10% Tier 1 target any longer.

We'll come back to the market with a new guidance on what we think are adequate capitalization levels for the Bank when the regulatory and market requirements have become clear.

There has been some misunderstanding in recent weeks also regarding the changes we are proposing to our holding structure in the United States.

Let me therefore say a few words on this topic.

In order to meet new regulatory requirements in the United States, Deutsche Bank intends to partly reorganize the holding structure for its operated businesses in the United States.

The [organizational] holding structure, part of which we have put up for approval at our AGM next month, will not lead to additional equity requirements on Deutsche Bank Group level, nor does it require additional funding for the proposed second shareholder in Deutsche Bank New York.

We also expect that there will be no negative tax effect as we are aligning our primary US entities into a single tax grouping.

We've agreed the new structure with the US authorities.

Let me also remind you that our client-facing regulated US subsidiaries, DBSI and DBTCA, are highly capitalized as they stand right now.

On the following page, provides some details on the development of our core Tier 1 capital and our risk-weighted assets.

As you can see, the increase in core Tier 1 capital was largely driven by this quarter's net income of EUR2.1 billion.

Risk-weighted assets came down by EUR18 billion in the quarter, primarily due to EUR12 billion lower credit risk related charges, including a EUR4 billion reduction risk-weighted asset related to derivatives in the trading business, as well as EUR6 billion lending related risk-weighted asset reduction in our classic banking businesses.

The development of foreign exchange rates, obviously in particular the euro/US dollar rate, impacted both capital and risk-weighted assets, with only a marginal net impact on our core Tier 1 ratio, as you can see on the two charts.

We believe, and that's what we highlight on page 10, as you know, that the discussion on funding is at least as important for investors in a bank as the capital theme.

We would, therefore, like to point out again that the capital discussion has not negatively affected our funding advantage, both in terms of funding costs, and access to all relevant funding sources.

In terms of costs, we have issued EUR10 billion to the capital markets in the first quarter at an average spread of 56 basis points over LIBOR/[EURIBOR].

We sold 40% of this volume through retail networks.

The issuance activity included our second and long-awaited Pfandbrief of EUR1 billion issued at a spread of 13 basis points, with again being able to issue senior paper significantly tighter than CDS levels; in fact, roughly 40 basis points tighter during Q1.

In addition, we have gathered approximately EUR6 billion of funding from retail deposits from PBC's 12 month deposit campaign, where the [inflows] have continued into the first quarter.

This campaign contributed to the accounting driven volatility in our reconciliation column, which I will explain at a chart later.

As a result of our first quarter funding activities, we can report that our 2011 funding plan of EUR26 billion, we have already completed 63% by the end of this reporting period.

I would like to mention here as well that as of March 31, we held EUR135 billion of liquidity reserves to ensure the Bank remains liquid in a stress scenario.

For further details in this number and the structure of our funding sources, you can also refer to slide 34 in the appendix of my presentation.

So let's move on now to the first quarter results of our business segments.

As usual, I'll start with an overview of the divisional performance.

At first sight, there are three things that strike me when looking at this chart.

Firstly, our Investment Bank has managed to achieve results which are not far short of the outstanding results in the first quarter of 2010.

Secondly, the contribution of our Retail business has massively risen, even if you adjust for the one-off impact from our Chinese investment.

And thirdly, the negative contributions from corporate investments and consolidation and adjustments, which are not part of the results of our business divisions, and therefore are not included in our EUR10 billion target, we have disclosed here separately.

I will come back to all of these points when going through the divisional results.

Now let me start on page 13 with CB&S.

In CB&S, we have achieved very good first quarter results again, with strong performance across both Sales & Trading and Corporate Finance, despite more difficult trading conditions in March driven by the events in Japan and the ongoing sovereign risk concerns.

While I will comment on the different revenue lines on the following slides, let me have a quick look at costs here.

Costs were higher compared to the prior-year quarter, driven by higher bonus and retention costs as well as IT investment supporting many of our strategic initiatives.

Adjusting for these and the FX moves, costs were broadly flat.

Compared to the first quarter of 2010, first quarter '11 included a substantial increase in current year bonus and retention charges, reflecting the impact of career retirement, as discussed previously.

This was partially offset by a decrease in other costs.

The Investment Bank remains highly focused on cost management going forward.

We have also made progress in de-risking the business and increasing capital efficiency.

We reduced the bespoke book in our credit correlation portfolio in the first quarter, and net monoline exposure has decreased through targeted actions.

The reduction of our remaining IAS39 portfolio, which largely relates to the Sales & Trading debt business, has made further progress in the first quarter.

As you can see from a slide in the appendix, we sold assets with a book value of approximately EUR700 million, recording a small gain of EUR18 million.

Including redemptions and maturities, the overall difference between carrying and fair value came down by another EUR0.5 billion to EUR2.5 billion at the end of the quarter.

We will obviously continue to take any opportunities to reduce our exposure to legacy assets.

On page 14, we show the revenues in Sales & Trading debt and can report that revenues were only down 4% on a very strong first quarter last year.

Improvements of RMBS and commodities partially offset declines across FX rates, credit and emerging markets, mainly due to slower client volumes as a result of the geopolitical uncertainties, but our client solution businesses have continued to have strong demand.

Overall, we believe this was a strong performance versus our key peers, particularly given that we have reduced risk further compared to the prior-year quarter, and have not seen a sharp decline in revenues.

Please see the slide for further details on the revenue trends in the different businesses.

On page 15, I show that Sales & Trading equity revenues were flat versus the first quarter of 2010, which is a strong performance, given the declines for many of our peers.

In fact, there were solid revenues from all businesses, despite high volatility in markets in March.

Our equity results included a gain from the sale in Russian Stock Exchange, RTS.

However, this was partially offset by losses during the quarter due to the Japan earthquake, so underlying performance was also very pleasing.

I would like to mention as well that we were voted number 1 in the Institutional Investor's 2011 European equity research survey.

Let me go to page 16.

In our primary business, we finished the first quarter ranked number 4 globally in Dealogic fees, our best ever start to a year.

We gained market share in all regions and have top five ranks in M&A, ECM and high yield and investment grade bonds, with particularly strong performance in cross-border M&A, Europe and APAC.

We played a key role in the number of transactions, including [fifth third TARP] repayment, the Hutchison Port's IPO, AT&T, T-Mobile and Deutsche Borse New York Stock Exchange transactions.

These are only a few of the significant transactions in which we were able to support our clients.

They show our improved strength across the US and Asia, and how our clients benefit from the further integration of CIB.

Let me now move on to GTB on the next page.

GTB had a strong quarter, reflected in an IBIT increase of EUR137 million year on year, mainly driven by strong revenue growth across all major businesses.

