Deutsche Bank AG (DB) 2012 Q2 法說會逐字稿

Ladies and gentlemen, thank you for standing by.

Welcome to the second-quarter 2012 conference call of Deutsche Bank.

Throughout today's recorded presentation all participants will be in a listen-only mode.

The presentation will be followed by a question and answer session.

(Operator Instructions).

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

Please go ahead, sir.

Yes, good afternoon, and good morning to all of those dialing from the Americas.

This is Joachim Mueller from Investor Relations.

And on behalf of Deutsche Bank, welcome to our second quarter conference call.

Let me start by saying that our co-CEOs, Juergen Fitschen and Anshu Jain, have decided to join this call to give you a firsthand update on our ongoing 100 days strategic review and discuss some of the key themes emerging from that process.

To be clear, this is still work in progress.

We will give you more detail of the results in September.

Anshu and Juergen will then hand over to our CFO, Stefan Krause, who will lead you through the Q2 results and take questions relating to those results as usual.

Please understand that if you have questions on the longer term strategy, there will be an opportunity to put all of these in September.

So we suggest focusing your questions today on the second-quarter results.

Please note the cautionary statements with regard to forward-looking statements at the end of the presentation.

With that, let me hand over to our co-CEO, Juergen Fitschen.

(technical difficulty) second quarter results call.

Anshu and I took charge 60 days ago.

We're just over halfway through the 100-day strategy review, which we launched on June 1. The process is going extremely well.

It has included broad involvement of employees and other stakeholders.

At the 100-day mark, on schedule, we'll have significant progress to report to you on many fronts.

So today we are pleased to announce Investor Day on September 11 in Frankfurt, to which you are cordially invited.

As you also know, Anshu and I have a division of labor of the CEO task between us.

It is agreed that the CEO dialog for the analyst and investor community will be left to Anshu.

Accordingly, I suggested that Anshu gives you an interim progress report on our strategy review.

Let me now hand over to him.

Anshu?

Thank you, Juergen.

Ladies and gentlemen, this is our first communication with you since we took charge in June.

This is obviously a critical relationship for us, and we take our responsibility towards you extremely seriously.

For me personally, today marks the first step of a long-term partnership and dialog with you.

Juergen talked about our 100-day strategy process, which is now just beyond the halfway stage.

To be clear, our review has focused both on the need for a clear strategic direction and on immediate action.

We made a lot of progress.

Today, out of the many themes you'd expect us to grapple with, we want to update you on three themes, which are uppermost in our minds, and I daresay in yours as well.

And those are culture, operational efficiency and capital.

So let me start with the all-important theme of culture.

We are aware of the need for a change of culture in the banking industry, especially in investment banking.

That debate is intense and entirely justified.

Let me be explicit.

We recognize that change is imperative.

The time for vague promises of cultural change in our industry is long gone.

We understand that not only you and our investors but also our clients, regulators, governments and the public, want to see change.

We don't underestimate the complexity of the task, nor the time it'll take, but Juergen and I are totally determined to act quickly and decisively.

In our strategy review so far, we have focused on two key levers.

The first is compensation.

The need for cultural change has many dimensions; the need to change the compensation model is the most important of all.

We've already reduced compensation significantly over the past few years.

Now we need to further address both the absolute level of compensation and the relative balance between rewards for shareholders and those for employees.

Our compensation process needs to become less complex and more transparent.

And compensation must be clearly and visibly aligned to sustainable performance.

We are confident that our strategy review and our drive for higher operating efficiency will decisively address all of these issues.

Let me be clear.

We will stay committed to attracting and retaining the best talent.

Our clients expect that, and so do you.

But we firmly believe that the industry as a whole will have to change its compensation model.

And we are absolutely committed to being at the forefront of that change.

Secondly, we will continue to emphasize that our practices and our codes of personal conduct must be in line with this Bank's long tradition of doing business to the highest standards.

Those practices must also be oriented towards sustainable, long-term partnerships with our clients, other stakeholders, and society at large.

Standards are changing, and where we need to make adjustments, we won't shy away from doing so.

In an organization of over 100,000 people, can we guarantee that there will not be slippages?

Of course not.

But we can and we will ensure that the tone at the top is crystal clear, maintain first-class compliance and risk management systems, and do our best to root out bad behavior.

So then let me turn to the issue of costs and operational efficiency.

In our strategic review, we've been relentlessly focusing on the cost issue.

Put simply, our cost base is too high.

As of this interim stage we have clear visibility of approximately EUR3b of cost savings versus our run rate for the first half of 2012.

That is net of investments we will make to support business growth.

While we go through our strategy review and focus on longer-term initiatives, we have also identified immediate measures we need to take.

Our EUR3b target includes contributions from both.

Of course challenges exist.

Regulation and legal issues put upward pressure on our cost base.

There will also be a substantial cost to achieve these savings.

However, we are determined and confident that we can achieve this target.

We'll make these savings in four ways.

First, by making changes to our business and revenue models.

Second, by scaling back some of our business and missions in certain regions and countries.

Third, by implementing a re-engineering program aimed at achieving world-class operating performance with flexibility, quality and robust controls.

And fourth, by completing the measures in Postbank we've already announced, and which will contribute EUR500m of savings to the EUR3b total.

In the past some of you have expressed skepticism about our delivery on cost reduction.

But we are confident we can deliver.

In all our most recent major programs, [total] integration across the investment bank, Postbank integration and our complexity reduction program, we are delivering on or ahead of target.

Furthermore, I would also like to announce today some immediate actions which have been in progress for some weeks now.

We are proud of our world-leading investment banking platform, but we are continually calibrating the size of our platform to our market environment.

Consequently we are reducing headcount by approximately 1,900 people.

Of that, 1,500 will come across the investment banking complex and related infrastructure and 400 in other areas.

All these reductions are predominantly outside Germany.

These measures will contribute savings of approximately EUR350m off the overall EUR3b target on a run rate basis.

We're committed to transparency with regard to our cost base and we'll come back to you with more concrete details in September.

And finally then, let me turn to capital.

We recognize that you are very focused on the capital issue, for the industry and for Deutsche Bank.

Let me start with two statements.