Specifically, trade finance continued to capitalize on the strong demand for international trade products and financing; the Trust & Securities Services profited from improved market conditions in the Depositary Receipt & Custody business; and cash management revenues grew based on higher payment and deposit volumes, as well an uptick in interest rates.

The acquisition of the commercial banking activities from ABN AMRO made a small positive contribution to GTB's pre-tax profit in this quarter.

We currently expect this business to roughly break even for the full year.

The net increase in costs versus the first quarter of last year was mainly caused by the acquisition.

The interest rate increase by the ECB may provide further upside for interest income in GTB.

So let me move now to PCAM.

On page 18, I start with asset management.

Adjusted for the aforementioned career retirement effect, which was an expense of EUR33 million in this division, pre-tax profit in the first quarter was higher than in all quarters of 2010.

Starting the year at this level, we expect further increases in quarterly IBIT, because the seasonality of our business that you can see in the 2009 quarters, is something we anticipated to see this year again.

This is due to the cycle of performance fees, which typically come in in the second half of the year.

The overall business saw EUR6 billion of outflows in low margin products, and EUR2 billion of inflows in higher fee products, the most notable example in the quarter being the following.

DWS Japan raised more than EUR3 billion, one half thereof in the first quarter from a new fund which offers an attractive yield pickup for Japanese investors by offering them exposure to global infrastructure stocks.

This fund is run as a White Label product in cooperation with Nomura, and combines the creativity of DWS with the infrastructure investment and expertise of [Reed].

The net margin on this product for asset management is no less than 80 basis points.

Overall, the net flows in the quarter are expected to result in EUR10 million positive revenue for the full year.

Anecdotally, I would like to highlight that our core retirement product for the German [REEF Noventa] has now sold more than 1 million times, with 1.1 million contracts sold by the end of March of 2011.

The charm as you know of this product as in any of the other retirement structures, is there is a regular flow of client savings into it.

If clients don't save, they lose the government subsidy.

On page 19, I show you the results of our Private Wealth Management business.

Our Private Wealth Management business, including the Sal.

Oppenheim franchise, produced a very satisfying result of EUR116 million before taxes.

This was due to the mix of good operating performance and some positive one-offs at Sal.

Oppenheim.

Excluding Sal.

Oppenheim, revenues were up 16% year on year, driven by new money market performance and a profitable shift in the asset mix.

Provisions for credit losses were slightly up from a specific effect in the first quarter.

We expect a normalized level to be around EUR10 million per quarter.

Net new money was EUR3 billion relating to Germany and Asia Pacific mainly.

You may have noted that the numbers on this chart have been adjusted for BHF, which due to our intention to sell, have been transferred to the Corporate Investment segment as of January 1, 2011.

As you know, during the first quarter of 2011, we tried to conduct exclusive negotiations on the sale of BHF Bank with LGT, a Liechtenstein based bank, and we regret that this transaction did not come about.

Given that this decision has only been announced last week, it's really too early to now provide details regarding the integration of BHF into Deutsche Bank, which we will do then in the next quarter.

Let me move on to page 20, our Private & Business Client business.

PBC has now begun to reap the benefits from the acquisition of Postbank, which, in the first quarter of '11, has been included in Deutsche Bank's consolidated income statement for a full quarter for the first time.

Postbank contributed EUR221 million to PBC after cost-to-achieve, purchase price, accounting effects and minorities.

The EUR78 million cost-to-achieve in the first quarter included EUR38 million of infrastructure investments at PB level to prepare for the joint platform.

The existing retail businesses of Deutsche Bank also generated excellent results.

One example of our distribution power is a very successful deposit gathering campaign which has already brought EUR10 billion to the Group since November of last year.

41% of the amount was new money to the Bank.

The change in the accounting of our stake in Chinese HuaXia Bank, which we now hold at equity, triggered a net 1 time gain through the P&L or EUR236 million.

This gain did not increase our book equity.

However, as the gain had been recognized in the other comprehensive income previously, it did increase our Tier 1 capital, though by approximately around EUR200 million post-tax.

The ongoing equity pickup was EUR14 million for six weeks of the quarter.

As usual, in the third section of my presentation, I will now turn to some specific themes which deserve a closer look in our view (technical difficulty) provision impaired loans, something you should note for the future.

Performance of the exposure held in our corporate investments explained the accounting noise that was obviously substantially higher than in usual quarters in consolidation adjustments, and give you an update on where we stand with the EUR10 billion target.

First, let's take a closer look on the accounting effect.

With the consolidation of Postbank, it's now on our recording of credit provisions.

We did record EUR373 million in provisions for credit losses in the first quarter, including EUR206 million for Postbank.

With regard to Postbank, it is important to bear in mind that we had to apply at the time of consolidation, we had to put Postbank loans on our balance sheet already (technical difficulty).

Another significant driver was the medium to longer term FX basis risk, which is due to the fact that DB raises the majority of its funds in euro, and partially swaps into US dollar.

Finally, please bear in mind that consolidation adjusted is not included in our 2011 pre-tax profit target, and that overall, we expect it to be negative in 2011.

Let me now go to the update on our 2011 targets, as shown on page 26.

Understandably the market obviously is very closely watching us on our way to achieving the well publicized target of EUR10 billion of the pre-tax profit sum of our business divisions for the full year 2011.

With EUR3.5 billion for our business divisions in the bag, which is 35% of what we want to earn this year, I think we can say that we are very well on track to deliver.

I would also like to point out that the pre-tax results of the first quarter were ahead of our plan for the quarter.

Also, there was a negative FX impact of EUR120 million compared with the planned FX rates.

If you want to look for risk factors beyond FX movements, [here] could be some of them.

Markets obviously could develop less favorably than had we assumed when we introduced the targets.

As Actavis was transferred from Corporate Investments -- to Corporate Investments at the beginning of the year, CB&S will not benefit from the positive contribution we expected Actavis to deliver after restructuring in the last year in the budget.

But such potential short [funds] could, at least partially, be compensated by our well performing Retail business, which had a very good performance in the first quarter, even if I exclude the one-time effect from Hua Xia.

On the last slide, it provides you a summary of outlook that I'm not going to walk you through in detail.

I just want to make you aware -- this is some free advertizing for my IR team; I want to make you aware that we have some workshops set up for CIB and PBC in June of 2011 that we hope you all can attend.

So thank you very much, and I'll answer any questions you have.

We will now begin the question and answer session.

(Operator Instructions).

Kian Abouhossein, JPMorgan.

A few questions.

I'm afraid some of them were accounting related.

Just coming back to slide 20 where you went through the accounting of your fair value accounting on the loan book of Postbank.

Can you just, if you may, run through it one more time to explain exactly how the booking works, and remind me of how much you have booked in terms of mark-up, as I understood there was a mark-up from your presentation?

And then secondly, on slide 25, can you maybe explain to me one more time the timing differences, how they accrue; and in particular, how this half of the EUR370 million has impacted your PBC business?

And then thirdly, can you run me through the Corporate Investment side, through the different assets?

You mentioned Actavis should have an okay result.

What does that mean?

Does that mean a loss, or does it mean it should break even for the year?

Can you also talk about the other assets that you clearly have transferred over into this division?

And what will happen with BHF?

Will it stay here, or will it be going back to your divisional numbers?

And how should we think about it against your EUR10 billion target?

Okay, let me start, Kian, with -- to answer some of your questions.

Let me start on your slide -- let me go back to slide 20.

I think in slide 20, what we tried to highlight, obviously, is the fair value of our loan book.

[In] principle, what we had to do on consolidation is we had -- oh, 22, sorry; slide 22 is what you referred to.

What we had to do on consolidation is to fair value all assets and liabilities of Postbank.

Of course, when you fair value them, in comparison to the single accounts of Postbank, we now have different value of the loan on the Group accounts versus the value of the loan on the individual Postbank accounts, meaning that while they have a loan, minus obviously loan-loss provisions, we by fair valuing obviously don't need the loan-loss provisions.

We obviously eliminate the loan-loss provisions because we correctly represent the value of this loan at the initial transaction.

And therefore now you see this divergency between loan-loss reporting at Postbank at individual entity level, and the loan-loss recording at Group level, because of course, if -- and that's what I was trying to explain with my example; if now Postbank, let's say, has in a specific loan a deterioration of the credit, a deterioration of the rating, and they additionally put allowances on it, obviously, at that point of time, we have to compare it with the fair value that we put on the loan, and then make a different assessment whether we need additional or don't need additional provisions.

On page 22, what happens basically is as we now have taken provisions, and let's assume now the reverse, that there is an improvement in the loan at Postbank, and they are able now to release loan-loss provisions they had made previously, of course, the contrary effect occurs in which we now have an additional income that we are not able to now net against loan-loss provisions, but that we record them in other income.

And therefore in the future I will always have to show to you so you get a good feeling what our net -- on a definition comparable net credit provisions are.

We will disclose to you how much the impact is on the net income.

And therefore, you could see that although we have to report EUR373 million in credit provisions, the effective, financially effective rate for the Group was only EUR256 million because we have an offset in income on the other side.

So there is no net impact.

This is obviously in line with our definition.

Let me go to your timing differences, and I would really like to refer to the chart.

Let me quickly go -- it's to slide 25.

Let me just quickly [only help you].

I don't know if you could look at the chart that we put down.

Let's look at the Group column.

In the Group column, you see that basically we have steady accrued interest rate, which we took an example of a funding instrument we have in place.

And you see on what is the third line, you see this [10, 10, 10, 10, 10], which is the assumption -- this is the over time accrued interest paid on a monthly basis, if you so want; or an annual basis you can take.

Of course, it obviously depends on the term of the interest.

Now in this segment, you see now obviously the underlying mark to market.

We have to mark to market these instruments, and in the assumption here, you saw a positive [15].

So you see the positive 15.

And then you see in C&A that in order to get to the Group which has -- we need to record 10, an interest expense of 10.

You see that we have to compensate with 25 in C&A.

So if we take then the segment plus C&A, I can record the 10 interest rate expense.

Then of course we made just an assumption.

Obviously, you could make any assumption of how the MtM moves, and we showed some volatility here in this chart to just prove the point how much it moves.

So the subsequent part is then a negative MtM, and then you see that we have a positive in the C&A, and that is how this volatility generates.

But important for us to note that over time, and we assume now this is a fixed period instrument; it's an assumption, of course, that after the fixed period it basically nets out to zero.

And that's what obviously will continuously mean.

So to some extent, if we had a quarter with a significant impact, you can make an assumption that there's some positives coming down the road.

And this is obviously something also to do with the front loading of our funding that we have done.

For PBC, the effect is overall neutral.

Secondly, they have -- also they are hedging derivatives on an MtM basis.

So at the end, they are -- for PBC specifically in this quarter, the effect was more or less neutral.

Then on the Corporate Investment side, let me walk you through a couple of assets that we have, and let me just refer to the larger ones.

Actavis actually has a positive P&L, and has -- in our plan, the assumption was that Actavis will have a positive contribution.

It was [in Actavis] business.

We now have made the management decision to run it out of Corporate Investments; and, therefore, according to the rules in our segment reporting, we have to reclassify it, because our reclassification is guided by the fact of who -- which segment one has the managerial responsibility for the business.

So to that extent, we actually took out a planned profit from the EUR10 billion target and moved it into our C&I segment.

The second is we have our casino, Cosmopolitan, which in the first quarter had obviously its startup losses.

We inaugurated and opened it at the end of last year, and again, obviously, we've had now the first quarter.

The business is doing well.

We are moving ahead, but obviously we had to deal with the usual startup losses which also in its size were within our expected levels of the startup of an operation of this magnitude.

On our ports, on Maher, we have a good operational development.

Obviously, the improvement in the general economic environment, the improvement in import/export business has had a good impact on our ports, with gained additional volume, with gained additional customers.

Nevertheless, Maher continues to be impacted with a relatively expensive funding that was done pre-crisis; and second, obviously, this business as it's asset-intensive has to carry a high level of depreciation, and that's why it showed a loss in the quarter.

We did also have an impairment on our Taunus corporate -- Taunusanlage corporate center headquarters building; that is to know what transferred into a fund, and we have to do a mark-to-market on that has well.

And we had a negative impact that is also a one-time effect that will not reoccur, which you need to know.

And then with BHF, again, as I said in my slide, it's too early to tell specifically what's going to happen.

We obviously are working on it.

It's work in progress, and we obviously were geared up to do the sale until last week.

And, therefore, we ask for your understanding that I don't have fully lined-out plan at this point in time as it's still work in progress.

Okay, and on the corporate Investment side, is there any way that you can give us an idea of what the potential -- we know the divisional pre-tax target, but on the corporate and investment side, what we should assume could be the potential loss in that division for the year?

Well, I can definitely tell you that the first quarter is not a good example to extrapolate for the rest of the year.

And that is expected to be substantially lower than the multiplication of that quarter.

I can give you as much.

And the corporate center, I assume, is going to be mainly purely impacted by these accounting changes which are, over time, be going closer to zero?

Yes.

But there is no underlying issue really?

No.

Okay, great.

No; there's no other effects.