First, we have always managed our capital to be comfortably above all regulatory thresholds, even in stress scenarios.

Our current capital ratios are well above all regulatory thresholds and our capital plan will continue to deliver a substantial cushion.

Second, it is important to look at other measures of stability.

Some of you have rightly focused on risk-bearing capacity, that is, our capacity to absorb severe stress loss across our portfolio.

Here we're in line with the best in the industry.

Stefan will discuss this measure in more detail.

Furthermore, just as important to Deutsche Bank's strength and security is the stability and reliability of our liquidity and funding positions, both of which remain top class.

Nevertheless, we recognize that strengthening core Tier 1 capital is a priority.

So let me now share with you the immediate steps we're already taking to address this critical issue.

First, we remain confident that we can meet our published simulated guidance of Basel 3 core Tier 1 ratios even in the event that net income projections need to be further adjusted downwards due to continued market turbulence.

In response to lower second-quarter performance, we've identified EUR29b of additional risk-weighted assets reductions and capital bill measures beyond those we've already committed to and communicated.

We've already delivered on some of these, including the exit of certain legacy positions which are capital-intensive under Basel 3. Therefore, we continue to expect that at the beginning of 2013, our core Tier 1 ratio including phase-in will be approximately 9%.

That is equivalent to 7.2% on a fully loaded basis.

Stefan will talk in more detail about this.

Second, we're working on a complete range of initiatives that will be realized very rapidly over the next year or so.

These will enable us to reduce risk and build capital organically.

They include managing down legacy positions in both the investment bank and Postbank, and taking decisive action on specific sub-performing assets.

We're also continuing to rule out advanced rating models across the bank, particularly in PBC.

Within our capital toolbox, which Stefan will talk about in more detail, we have additional measures, all of which we're looking at very carefully.

Crucially, we will implement these initiatives whilst simultaneously supporting growth in the real economy.

Taking all these factors into account, and even given the possibility of lower performance, we have an ambition of a Basel 3 core Tier 1 ratio of approximately 10% on a phased-in basis, equivalent to at least 8% on a fully-loaded basis by the end of the first quarter 2013.

We aim to continue to grow this ratio throughout the rest of 2013 and beyond, while investing the necessary costs to achieve our cost reduction program.

Finally, let me remind you that like other banks, we're making these statements when rules are still being finalized by legislators and regulatory guidance on implementation is incomplete in many ways.

Nevertheless, this is our current reading of what is expected to come, and a clear commitment to meaningful further improvement in our capital ratios.

At our Investor Day in September we will provide you with details of our capital roadmap.

But today I would only like to emphasize that there has been no change in our approach.

We aim to apply all the capital levers at our disposal before coming to investors to raise equity.

So now let me conclude.

Difficult economic conditions and financial markets, increased regulatory oversight and litigation are well-known headwinds for us and the industry.

These headwinds don't excuse us from growth.

They necessitate a more efficient operating model.

Growth is an imperative.

We must grow without losing our competitive edge.

We must maintain our ability to deliver seamless service to our clients.

But we also must grow in a manner that's sustainable and responsible.

We aim to strike the right balance to serve all our stakeholders, our shareholders, our employees, our clients, as well as society.

We reaffirm our commitment to a universal banking model.

We are convinced that this model is best for our clients as we seek to help them grow, manage risks and operate wherever they need to across the globe, and to deliver that integrated service cost-efficiently.

As we take stock, Juergen and I recognize what a remarkable platform Deutsche Bank has built over the past two decades.

We have a unique global network, a very strong brand, leadership positions in most core businesses and deep relationships with clients.

We are firmly anchored in our home market, which is Europe's largest and most successful economy.

Very few competitors can claim all of that.

More importantly, I very much doubt that any new entrant can come close to it in the foreseeable future.

That represents an enviable competitive advantage.

Our mandate is to steward this unique institution through what will undoubtedly be a difficult time for the industry.

We have no illusions; it won't be easy.

But we're totally committed to the challenge.

So now let me hand over to Stefan Krause, who will walk you through our second quarter figures and take questions on those results.

I look forward to seeing as many of you as possible in person, hopefully, at our Investor Day in Frankfurt.

Thank you very much.

Yes.

Thank you, Anshu, and also good afternoon, or good morning, from my side.

I'll obviously have the task now to walk you through the second-quarter results as usual.

And I would like to begin on the third slide.

It should come as no surprise to you that it was a difficult revenue environment in the second quarter, whereas, if you remember, the first quarter benefited substantially from an improvement in confidence as a result of the LTRO, the European sovereign debt crisis again intensified in the second quarter.

I guess this is no news to you.

Given our strong franchise in Europe, we continued to be negatively impacted.

Client risk aversion due to ongoing uncertainty led to lower client activity across most of our major businesses.

Our corporate and institutional clients are delaying strategic actions as well as essential hedging and market issuance.

Our retail bank is generally facing lower interest income and lower brokerage-related revenues, as clients move towards cash and capital protection type products.

In contrast, the persistent low rate interest rate environment, is a headwind in our transaction bank as well, whilst in addition to suppressed asset growth, margins in asset management are pressured by the ongoing shift towards cash programs.

For the Group, revenues declined just 6% from the second quarter 2011 despite a meaningful deterioration in client activity levels and in investor confidence over the course of the year.

The current environment continues to result in significantly lower levels of client activity, both on investment banking as well as certain parts of our retail business and we expect this to continue into the second half of the year.

We intend to continue to run low levels of risk in light of this environment and maintain tight reins on expenses, while remaining focused on servicing our clients in the best possible way, as Anshu alluded.

Turning now to slide four, the core Tier 1 ratio continues to increase quarter after quarter despite the market difficulties.

At 10.2% we are well above the EBA required minimum mandated for second quarter end.

The tick up in leverage ratio is primarily attributable to rounding.

It was virtually unchanged.

Also we continued to run with very high levels of liquidity reserves, more than EUR200b at quarter end.

We feel it's prudent to carry such high reserves, given the market volatility.

Let me now come to page five.

CB&S IBIT decline is attributable to the lower revenues and CB&S revenues are obviously more correlated with the health and growth prospects of the global economy.