It's mainly again -- obviously, and I can give you some -- obviously, we are certainly bothered by the volatility.

It is something you generally don't want to see on your accounts.

It always causes concerns and suspicion around what's going on if you have, let's say, a non-business division impact of this magnitude.

We are working in reducing.

You can somewhat reduce this volatility by complying better with hedging requirements according to IFRS, and we are working, Hugo and I, are working to improve that and lower the volatility on that.

And obviously, that requires some investment into systems, and that's going to take a little bit of the time.

But we believe that, I think.

But whenever we have a big negative on that you can expect that down the line, there will be a big positive; because at the end, this always results in zero.

And the second effect is the basis risk US because of our funding between US; mainly fund in euro and, obviously, we are supporting a strong business in the United States.

That's obviously (inaudible), but also there our view is that we want to come to a better balancing to avoid the volatility.

Okay, and lastly, BHF, we should leave it in our forecast?

We should assume it's staying in this division for now.

Well, yes; we will -- obviously, now we have a quarter ahead of us, and in this quarter we'll make the pertinent decisions.

And my expectations would be that if I update you on the second quarter, I can give you specifics on how we deal with it.

Great.

Thank you very much.

Matt Clark, KBW.

A couple of questions, firstly on the guidance or outlook for the Postbank impact.

I think you had said to expect a roughly neutral impact this year as integration costs outweigh the underlying contribution; and clearly, it's had a significantly positive impact in the first quarter.

Would you revise that previous guidance and/or maybe give some guidance for how you would expect integration expenses to change versus the first quarter level?

And the second question is about the securitization deduction within your Tier 1 capital, which has stubbornly remained around the EUR5 billion level.

I just want to understand your thinking there.

In the past, I think you've suggested that there are some hedges that leave you pretty comfortable with the economic impact and valuation of that, but from the outside, it's a bit hard to see why, if that's so, why you don't sell those down.

So could you just comment on why you haven't been more aggressive in reducing those securitization positions?

Is it because you think the market will recover from here?

Or you just have a high degree of confidence that you can sell them down in the future without a loss, and want to enjoy the revenue from them in the meantime?

Or any other thoughts there would be appreciated, because it's a bit hard to digest.

Thanks.

Yes, okay, Matt; good question.

First of all, on the guidance, I happily revise my guidance.

So far, we've had a good performance and as we -- at Postbank, a really very good performance.

Germany is doing very well, and you see it also in our classic or traditional Deutsche Bank business.

We are investing.

We are moving ahead with the integration.

We are obviously working on it.

But we definitely at this point can say that Postbank probably will contribute stronger than expected in the plan.

Let's not forget that the time we made the plan we had not yet the full Postbank insight.

We did not have the full working with Postbank because the plan was developed around the September to November timeframe of last year.

And we then went into the consolidation, as you know, towards the end of December timeframe at the end of the year.

And, therefore, obviously now with the update of the plan of Postbank, with the insight into what their plan is, we definitely expect a better contribution.

Nevertheless, you're right; obviously, some of the costs to achieve these synergies will increase throughout the year; but definitely, gladly revise my guidance that obviously Postbank will help more.

Then on the securitization deduction again, it's as you correctly pointed out, it's not at all an issue that concerns us from a financial point of view.

According to the German solvency rules that we apply when calculating capital deductions on that portfolio, the rules are very much form over substance.

And in this form over substance statement, obviously there is -- when we have a hedge at portfolio level that's not specific, we still have to apply the higher capital charge, although economically, the position is financially protected and hedged from our point of view.

And therefore, the true risk in that portfolio versus what we have to report as capital charges is no relation whatsoever.

That's what we're not concerned about this book at all.

The book is a positive book.

The book is contributing and, therefore, obviously, you are also right in your second assumption that obviously we have no specific hurry in selling this book because it continues to contribute.

And economically, or from a risk point of view, it is a protected book.

And we expect obviously by the end of the year the levels to be lower.

Obviously, you will have some maturity, and obviously any opportunity for us to sell at reasonable levels we will obviously take.

And we also continue to be confident that we will be able to sell at [no P&L effect] impact towards the later part of the year.

The good news again is that obviously some of these capital charges already emulate or are comparable to what we will have to deal in then in the Basel 2.5 framework.

So to that extent the step-up for us when it comes to Basel 2.5 will not be as significant as it might have been if this German solvency rule application would not -- we wouldn't have to already done it since a couple of quarters.

Okay, can I just follow up then?

Some other banks have said that they don't see any reason to mitigate aggressively at this point in time and we should think about quotas to end 2012 as being when they're really going to aggressively reduce their balance sheets.

Is that the way we should think about this portfolio; that come December 2012, you can just kick it out the door then comfortably?

No, I would give you a different picture.

This is a portfolio that is running off at a good pace, so we don't expect it to have this like we would be exposed to a big bag of assets that we have to get out.

So our plan basically shows a run-off.

Our plan shows also some sales activities that are ongoing, and not like for heavy inflow that hit.

So we will continue to reduce, but obviously not necessarily aggressively.

But our plan includes [via] maturity and some sales, a rundown of the portfolio before the big capital charges apply to a portfolio of this nature.

I would really like to claim that maybe versus some of our competitors, we started this effort of reducing these assets much earlier.

We put this book on hold and started the run-off and reduction in sales activities much earlier.

Okay, thanks very much.

Philipp Zieschang, UBS.

Morning.

I have basically two areas.

One is again your 2011 targets; and the second one would be capital.

With respect to your 2011 targets, you've mentioned that due to the Actavis transfer that CB&S will lose some profits which hopefully are being made up by PBC.

Do you have firm new profit targets for 2011 for these two divisions?

That would be the first question.

The second one is coming back, I think, to Kian's point on the corporate investments.

You said at the last conference call that we should expect a running cost of roughly EUR300 million for corporate investments.

So will that change due to the Actavis inclusion?

Because it's all basically stories.

You had a decent [deed], but what do we need to deduct from your EUR10 billion target for 2011 on the non-operating side?

So what is basically your new --?

You've mentioned that it isn't a Q1 run-rate, but you've mentioned a firm number at the last conference call with the [300].

The third one related also is again on the consolidation adjustment side.

Is there any reason why what we should expect beyond 2011 in terms of a normalized contribution, why we should have a structural loss in there, or is it just the hedging noise which is probably reversing largely during the next three quarters, as you indicated?

So basically, whether there are new targets for PBC and CB&S, and what should we plug in for the other two non operating divisions for 2011.

And is there any structural noise beyond 2011, apart from the running costs?

The second part is basically the capital base.

You haven't put in a slide on your Basel 3 outlook which you've intensively discussed in Q3.

I was just wondering, given that you recently put out new disclosure saying that 25% of CIB risk-weighted assets is legacy post-mitigation in 2013, whether -- and that wasn't in that form flagged when you gave your Basel 3 guidance of the 7%; and in 2013, the 7% core Tier 1, including deductions, and the 8.1% excluding deductions.

I was just wondering how should we bake in this new disclosure into the capital forecast.

Is it something you in terms of risk-weighted assets which is -- which goes beyond your Q3 disclosure?

And is there much more capital releases to be expected because it is said that it's post-mitigation?

Thank you.

Okay.

Philip, let me start on the targets.

No; we wanted to make -- well, we have not set out new targets for our different business divisions on Q1 result.

Certainly something we may look into as we get into the second quarter, but at this time, we felt it's too early to make adjustments.

We just wanted to make you aware that in all fairness, as we transferred and took profit out of the CIB's target, that it would be fair to mention it, that certainly to somewhat a stretch for CIB has been technically increased at this point in time, and that's something that we would have to consider down the road.

Second, obviously, I want you to be aware that, obviously, we have opportunities within CIB, obviously, in the budget; also have good results in the performance; good results at GTB levels as well as the PBC levels that we have compensating effect.

Also you may be aware that obviously we will have an issue as exchange rate impacts in the first quarter on the plan was already negative by approximately EUR120 million, and I want to also make you aware of this effect.

But to answer your question, no, we have not given out new targets.

We would like to stay with the current targets at this point in time.

But you should understand how the targets have been impacted, either by technical or by market driven effects.

Our corporate investment, that's as I say, I wouldn't change their target either.

As you saw, we had some additional one-offs in the first quarter.

And obviously, they may be offset then by the benefit we might have from our targets over the year.

So I would stay around the same guidance that you mentioned and that we have given you.

On the normalization of the C&A, honestly, that's a very difficult question to answer because the exchange rate and interest rate movements are -- just imagine, these are -- the balance sheet items behind this are almost trillion [positions] and, obviously, any slightest move on interest rates will obviously cause very quickly EUR50 million to EUR100 million in volatility in these [countries].

And it's based on the fact of the large -- on the big size of the underlying.

Basically, our view is that we want to reduce the volatility.

We used to have much lower; it was around rather the EUR200 million type of volatility, instead of close to EUR400 million in volatility.

And the management actions we've taken is to bring it down.

By the way, in a peer comparison, we've seen that peers have similar effects, [added up] your accounting noise driven.

We just wanted to make everybody aware that this is really technically -- that we're not transferring any loss positions into the two segments to improve our EUR10 billion target, because that would be a definitely a wrong view on what's happening, both in CI and with the C&A adjustments.

But you can expect that we are working on reducing the noise, and that definitely the noise we saw in this quarter, hopefully, it's one that stays at the higher end.

And of course, I'm making this statement under the assumption that interest rates, for example, or exchange rates, don't show substantial volatility, because that obviously could impact this structure.

Last but not least, honestly, no change to our capital.

We have been -- we continuously monitor our capital plan.

And we have given you just this disclosure that we did at the [MF] conference.

It was just meant to give you some additional disclosure around the topic.

But our capital plan is unchanged.

Obviously, we have monitored and continue to observe any impact and changes we have had.

But in fact, it's somewhat our currency is that we might be a little bit even somewhat better than we indicated in the third quarter in our forecast for our capital.

So we are in line.

We are in the process with our regulators to review Basel 2.5 implementation.

But at this point in time, I can report to you that we have no material deviations at this point to report.

Thanks.

Just a final one on the bank levy you've mentioned we should expect from the second quarter onwards; some charges related to Germany and the UK.

Could you --?

That's definitely something you should expect, because we expect these laws to be enacted.

And as soon as obviously the laws are being enacted, we will have to then start booking expense around it.

We cannot, according to IFRS, until the law is enacted and the charges have a certain level of certainty.

And that's why we didn't have any charges relating to those in the first quarter.

Will it be in tax line or in operating costs, and could you give us a bit of color in terms of the size?

These are cost taxes.

They will be in operating line.

And the size potentially?

That we have not given an update at this point in time, but I think you hear some numbers floating around that are sizeable, so that's something we have to deal with.

But again, let's not forget that this will not impact our EUR10 billion target.

In the way we have defined the EUR10 billion target, we clearly said that this is an impact that's outside of our EUR10 billion target.

So in terms of tracking this, will have not an impact.

Just on the Group pre-tax, and then certainly after tax results it might.

Thank you.

But I'll give you some more details I think in Q2 as soon as we have more certainty around that issue.

Derek De Vries, Bank of America.

Thanks.

I just want to come back to a few things we've touched on already, and hopefully I'm not the only one still a bit confused.

Starting with slide 25, and I apologize if you've gone through this a few times, but I just want to make sure I understand it.

The EUR370 million negative impact from the corporate center, that's pretty clear.

And then it's pretty clear there's an offsetting positive impact through the segments.

Can you quantify what that positive impact was in Q1?

And then I realize these will reverse in Q2, Q3, etc., but did you quantify the positive impacts through the divisions, because presumably, it's not the full EUR370 million?

That's the first question.

Second question, just to follow up on the Basel 3 stuff.

Obviously, one of the positive surprises from this set of results was the risk-weighted asset reduction.

But if I understood your answer to the previous questions, you're leaving your EUR125 billion and EUR190 billion net and gross risk-weighted asset under Basel 3 and those numbers are unchanged.

So as I'm calculating my Basel 3 numbers, the only difference is I'm starting with a lower point in grossing it up the same.

Is that correct?

And then I just want to -- you mentioned the -- in the Equities business, you mentioned there's a positive impact from your sale of the stake in the Russian Stock Exchange and that's offset by some negative impacts associated with the conditions in Q1.

I'm just wondering, in terms of the stake in Russian Stock Exchange, are we talking like a 20 million gain that's offset by negatives?

Or is it something larger than that, would be helpful.

Thanks.

Okay.

I know that this consolidation adjustment impact is [not], but let's not forget that when we compare our division, it has no positive impact because the divisions are on a mark-to-market for the underlying assets and the hedges as well.

Yes?

So I know it's difficult to comprehend, but in that sense, it's just a correction position between two accounting methods.

That's all it does.

It doesn't have necessarily any positive impact.

It comes back to this question is, what's the true profit?

Is it an accrual profit, or is it a mark-to-market profit that you want to register?

And that's why it's difficult to say that there was a positive impact, because it's just an accounting method or [view different] on how you define the profit of a division and that (multiple speakers).

Yes, but in your slide, you show the negative -- so in your example, you show the negative EUR25 million impact in the corporate and adjustments and you show the positive EUR15 million in the segment; and in the next quarter, that's a negative EUR25 million in the segment and positive EUR15 million.