So while revenues are down 11% year over year, when we take into consideration our reduced risk profile, muted client activity and the overall macroeconomic difficulties, the revenue result is in line with the opportunities presented by the market.

Our Asset and Wealth Management business was impacted by the sale process, and the ongoing industry headwinds.

This quarter there's approximately EUR90m of non-operational costs booked in asset and wealth management.

Beyond this quarter's results, you should know we are committed to Asset and Wealth Management and we'll manage Asset Management and Wealth Management in a more integrated fashion in the future.

PBC is forging ahead in its integration.

The synergies we identified in the Postbank/Deutsche Bank integration are beginning to materialize, especially as it relates to our new state-of-the-art banking platform.

The change in profitability is primarily attributable to higher cost to achieve related to the integration.

GTB continues to demonstrate revenue growth across all products and regions.

In the second half of 2012 we will enter the final stages of integrating our commercial banking business in the Netherlands.

We expect to begin to realize the cost synergies from this integration beginning next year.

As I mentioned, total net revenue decreased by 6% year over year and 13% quarter over quarter.

Our brokerage-related revenues are the most elastic to the deterioration in investor confidence.

As you can see on our net revenue page, on page six, further below interest rate environment has been a persistent headwind for many of our revenue sources.

Effects on currency translation impacted revenues favorable, and partly offset the aforementioned revenue reduction.

Let me now turn to slide seven.

Our risk provision profile continues to be favorable.

In CIB we saw EUR159m of provision, largely driven by commercial real estate financing, belonging to our portfolio of IAS 39 reclassified assets.

Compared to the same quarter last year, it means an increase of EUR32m, which is in line with our expectations and does not indicate a weakening of our corporate portfolio.

The increase in CIB in comparison to the same quarter last year was more than offset by lower charges recorded in PCAM, where provisions reduced by EUR76m.

Postbank contributed a reduction of EUR75m, compared to the provisioning level in the second quarter last year.

However, this was largely attributable to how releases of allowances for acquisitions are recorded.

And in PCAM, excluding Postbank, provisions were on the same level as in the second quarter of 2011.

Similar to 2011, we may experience a moderate uptick in provisions as we progress into the year.

I will also detail our asset quality with respect to our PBC loan book later in the presentation.

Non-interest expenses, as you can see on page eight, are up 5% year over year.

Compensation-related costs were almost unchanged versus the prior year's quarter.

Lower performance-related compensation was offset by increased deferred compensation from prior years, higher severance payments and salaries.

Non-compensation expenses increased by approximately EUR400m, primarily due to the increased litigation-related expenses and higher operational losses, increased IT cost as well as adverse FX rate movement.

Move to slide nine, you see that net income for the second quarter 2012 was EUR661m compared to EUR1.2b in the second quarter of 2011.

The effective tax rate in the current and prior year's quarter was 31%.

On slide 10 we show our usual capital ratios and risk-weighted assets chart.

And you can see that we finished the quarter with a core Tier 1 ratio of 10.2% and a Tier 1 ratio of 13.6%.

As projected already last year, Deutsche Bank well exceeds the 9% threshold set by the EBA for June of 2012.

Let's review the capital and risk-weighted assets development this quarter in more detail.

Let's turn to slide 11, where we show both.

The core Tier 1 capital increased by EUR0.8b from EUR37b to EUR37.8b.

For the quarter we saw about EUR600m capital formation through net income, as I explained, along with offsetting effect of dividend accruals, lower capital deduction items, FX movement and a one-time Postbank effect as a result of the approval of the domination agreement that we are seeking by their shareholders.

On the risk-weighted assets side, the net increase of EUR4.2b was largely due to FX effects, partially mitigated by a reduction in credit risk.

Let me move now to the usual discussion on our business divisions' results.

And let's go to page 13.

Here you see the overview of our businesses and their performance.

And I would suggest that we move -- go through this in segment by segment.

And I start with CB&S on page 14.

Against a challenging background as backdrop, as Anshu already alluded in his speech, CB&S delivered a solid revenue performance underpinned by the strengths of our flow businesses and the ongoing demand for client solutions.

The second quarter saw a continuous uncertain macroeconomic environment leading to reduced client activity in many areas.

We continued to manage towards a low risk, client-focused business model.

In fact, in the first half of the year we have experienced only one negative trading day.

And VaR is down 25% year over year versus the sales and trading revenue decline of only 7%, resulting in a significant uptick in return on VaR, which in my opinion shows you that we are maintaining a very impressive return on VaR.

As I said earlier, our expenses continue to be pressured by increased legal and regulatory costs, and in the second quarter of 2012 we saw significant headwinds from FX movements versus the prior year quarter.

DB&S compensation costs were down year over year due to the lower headcount and lower compensation per head.

On page 15 we show the Sales and Trading Debt and other products.

Our Sales and Trading Debt revenues were resilient, down only 7% year over year despite a much lower risk profile.

In FX, we continued to be the market leader for the second quarter in a row, DB had record client volumes although competitive pressure on margins resulted in slightly lower year-over-year revenues.

We have now had record FX volumes for three out of the last four quarters.

Rates revenues were higher year over year due to solid client activity while money markets performance was in line with the prior year quarter.

We are deliberately, as you know, deliberately running with lower inventory levels in flow credits due to the current market environment while demand for client solutions has held up relatively well.

Let me now turn to page 16, where we show our Sales and Trading equity.

Those revenues were virtually flat year over year, as you can see, a very good achievement.

Our market-leading franchise in Europe means that we are more exposed to the European-centric crisis.

Cash equity revenues were up significantly year over year, despite the lower market activity.

Year to date we have grown our cash equities market share across all regions.

Our prime brokerage franchise remains strong, driven by increased client balances and higher year-over-year revenues in Asia and the US.

Origination and Advisory had a solid quarter, in a period marked by slower activity, as you can see on page 17.

We maintained a top five global rank, as well as a solid number one rank in EMEA.

On a product basis we had good relative performance with top five ranks in four products.

Key deals in the quarter included the US Treasury sell-down of its stake in AIG, ABB's EUR3b acquisition of Thomas & Betts and representing Nestle in the EUR9b acquisition of Pfizer's Nutrition business.

Our pipeline remains reasonably strong.