So presumably, the EUR370 million you reference is equivalent to the negative EUR25 million.

Yes, but if only I would assume that I have to accrual book these segments, which these segments I need to record on MtM basis.

It's only a correction position.

It really comes down -- you can say, yes, what you correctly say.

Of course, if you take my example, you would have to compare the EUR370 million versus the EUR370 million, of course.

But now if you ask me does it have a positive impact on profitability, the question how you define profitability.

And in a business segment, according to IFRS, we have to define profitability assessing mark-to-market for the segments, and then you obviously come to the -- to at the end, a true profit representation at the segment.

I want to caution you to assume now that there was a lifted up profit in the divisions by that amount.

Okay.

So --

We have from the hedging derivatives, obviously, we have negatives.

Let's not forget the IFRS rule that applies here.

We need to prove the effectiveness of these hedges according to IFRS, which is different than the effectiveness of the hedges that we do in these positions where the businesses apply it to their results from a pure financial point of view.

So you could have a hedge that the business implemented at business result levels to manage their asset and liability positions that does not qualify for hedge accounting according to IFRS, that we then have to correct in consolidation and adjustments.

So that's why I don't want to leave anybody with the impression that there was improved profit by EUR370 million in the divisions, because that would be a wrong view.

Okay.

On your Basel 3 stuff, yes, we stay unchanged.

Yes, of course, we -- and let's not forget that some of this Basel 3 we provided a view where we stand at the beginning of 2013.

So we gave you a sense of where we are.

As we move on our de-risking activities, maybe some of it will occur sooner, and maybe some of it will occur later than assumed.

It's the timing between the start, which was the Q disclosed to you, the third quarter of last year, and the point in time.

That's why it would also be wrong to assume because we have managed to reduce risk-weighted assets now that these are on top reductions that we did not expect.

This is part of our path of mitigation that will lead to the results and, therefore, no, I want to say it very clearly, there is no change to the Basel 3 [stuff and] view.

Again, we've been working with regulators.

We've been monitoring.

Obviously, there have been corrections.

There have been improvements.

There have been more detailed views on our capital plan, but nothing material has changed at this point in time that we felt that we needed to give you an update on our disclosure on.

So it's just the progressing over time, and you know our mitigation effect; the volumes are substantial.

So obviously, it's good that we are moving ahead early and starting to see that mitigation is working.

And then the last question I now lost.

It was the sale of the Russian -- your stake in the Russian Stock Exchange and the offsetting loss.

Just order of magnitude, and I can understand if you don't want to comment exactly, but are we talking tens of millions here?

No, no; it's about EUR60 million.

EUR60 million, fine.

Rough more or less.

Yes.

Great.

Thank you very much.

Thanks then.

Christopher Wheeler, Mediobanca.

A couple of questions really; first, on Postbank.

You've given us obviously the severance costs of EUR48 million, which I guess is in respect of the integration.

Can you just give some clue as to what other integration costs you've actually taken?

I can't find them in the text.

And secondly, I know we have the PBC day in June, but can you just say since December when you took full control of the Bank, what milestone events have actually occurred to date in terms of the consolidation?

That's on Postbank.

And then the final question, coming at capital from a slightly different way, obviously, you did give that data, you rightly say, at the conference, which was very helpful.

Clearly, the 8% pre-deductions was the number I think you were focusing on.

Given what's happened in Italy and, obviously, you saw what happened with Morgan Stanley last week with ratios being pushed up for the 2012 date, and [Mr.

Tulhagi] possibly appealing at the ECB, does that put any pressure on you, given the fact that you obviously have an all-in 2012 ratio that looks weak compared to your competitors but which I know you feel is not really an issue?

Yes.

Let me start with Postbank.

First of all, when we talk about this integration cost, it's not severance because the second is we are obviously putting some system costs in place too; let's not forget that basically the Postbank integration largely is first the creation of a common retail operating platform that we are working on and that much of the initial cost is associated to that.

And I just refer to the rest.

I think you find more disclosure on page 20 in item number 1.

I think I give you some more numbers to your question on the EUR42 million and EUR78 million that you ask.

On the capital situation, I can only reiterate our feeling that -- and maybe at this point also disclose to you that, obviously, our effectively going into the AGM with capital authorizations is just standard practice, because obviously, we want to be as a Bank in a position to have this authorization in place.

Please don't misunderstand it.

It's not indicative.

We don't believe and continue to believe that we do not need to raise further capital outside of any significant acquisitions we may plan, for which obviously we want to have authorization in place in case opportunities present themselves.

But outside of that, we continue to perform well against our capital plan.

We do believe that we are sufficiently capitalized.

We do believe that we will be sufficiently capitalized, and I can only say again, look at the combination of funding and capital because at the end of the day, that's, I think, what defines the strength of the Bank and not a peer comparison that we constantly are confronted with.

That in our view is a result of historic developments that work quite differently from us.

It's not having taken state capital at any point in time and just managing a reasonable tight capital.

That always has had the philosophy that it's bad business practice to have capital unutilized and surplus capital for long periods of time in an organization.

That's financially not a sound input concept, and that's why we continue to believe that to run the Bank on very high levels of capital by the way right now; historically high levels of capital and the strength of our balance sheet on the funding side is the more reasonable approach to run a business on a sustainable basis.

So again, only to clarify that.

On your PBC question, I need to ask again, what was the question, the --?

No, I was just asking if any milestone events had actually been released in the first five months since the full consolidation of Postbank.

No.

There's no milestone events.

No.

Okay.

Thanks very much.

Jeremy Sigee, Barclays Capital.

I just wanted to come back actually to a couple of things that we've been talking about here.

Firstly, on capital, could you talk some more?

I know you touched on it, but could you talk some more about why the RWAs came down in the quarter, given that your leverage ratio was unchanged?

Was it a change of mix or of modeling, or did you reduce certain activities?

Linked to that, is there a change in strategy on capital?

Are you now seeking to more actively reduce risk-weighted assets and improve your ratios?

Is there a change on strategy that you're implying here?

And finally, could we come back again to this question of the central items, corporate investments and C&A?

And I think we didn't get a answer earlier on.

If we think about 2012/2013, conceptually, what should we be expecting there?

Does C&A conceptually through the cycle average to zero?

And what should corporate investments on a midterm run rate, what should that be contributing?

Okay.

Let me start with the third one.

Obviously, conceptually long-term, we intend to sell all these assets.

That's it on corporate investments.

They are non-core assets and, obviously, at the right time, when markets have improved and when we obviously can sell it beneficially to shareholders, these activities will be all done.

So long term, you should assume all these activities are done and there's no negative.

And that's hopefully going to occur in the next three years that we will be able to sell at given points in time, at good given points in time these legacy assets that are non-core to the Bank.

And sorry, and while you still own them, is there any reason why they should be a negative rather than contributing profits?

No, they can obviously -- obviously, we will be in a better sales position if we manage to turn these businesses around and be positive contributors.

That's why we also made the decision to move it into a corporate investment, because the team there, our associates there, these are professionals that obviously come in, and we've hired some industry experts as well that come in and will help us to turn around these businesses to bring them to profitability because, obviously, that will improve our sales position.

We have some situations, as you know.

As I said, on Cosmo, we had a startup.

It's a startup operation and startup operations lose money in the first year, and then obviously turn around and produce profit.

I think the success of Cosmo you could read in the press.

It's well positioned.

It is the hippest place in Vegas right now.

Las Vegas is recovering, and I think we will be the newest facility in Las Vegas for a long, long time.

There will be no other openings going on.

And I think that's why we're not concerned that they will be able to turn around this business.

Actavis is after the restructuring and the capital base, as I told you already in the transfer, a positive contribution.

On the ports, we still have -- obviously, the issue is on an operating EBITA basis.

This business is already turned around.

It's positive, but obviously it has to carry a significant funding charge, which obviously will also run off in the near future.

And, obviously, it is an asset in terms of business, so we will have depreciation charges to deal with.

But as EBITA improves, the cover of these depreciation charges will improve.

And then again, we had a one-off this quarter with the sale of our corporate headquarters that impacted [C&A] negative.

So you should over time assume, for the timeframe you've given me, certainly assume that this business turnaround might be positive contributors, and then we would obviously try to get out of them as soon as they are, because that's not profit we are banking on for the long-term.

And in terms of C&A, again, we are doing anything we can to mitigate the volatility.

The problem of it, it's not necessarily financially non-[financing]; it's just as I showed you in the chart, it's just a correction position.

Nevertheless, as we are all discussing today, the market struggles with this type of volatility and that's why we're taking measures to reduce it.

But you should assume that in this range of around [EUR200 million], that's something may stay over the longer term.

And again, I have to caution everybody, because I'm making big assumptions on interest rates, and exchange rate movements are not being as sharp as they might have been on it.

On the risk-weighted assets, I think we showed you also a chart, which was on page 9.

I think we disclosed to you the main effects.

We had an FX effect that was favorable of EUR7 billion.

We then had an EUR11.6 billion reduction in credit risk, which as I told you in the text, it was related to EUR4 billion out of derivatives, and EUR5 billion lending related and EUR3 billion out of other repo securities and stuff like that.

So we had a good development in credit, with a slight increase in market risk and a decrease in operational risk.

So that is where the movement -- so it was all movements across the board, but mainly a credit risk reduction.

And, sorry, so I guess what I was trying to get beyond that was then on that credit risk reduction, is that simply a reflection of volume reduction?

Or is a rating migration or modeling effect or a mix shift?

Well, it's mainly driven by exposure reduction; and that's what it is, yes.

That's mitigation or exposure reduction.

But it also has the component -- as we see the credit environment improving, also there have been improvements there, and obviously, EUR4 billion of improvement of parameters that we had in our calculations.

So it also signals an improvement in the market data that are used in the models to assess that.

And then my follow-on question was is there a change a strategy here?

Does this reflect something that you're going to pursuing further more aggressively than previously?

No, again, we are in line with our plan.

We have disclosed that plan in the third quarter.

We will, and I really promise, I'll give you an update if there's material changes to this plan, as we all understand that for not comprehensive financial but for general market reasons, there's so much focus on it?

But with all the discussions and the progress we've had, at this point, there is no substantial material change to this plan.

As we have learned more about the application of Basel 2.5 and have discussions with the regulators, for example, we have nothing to report that really substantially or materially affects our capital plan going forward, our mitigation going forward.

We have not changed our strategy around it.

And again, also this refers to our plans on capitalization of the Bank.

I reiterate the statement that we do not need from our perspective and our [capital], we do not need to go for a capital increase.

Okay, thank you.

Fiona Swaffield.

On -- sorry to go back to the Postbank number again, but is there anything else in the EUR221 million?

For example, any other PPA effects on, say, some of the securities that you will have at fair value?

Because I would have assumed there to have been quite a big rally in the valuation of some of those assets in the first quarter, is the first question.

And the second question, just to clarify what you've just said on RWA; so if we go back to the EUR90 billion targeted management action, what you're saying, if we take the credit risks EUR11.6 billion, that you've done about 13%/15% of that already.

So it's just that you're getting ahead of plan compared to peers.

And then lastly, on the sales and trading debt and the number, I think there's a EUR175 million one-off in there from the slides.

But just to understand, I wasn't aware that RMBS was a major product for you, but you do highlight it a lot of times.

I wonder if you could just talk about exactly how strong it has been and commodities, and how big are those two numbers in that Q1 number?

Thanks.

Okay, Postbank PPA effect.

Number 1, of course, at Group level, PPA effects do play a role.

And obviously, there was a PPA contribution in the Postbank results, but we have decided to leave this and not disclose it separate at this point.

We had also costs to achieve in this number, so we had also some costs that were booked against Postbank.

This is different factors influencing the Postbank results.

Postbank's individual accounts, obviously, will show their straight profit, as they calculate it.

For example, when they obviously made certain additional reserves, which we from a Group level have already taken into account in our fair valuation, then obviously we can reverse them; and obviously vice versa (technical difficulty) improvement out of PPA, and we took charges that we don't need, obviously, then the Group profit will be higher.

There's a lot of movement in that position and a lot of details that we won't disclose more in detail.

But I would encourage you to visit our workshop because, obviously, we'll try to give you somewhat transparency around the functioning of this component, which certainly in a phone call like this, would be too complicated to explain in detail.

But I verify for you that we did have PPA effects in the first quarter result on Postbank.

But how would we as outside observers then use that EUR221 million base to forecast?

That's what we said we understand.

It's obviously difficult to forecast because it has basically three components or four components.

It has the operating profit of Postbank.

It then has the reversal of any reserves they do that we have already taken into account from a Group perspective.

It then has PPA effects.

That depends obviously on how the progress is on the assets that we fair value and how the development, for example, of interest rates.

And then it does include the synergy costs.

So it is several components.

Again, in the next quarter and in the workshop, we plan to provide you some more disclosure and guidance.

But to be honest, some of these numbers will be difficult to estimate from an outside-in perspective over time.

Okay.

It's just a matter of fact on how this accounting occurs.

Second question on the EUR90 billion; again, no, don't assume that this is speeding up or don't assume (inaudible).