ECM and M&A are both in line with last year, as deals continue to get pushed and delayed, while LDCM is much stronger.

The quality of the pipeline I can tell you continues to also be very good.

On page 18 we turn to our GTB businesses.

Business will continue to benefit from the strong business momentum with broad-based strength across all major products.

Revenues increased by 10% year over year to EUR970m.

Despite the deteriorating economic outlook, trade finance demand remains strong, and we continue to increase customer volumes, especially in Europe and Asia, where we benefit from our brand and quality product offering.

Trust & Security Services also benefited from higher balances and increased fee income, especially in the corporate trust and alternative funds business in the US and UK.

Cash management on the corporate as well as the financial institution side is a beneficiary from the flight-to-quality trend resulting in higher deposit volumes.

Provisions for credit losses were up 54% year over year to EUR47m.

These were mainly related to the loan portfolio acquired in the Netherlands.

Overall, after an outstanding first quarter, GTB showed another solid performance despite higher LLPs and costs related to the business activity and integration.

On page 19, you see the development of the Asset and Wealth Management business that obviously has had a very difficult quarter.

The asset-gathering industry, as you all know, continues to be pressured on several fronts; increased regulation, changing industry dynamics between producer and distributors, and general negative investor sentiment.

For DB specifically, Asset Management is obviously suffering from the uncertainty caused by the strategic review of the Global Asset Management division initiated in November of 2011.

Over the last few years we've developed a very capable M&A team that has closed over 60 transactions in the last 30 months.

So we also worked very hard to complete this transaction, but we were unable to agree on acceptable terms for the sale.

And it was never our intention to sell the business at any price, only if it realized a true value creation for our shareholders.

Turning to the future, we are committed to our Asset and Wealth Management business.

The two business divisions now have a single management structure, a single Executive Committee, and are working together as a unit.

Our franchise is still intact and we are in the process of developing an integrated business plan for the division that will be part obviously of our strategic announcement.

Let's turn to page 20.

I go now into Asset Management.

That was clearly impacted by the sales process.

However, the market environment for asset managers has also been extremely difficult, and is the primary driver of this quarter's poor performance.

The confluence of a pessimistic economic outlook, market volatility and generally downward-trending indices caused investor confidence in both equity and bond capabilities to suffer.

The continued mix shift towards passive strategies and increasingly also cash products is pressuring revenue margins.

Non-interest expense would have improved year over year if not for charges related to the strategic review.

The majority of the EUR50m we identify this quarter relate to increased legal and consulting costs.

The second half of this year we expect some additional expenses related to the strategic review.

The inability to pitch for new business during the transaction process obviously magnifies the net new asset outflows.

This quarter approximately EUR3b of the EUR6b outflow was from cash outflow products.

Let's now move on to Private Wealth Management.

Actually, Private Wealth Management had quite a mixed performance this quarter.

Obviously we are disappointed with the profitability level.

But weaker revenues were primarily attributable to the non-recurrence of positive realignment charges booked in the second quarter of the previous year related to Sal Oppenheim.

These effects offset the positive business momentum, particularly in APAC and the Americas.

Non-interest expenses were negatively impacted by about EUR40m of specific items relating to litigation and business taxes.

On the positive side, the business attracted over EUR6b of fresh inflows this quarter, bringing the first half year result total to just over EUR8b or 6% growth rate of the year and invested asset base.

The asset base increased in the first half of the year to EUR284b, with the majority of the increase driven by [inflows] and a positive FX offsetting the negative market effects.

Our lending initiative continues to gain traction, increasing 21% year over year to EUR33b.

The loan book growth should generate good levels of future profitability.

Let's now focus on our retail business.

Let's start on page 22.

As you know, PBC continues to show a resilient performance despite market headwinds, with low interest rates and muted client investment activity.

The deposit base developed solidly, particularly sight deposits, which increased by 13% compared to previous year's quarter.

The loan book continues to grow.

German mortgages increased by more than 5% in the past 12 months, and the second quarter was one of the best quarters in the mortgage production.

I guess we all Germans are running into buying homes but not knowing where to put our money.

In Advisory Banking Germany with an increase of 180% compared to the previous year's quarter, we had a very good result.

The reported pre-tax profit of EUR398m is down 13% versus the second quarter of 2011 on a reported basis.

The decrease in profitability is primarily attributable to Consumer Banking Germany business unit, where the pre-tax profits fell from EUR229m in the second quarter of 2011 to EUR165m in the current quarter.

There are two effects to take note of here.

Firstly, this quarter we recorded lower results from the sell down of assets in the non-customer Postbank book, while in earlier quarters we realized benefits from the accelerated amortization of the PPA.

Secondly, the asset sell down is resulting in excess liquidity, as you can imagine, which is currently invested in low-yielding assets, pressuring interest income.

The core business of Consumer Banking Germany is performing very well, by the way.

Advisory Banking Germany and Advisory Banking International pre-tax profits were flat versus the prior year quarter.

In Advisory Banking Germany, the balance sheet business, especially mortgages, continues to grow.

And LLPs are trending downwards, which partially offsets the continued drag from lower brokerage revenues.

In Advisory Banking International, we have been successfully repricing the loan book.

However, deposit margins continue to be under pressure.

Finally, we are pleased to announce this quarter saw the first rollout of our state-of-the-art retail banking platform.

We have migrated the first 5m saving accounts onto the new system.

The new IT platform will drive the delivery of approximately 70% of the synergies we expect from the Postbank integration.

So finally, to what you have been waiting all the time, some few key current topics.

Let me start on page 24, that I know is your favorite chart.

As you already know from our ad hoc, we continue to see our Basel 3 simulation at 7.2% for January 1, '13 fully loaded, unchanged from our simulation communicated last quarter.

So let me walk you through this, our newest and latest version.

First, we still conservatively include the EUR12b risk-weighted assets growth item introduced in our simulation in the first quarter of 2011, as you may recall.

Then, we show EUR119b in relation to Basel 3. The increase of EUR14b, compared to last quarter's simulation, is purely technical, with no net impact on the Basel 3 Tier 1 ratios.

You will note a correspondingly lower risk-weighted asset impact shown under application of 2019 rules, and there are also not-so-visible further entries on the capital side.

All said, we believe this better reflects how the 10% to 15% rule under Basel 3 will be applied.

However, important for you, there is no net impact on the Basel 3 ratio with phase-in nor the fully loaded ratio.

It is a pure presentation matter.

If you would have further presentations, we can walk you through, or I can walk you through this after the call.

What is new in the inclusion of a set of additional management actions we currently execute to compensate for the lower net income projections for the second half of this year, as well as the second quarter net income, which came in below previous market estimates.

As of today, we Have already executed about 20% of this additional management action.

whilst we included some potential cost in our simulation, we did by the way to date not incur any measure of costs for what we did so far, and we are selling these assets at our marks.

All said, our simulated pro forma core Tier 1 ratio with phase-in is now 8.9% as of January 1, 2013, marginally better than we previously indicated and on a fully-loaded basis, which means under the 2019 rule we again arrive at 7.2%, in line with what I indicated to you in April.

Let me remind you that this simulation does not consider all of our management actions, nor our full management action potential, but only what we do directly in relation to Basel 3 or in the context of the initial additional EUR29b of management action we have now triggered, given the net income development.

We understand that market participants generally look at Basel 3 core Tier 1 on this fully loaded basis and we'll continue to provide updates accordingly, despite our misgivings around comparability from bank to bank.

Please keep in mind that there is a high degree of interpretation required to calculate a financially loaded view.

There remains a lot of uncertainty, as you know, in the final rules that will be written and then applied.

However, I want to remind you from a regulatory view, at no point in time will we ever be anywhere near breaching our required capital minimum even under stress scenarios.

We have extensive talks with our regulators and are comfortable with the required thresholds though the transition to Basel 3. When managing capital as it refers to risk, we also look at other KPIs, and particularly very important the risk-bearing capacity.

As defined as the amount of Tier 1 capital available to absorb a severe stress loss across the Bank's portfolio, our current mark is just above 200%.

It says here that we have ample room to deal with risk within our capital, and I think this is what we should focus on.

In fact, our mark shows that our lower risk-carrying business model, and the higher quality of our asset base, allows us the comfort to operate at a lower core Tier 1 ratio than some of our peers.

Let me now move to page 25.

Let me begin by saying we share your frustration that there has not been an absolute reduction in the costs in the reported cost base, despite several successful cost initiatives.

Looking at our second quarter 2012 versus second quarter 2011 cost development, non-interest expenses increased by approximately EUR350m in the second quarter of 2012, compared to the same period in 2011.

On a net basis the increase mainly reflects the impact of the weakening euro on currency translation.

Expenses for litigation and regulatory requirements including related IT spend increased by approximately EUR200m.

This was almost completely offset by lower performance-related compensation and net savings from cost containment measures.

Turning to the half-year comparison, the headwinds are more stark.

Performance-related compensation decreased by approximately EUR900m.

Our savings from prior cost containment measures such as complexity reduction have been reinvested into our ongoing PBC integration project.

The only increases in our first half 2012 cost base result therefore for nearly EUR430m of additional litigation and regulatory related IT spend and approximately EUR600m of FX translation headwinds.

In fact, on an FX-adjusted basis, our cost base has decreased by EUR300m versus the first half of 2011.

The next slide provides some more detail on our performance-related compensation expenses.

So turn to page 26.

And as you already know, our shift towards higher deferred compensation complies with regulatory requirements and better alliance of shareholder and employee interests.

That's the intention.

An unintended intention is shown here on this chart.

The portion of the compensation accrual that we control in the current period is down 27% year over year.

But while our overall compensation expenses are flat year over year, the negative impact from this amortization of prior year deferrals masks our efforts to reduce costs in the current period.

As this image demonstrates, our quarter-on-quarter cost flexibility has therefore just implicitly significantly decreased, especially in CB&S.

And as Anshu explained, management has taken decisive action on short-term cost reduction measures that have been introduced.

In addition, we will carry out an immediate restructuring program in the third quarter to reduce our CB&S and related workforce by approximately 1,900 people.

This will begin to bring the cost base more in line with our near-term revenue opportunity.

Let me turn now to the summary.

As you can see, the results in the second quarter reflect a challenging market environment.

Client activity levels in Europe remain very low.

We are confident there exists a political resolve to solve Europe's structural issues.

However, in the near term, we expect activity levels to remain low and the interest income headwinds will persist.

As Anshu previewed some of our strategic thinking, you can trust that the Bank is certainly not standing still.

We are in the final steps of formulating the strategic agenda that will set out path for the next few years.

Before I conclude I would like to make a special statement here as well.

As you know from our financial disclosures, Deutsche Bank is one of a number of banks and financial institutions that are subject to various industry-wide investigations relating to the interbank offered rates.

The Bank has received subpoenas and requests for information from certain regulators and governmental entities in connection with setting interbank offered rates for various currencies.

Deutsche Bank continues to cooperate fully with regulators in investigating interbank offered rates matters.

The review by the Bank is comprehensive and is being overseen by the Management Board and the Supervisory Board.

The Bank can confirm to date it has found that potential wrongdoing was limited to the action of a small number of individuals acting on their own initiative who have since been sanctioned.

Please understand that due to the ongoing investigation, we will not say anything further to the Libor matter.

With that, I conclude my remarks, and I certainly welcome all your questions now.

Thank you, ladies and gentlemen.

At this time we will begin the question and answer session.

(Operator Instructions).

One moment for the first question, please.

And the first question is from Derek De Vries of Bank of America.

May we have your question, please?

Sure.

Actually, I have a few questions, but I'll start with some simple ones.

The EUR3b cost target that takes us to a cost base of EUR24.3b, when do we get there?

You didn't quantify a time for that.

So that's a pretty straightforward one.

Also the big risk-weighted asset run-off that takes place in Q1 2013, can you give us a little bit more detail on that?

And then finally on compensation, I think you're the only European investment bank that doesn't give us the awarded-not-yet-expensed variable comp at the end of each year.

But if you make some estimates based on what you do give us, I actually thought the awarded-not-yet-expensed variable comp was down 2011 year end on 2010?