We have a mitigation plan which is challenging that we have disclosed to you on EUR90 billion.

And what you should see obviously over the quarters how we get there.

But don't assume that any step ahead or improvement in risk-weighted assets is additional to the EUR90 billion.

That would be a wrong assumption; or assume that because we have started already showing mitigation, that this means that we will be more successful with mitigation.

I think always in this way I only caution you, our EUR90 billion claim is still a valid number.

It's a challenging number for us as a business.

We have to work really to get there.

But I'm happy to report that we've had good success and we are moving along it.

And, therefore, we are confident and verify again that the plan that I disclosed to you in the last quarter we will be able to achieve at this point in time.

And also, in terms of understanding the rules a little bit better and working with the regulators, I can only again say we haven't found anything that needs us to update the Q3 plan that we laid out at this point in time.

But there's ongoing discussions.

Hopefully, some of them will even help us and we continue to be positive on achieving the plan.

But don't assume that we will be any faster or any better on it at this time on this early indication.

On the sales and trade debt, yes there was a one-off.

We disclosed that one-off and the disclosure around RMBS and our Commodities business only to highlight that our RMBS has improved.

RMBS sales have so much focused.

It's not highlighting the size of it necessarily or the importance for it, it's only the fact that for so long time we have had negative news on this business, and we see -- to give you an idea that we see improvement in this business and we have -- especially in this business strongly improved versus last year.

And the same we want to say as we are in terms towards our competition in the Commodities business, we in the past have not been such a big player; that we show that we are having good progress with our organic strategy that we have in the Commodities business and the team there is very successful in continuing to develop this business.

And I just wanted to highlight that these are the two areas that really had a significant performance improvement versus previous year; not meaning that they are substantial businesses of the Bank.

Okay, thanks.

I still see we have a long queue of analysts lining up, so if you could just short your questions to one question, that would be very helpful.

Thank you.

Next question, please?

Stuart Graham, Autonomous Research.

I had one question around the Taunus, please.

Can you just explain what you lose by losing the bank holding status of Taunus?

I know in the crisis, Goldman and Morgan Stanley were terribly keen to be banking holding companies, so what do you lose in terms of access to the Fed, etc., by giving up that license?

And related to that, do you get more intensive regulation of the US branch now, so net-net, your regulatory burden remains unchanged, or does it get lighter?

Thank you.

There are two quick answers; we don't lose anything; and, no, we have had enough regulatory scrutiny on all our entities and we don't expect that to change.

They've not only looked at Taunus; actually, Taunus was not an active part, so they always look at the operating entities, and that's really the view and picture I'd like to leave with all of you.

At the end, the entities a regulator should be concerned of in light of this subsidization discussion are operating entities in the specific countries that at the end are the counterparties to the clients in that specific geography.

And these two entities we have stressed over and over have always been well capitalized; are the entities that are under regulatory scrutiny and have to report; are the entities a regulator should be worried about in terms of geographical concerns that may exist and not a construct of a holding that has historic purposes that obviously we now address and resolve because it was creating so much confusion around theoretical exposure to US clients to an under-capitalized Deutsche Bank subsidiary, which was not an issue ever.

The main issue why it was not interesting to address for us as I showed previously, was just the effect on the tax; it carried significant amounts of [DTA] that -- DTAs that we could [lose], loss carry-forwards that we could use with the loss-carry forward rule in the United States, and why we not at that point change it without no need.

But after the -- all the discussion that Taunus has generated, we made a decision, okay, let's clean up our US corporate structure, and we were able to achieve two things.

We got rid of the de-banked Taunus, but we maintained the usability of our DTAs in the United States as well.

So we are one -- we will be one tax group in the United States, which is also progress.

So it's just a very plain and simple improvement of our corporate platform in the United States.

So it's no negatives for anything; no negatives for our clients, no negatives for the regulator, and nothing of that.

And obviously, there has been some misunderstanding around this which we wanted to address.

Okay, that's very clear.

Thank you.

Georg Kanders, WestLB.

I have only a question on the high compensation expenses in Q1.

That's only more or less a quarterly one-off from this February career retirement.

Is this correct?

Yes.

Okay, thanks.

It's -- be careful.

It's not necessarily a one-off; it's only in this a higher amount.

It moves forwards.

And we have that every February, and it is just based on our plans; and the only difference in this year is as we have been moving up in increasing obviously the amounts of deferred compensation based on required loss and the regulations around the new compensations and structures, we obviously have had to -- this number moves up conceptually.

[Just imagine]; the Bank used to defer about half of what we have to defer today based on the new compensation, regulated compensation rules.

But the good news is that 40% of our 2011 amortization of this compensation already occurred in Q1, which now means that obviously for the rest of the year, we'll always have -- we now have to only amortize 60% of the deferred compensation of the tranche that is valid for 2011, which obviously, as you can assume, is helpful for the run rate ongoing for the rest of the year.

That's very useful.

Thanks.

Huw Van Steenis, Morgan Stanley.

Most of my questions have been answered, so just one question going back to the proportion of earnings coming from Deutsche Postbank.

If you look out to 2013 and 2014, what proportion of Group -- of the operating profits do you think will be coming from asset and wealth management GTB, PBC versus the investment banks?

I think one of the most intriguing aspects of today's results is the rebalancing of earnings towards the non-investment banking earnings.

Thanks.

Yes, there's obviously two re-balancings that occur in the first quarter.

It's a rebalancing, as you correctly said, between our classical banking and the Investment Bank; and then there's also an interesting geographical re-balancing that's occurring.

Obviously, we are getting more profitability also out of Germany, of course, because of the Postbank situation, which in current environment, is also pretty good because, obviously, we have the good economic situation in Germany and therefore, can expect further positive contributions thereof.

If you ask me for a ratio, actually, looking at the ratios that now we have between what we call classical banking, it's slightly below 40%, and the Investment Bank at slightly above 60%; that's pretty much the ratio we are targeting in a first step.

And we have always said that over time, we expect it to be a 50/50 where we get to.

But not under the assumption that Investment Bank will reduce, but on the assumption that obviously we will be able to continue with the new acquisitions that all have been in the classical -- what we call the classical banking area of our business that with contributions from these acquisitions we will get to this 50/50 balancing longer term.

But I think the first good step, the new step to assume is 60/40.

Okay, thanks.

Okay, I think we are there, so we hope that's answered all your questions.

If not, come and talk to us in IR.

Otherwise, we will see you on the road.

So now we hope you can enjoy the royal weekend, particularly in the UK.

And with that, I would like to say, thank you and goodbye.

Thank you very much.

Ladies and gentlemen, the conference is now concluded.

Thank you for joining, and have a pleasant day.

Goodbye.