And I realize it's not straight lined accrued, but I'm wondering if you could just maybe give me how much has been awarded, not expensed, as of this second quarter 2012 versus second quarter 2011?

Because I have to admit, I was caught out by the 12% increase in amortization of deferrals.

I would have thought that number would have been broadly flat.

So a few questions there for you.

So thank you for your obviously good and pressing questions.

But on the first two, I'm going to ask you to have a little patience with us for the next couple of weeks, six weeks.

We're going to be out with detail and more about the strategy, as Anshu has said.

We've made a decision not to provide more disclosure or details other than you know what you heard on the call, because that's going to be the context and the content of the announced Investor Day.

So sorry, but I ask you to bear with us for a while.

On the compensation issue, the award-not-yet-expensed [comp] expensed in the second quarter 2012 versus the second quarter '11, where you would have thought that it would have been flat instead of an increase 12%.

I'm going to defer that.

Honestly, if the view we take on accruals is that obviously they have significantly increased over the last couple of years and the deferred portion as you know we were quite aggressive on deferral versus the industry in our view has increased.

So I will have to do the math to compare to your numbers to see how you came up with it.

But generally as we have reported previously, obviously the amount of deferred compensation has increased and is quite high for Deutsche Bank.

So what you're saying is the absolute off-balance sheet liability if you will, so the absolute level of awarded not yet expensed compensation today is higher than it was 12 months ago?

Yes, it has gone up, yes.

I need to see your numbers to compare.

I didn't do the math, but the expense clearly has gone up.

Because when I look at the deferral ratios that we have supplied to the different compensation levels, they were quite significantly higher in 2011.

But it's on a dwindling bonus pool unfortunately, at least for the rest of us.

That's true too.

But let us do the math.

We'll do that offline, I appreciate it.

We'll give you a call after this call to try to reconcile numbers.

Okay.

The next question is from Jeremy Sigee of Barclays.

May we have your question please?

Yes.

Well, actually, firstly, a follow on just on what you were just discussing.

The percentage deferred of the bonus pool went up from 49% to 61% I think in 2011.

Do we assume, or do you assume a constant 61% deferral proportion in 2012?

Is that how you're accruing?

That's my first question.

Secondly, obvious question, could you comment on the cost to achieve -- you're flagging a sizeable restructuring charge, presumably in the second half.

Could you comment on that?

Thirdly, I understand you don't want to talk about your future actions, but could you talk about the EUR29b additional management action that you've told us is now well underway.

What sort of assets are you getting rid of as part of that?

Jeremy, thanks for your questions.

First of all, it was our market view, we took a big leap of deferral last year, I would not see this number to certainly increase our deferral, and I would rather see that we might be a little bit more conservative because our competitive information indicated that we were certainly the bank that was quite aggressive in terms of our deferral ratio.

So I think we think that we will be slightly down, that's what we are currently accruing to, then we will see how -- we usually make this decision based on competitive information we get, and as you know we do this decisions towards year-end or at the turn of the year, at the beginning of the year.

But currently the trend, certainly we were maybe a little bit aggressive on that last year.

So on the types of asset, I'm sorry that I'm also going to defer to the strategic review in September.

It's part of the package and detailed explanation will provide you on our path to get to the numbers that Anshu announced.

Obviously we were aware that you were going to -- that we are going to generate a lot of questions for all of you with our announcements and therefore I know that I have to ask you for some patience on that.

But we would prefer to give you all the details in September so you can have a comprehensive view.

Because I'm sure your next question after where the EUR29b comes from is going to be how we further move down the path.

So please have some understanding.

[By the way, I] got from the team our planned deferral rates were around the 50% mark.

So to give you a view that we currently are planning down.

But I will caveat this by saying, this will obviously be a year-end decision based on competitive information we get.

Thank you.

And the restructuring charges they also are part of the wait and see statements?

Yes, this is part of the wait and see, but I think on the headcount reductions that again I would like to clarify.

As we have said, it's 1,500 in the Investment Bank and 400 in other areas of the bank.

I'm giving you that disclosure so you can apply what your guess - (technical difficulty) ratios are going to be.

We are going to give you more detail on the numbers and specifics in September.

Okay, thank you.

Thank you.

The next question is from Jon Peace from Nomura.

Yes, thank you.

Two quick questions please.

Firstly, just to clarify on the restructuring of the Asset Management Business.

Do I understand now that the potential sale is completely off the table?

So that business is being retained.

Would you be able to size potentially any hangover from revenue or cost impacts in the second half of the year?

Then the second question is just on capital adequacy.

I take your point completely that you've always been in excess of minimum capital standards.

But we've seen in Switzerland, for example, recently that as the Eurozone environment has deteriorated the regulators have put pressure on the local banks to improve their loss absorbing capital.

I just wondered what you thought, and whether you thought the German regulator might take a similar stance.

Thank you.

Okay, let me start with the Asset Management sale.

We had started one process which was the strategic review of the Asset Management business that we have concluded.

We have said that obviously as you know we were not able to agree on acceptable terms for our shareholders with a potential buyer.

Obviously we then had the reorganization of our Asset Management and Wealth Management business and therefore we stopped that process.

Now honestly, all our Asset Management businesses become part of the strategic review that's the review of the entire bank, and will be treated equally to any other either opportunity or challenge that we have to address within the context of the next couple of years' strategy and then you will get an update on what is going to be the future of the Asset Management business in September as well.

But I confirm that the attempt to sell the mainly North American Asset Management businesses that that project is concluded and closed and we are finalizing that.

I alluded to the cost that the Division had to carry around it and obviously we have concluded that process.

But I have to abstain to make comments about the future because again that we will answer then within September.

So let's talk about the capital adequacy.

Today honestly I feel more comfortable in making some of the statements because we have got some more clarification as we move along in terms of what expectations are and will be.

I can only reiterate that we feel very comfortable that with phase-in of Basel 3, assuming the numbers that we've provided to you and assuming what we know requirements will be, we will be at all times comfortably above regulatory minimums.

So if we are reacting to more capital needs, clearly it's not driven by our view that we need it from a regulatory point of view, but it's needed just from a market viewpoint and from an explanation on how the phased in targets will be achieved.

Now obviously in Switzerland the story is quite different.

You know the increased pressure on capital in Switzerland has something to do with the big impact of these banks on their economy and therefore a reaction obviously of the Swiss to protect their economy to protect their taxpayer and to protect obviously also the Swiss Wealth Management business that is the core to these banks.

Wealth Management normally doesn't carry that higher capital charges and it's logical that there was a specific adjustment based on these things.

These two things do not apply to Germany or to a bank operating in Germany.

So our answer to you is it's an apples to oranges comparison.

Just does not apply.

That's clear, thank you.

I hope that answers your questions.

Perfect thanks.

And for further capital ratio increases Anshu laid out in the speech, I again ask you to bear with us until September.

The next question is from Christopher Wheeler of Mediobanca.

May we have your question please?

Yes, good morning, gentlemen, good afternoon even.

Right, surprise, surprise, slide 24, just a question on the EUR119b of net RWA additions.

If I go back to October 2010 and I think last June when Anshu gave his presentations on the Investment Bank, you were talking about EUR90b of mitigation.

Within that EUR119b what have we got now for mitigation?

In other words, can you give us a clue as to what the gross number is and then perhaps within that EUR119b how much of that gross mitigation you hope to have achieved by the end of this year.

I think it's a good question you ask.

We started with EUR90b and I honestly was prepared to get this question because we've seen this number increase.

That's if you remember in my text I alluded quite in detail to this change.

We actually had a step in between which was EUR105b number.

I don't remember you asking me the step between the EUR90b and the EUR105b.

But at the end we have had no real material change in our total Basel 3 as regulations clarified it is timing difference.

We were able to move some of the effects into this bucket, while we reduced obviously the addition effect.

So it's just technically moving components.

The EUR90b saved by the way.

It was Basel 2.5 (inaudible).

The EUR90b, Basel 2.5 which we have so the EUR105b was the number after the Basel 2.5 update that we put in.

Obviously the reduction amount depends on the ultimate rules, and obviously the same action they give us bigger or smaller benefits.

What really matters to us is that we are very comfortable in hitting the net number we have to achieve our ratio is shown here.

That's the way it is.

There is significant management action still coming, but you see us being still very comfortable because we agreed an additional EUR29b of management action that we are very confident to be able to deliver in the near future.

Okay that's very helpful.

Just a second very quick question.

The job losses, I'm assuming this will happen fairly speedily therefore we can be convinced that that will have been done by the time we get through to the end of the third quarter.

Would that be fair?

Yes.

End of third quarter obviously it will happen speedily but you know sometimes it's just a technical process so it takes some time.

So I will not commit to the end of Q3 but it's certainly our intention to be done by year end.

Okay thank you very much, that's very helpful.

Thank you.

The next question is from Kian Abouhossein from JPMorgan.

May we have your question please?

Yes, hi thanks for some of the restructuring details.

I have two questions.

The first one relates to old slides, to put in context of what you're announcing now.

At the CIB Workshop, Anshu indicated a pre-tax ROE of 20% to 25%.

Clearly there's an indication that the world has changed probably more than at that time expected, which was in 2010.

I'm trying to get an understanding of what does it mean in terms of pre-tax ROE for CB&S going forward.

Is something like 20% or 25% still achievable in the new world with these measures that you're taking?

The second question is related to your legacy risk-weighted assets that Bill Broeksmit outlined, EUR70b plus or add Postbank on top I think you have another EUR15b left, plus C&I, roughly EUR90b of risk weighted assets that are to roll over, over time.

And if I look at one of the slides you outlined EUR15b to EUR20b rollover in 2013.

Is that included in your 8% Basel 3 fully-loaded Tier 1 number?

Also how much of the EUR29b is related to those legacy risk-weighted assets?

Okay, I'm going to make Anshu work here for the first time because he made the statement.

Then I'm going to take your risk-weighted asset question.

Hello Kian, thanks for your questions.

Again we will be giving you some fairly detailed guidance on how we expect the ROE to develop across the Group overall and across each of the divisions in September.

But I think it's fair to say that our prospects and our future view on profitability is different today than it was in 2010.

There is no doubt that the European crisis has developed closer towards our more grim scenario than our better case scenario over the course of the past two years.

That's the point I mind about making the decision to recalibrate our headcount.

So yes, we will guide you more precise details to come in September.

Then to your second question, honestly, we still have significant room to free up risk-weighted assets from legacy positions and, yes, a portion of that is in the second half of 2012 actions as well as in the Q1 '13 actions to get us to the 8%.

But it's not just that and there is obviously more thereafter as we are going to disclose then later in September.

But of course, for example, part of this EUR29b package is legacy asset related.

In terms of roll off, of course, some of the roll off assumptions might be changed because we end earlier but at the end of the day we also continue to have a significant roll off as we have described previously, at a later stage.

And can you give us a bit of an idea of roll off versus sale versus mitigations, i.e.

model changes or other ways of reducing risk-weighted assets through better netting.

No, no.

I don't have these numbers here with me so I couldn't give you a relationship.

But we promise to be detailed in September so you will understand the relationship between the different measures we are taking and we finally shed light into our famous toolbox.

Okay, thank you.

The next question is from Philip Zieschang from UBS.

Yes, hi.

Three questions if I may.

Just coming back to the EUR3b of identified cost savings, you write in the release that these include changes to the business and revenue model.

So should I assume the EUR3b are net of potential revenue losses?

Second question is again coming to your capital ratio guidance or simulation timeframe from first quarter, end of first quarter next year towards the end of next year.

Because you don't talk about full year 2013, would you expect the capital ratio also to benefit from lower deductions, i.e.

the amortization of some of your DTAs, I think Credit Suisse flagged around a 3b deduction in deductions next year, which are obviously helpful to capital ratios.

The third point coming back to Anshu's opening remarks also on compensation that is at the heart of the current profitability protection.

Should you read into that that you will accelerate the amortization of deferred comp for a specific period in order to get ahead of the curve with respect to cost flexibility or would that be rather unlikely given your necessity to strengthen the capital ratios organically.

Thank you.

Thanks for your questions.

You guys are really relentlessly asking us about the strategic information.

We would like to provide this in September.

Only to clarify that EUR3b are net of revenue growth reinvestment and obviously as I told you, more detail will follow in September.

Then in the end you asked a question about the significant benefit from lower deductions from DTAs.

Yes, we will also provide you details, but amortization of deferrals here follow obviously plan rules and accounting rules and that's what we put down.

We estimate that our DTAs will continue to decline organically because obviously we have assumptions that we will be profitable which we will talk you about also in September, but obviously not to the tune of EUR3b like some of our competitors.

Then our capital ratio obviously will not benefit from similar technical effects like these reclasses on DTAs that they have shown.

Then I did answer your question on the deferred comp, that obviously here we have to follow plan rules and we have to follow accounting guidelines in terms of how we can apply that.

It's not a discretionary change every year rule, otherwise I would get in trouble with our auditors.

But just to clarify, if you were to decide to take a larger chunk off the amortization of deferred comp which hasn't been expensed yet, that wouldn't be at your discretion you needed to follow through the deferral rate.

No, no.

You can change the plan into the future.

You can make assumptions into the future that you will change your compensation structure.

But then you still have to follow the accounting rules of what constitutes a specific annual cost and needs to be allocated to a specific service or what is future service, you know the accounting rules are pretty clear here.

Therefore obviously your ability there is very restricted, and especially for the old plan.

Don't forget that commitment to employees are on the old plans that we obviously had to maintain and that's where we have taken accounting decisions on how to accrue for them.

So there's limited flexibility.

Okay thank you.

Thank you.

The next question is from Stuart Graham from Autonomous Research.

Hi there, I have two questions please.

Firstly, is there any technical issue that stops you selling these 1,250 risk-weighted securitization positions?

Then secondly on the costs you've disappointed for two quarters in a row, so I guess using the first half cost base as your reference point for the EUR2.5b, ex the EUR500m in Postbank cost cuts gives you quite a high starting point.

So that EUR2.5b is now less than 10% of your starting point costs whereas some of your peers are up to targeting 15% of costs.

So I guess my question is, is that a preliminary cost figure?

Could that number still grow by the time we sit down in September?

Thanks.

Stuart, hi, it's Anshu.

I'll take the first question -- first half of your question and Stefan will take the second half.

No, there's absolutely nothing stopping us, it's completely management discretion.

As Stefan laid out earlier, what we are doing is navigating a very careful road where we are trying to estimate continually the price at which we can exit these positions, the cost of doing that, the opportunity cost of holding it versus the capital accretion.

That's then a dial that we've been managing over the last two years and we continue to do that.

What's been interesting, and you might have seen this within the main sell down of assets in the US is the appetite for this now is fairly robust.

There are a number of funds which are set up to participate.

So liquidity is actually -- of all the asset classes which have suffered, this is one place where liquidity is better today than it was a couple of years ago.

Nothing is stopping us, but we are continually calculating to see whether it's in our best interest net of all of those considerations.

One thing that worries me is that if you sold these things with a loss, would that invalidate some of your staff's bonus conditions in terms of the clawbacks that kick in if the CB&S Division makes a negative IBIT.

Is that a consideration which could preclude you from doing this?

You're asking very specific questions, Stuart, rest assured that what we do will be in shareholder's best interests and any employees who are adding value to the shareholders will not be prejudiced as a concern -- as a consequence of that.

So those are all management controllables.

That's an internal decision for us to take.

If we think it makes sense for the bank we'll do it, and employees that are helping us do it will certainly not be prejudiced.

But I can't get more specific than that.

Okay, and the second question was obviously the attachment point for our cost cutting which was a good question and we debated it also quite a bit.

Because at the end, the reason we use this one is to give you a guidance is because at the end the first half year cost base represents as far as we know, and you saw the increased legal and the increased obviously regulatory costs and the FX more accurate represents the costs of the current platform of the bank overall.

So therefore we decided if we provide you this as a basis and you are assuming some annualization of the first half year, and implying obviously some of the seasonality effects we normally have, that would give you a reasonable assumption of what the starting point of this number is.

It was just making a decision that this best describes the environment, the costs, the exchange rate we are implied, because we had such a big difference for example in the exchange rate versus previous year.

And obviously as we now have started to implement the Basel 3 requirements, we have IT and other regulatory costs reflected in our cost base.

So you have a better indication of what the comparative would be.

But for the rest I just ask you again to wait till September.

Okay, thank you.

The next question is from Kinner Lakhani from Citi.

May we have your question please?

Yes hi.

A few questions.

Firstly just on the EUR2.4b of latent losses that you have on your reclassified portfolio, how you are viewing this, given the statements you have made today.

Number two, just on your un-provisioned litigation which seems to be going up from EUR2.1b to EUR2.5b this quarter, at what point the number is large enough that you feel you need to take larger litigation charges.

Number three, just coming back on the point on comparability that I think you made earlier between banks and Basel ratios and so on.

Just to get a better sense, if your risk weighting methodology was not point in time but through the cycle where would your risk-weighted assets be?

Because this is one of the obvious differences between Deutsche and most of the rest of the universe that I'm trying to figure out.

Finally just a point on clarification, on these cost measures, it's probably just my understanding.

But should I think of them as being EUR3b off a EUR27b type run rate, i.e.

your go to level was EUR24b?

Given consensus is probably around EUR25b for the next couple of years, or should I be taking off EUR3b off whatever the street is expecting over the next couple of years in thinking about this.

Thank you.

Okay, thank you for your questions.

So let's walk through one or the other one.

Let me start with the EUR2.4b on our IAS 39 re-classed assets.

The way that I look at it, you know regretfully we IFRS filers have been forced to report this number for most of our competitors that file under US GAAP.

You would have never seen this reclassified assets.

We have to report both at accrual basis and their fair value basis in terms of market basis that we do not see this as a potential loss.

Because in our view as we reclassified these assets and intend to - in the original intent of selling and trading them, and now we put them on a pattern to sell them based on the best time of exit for these.

We just don't see these losses coming through the P&L.

Obviously, this number is volatile because every time the market weakens and liquidity disappears then obviously the gap increases.

But in most of the assets we have seen, if you look at the starting point which was above EUR5b you have seen how the convergence of our book value with the fair values that we have [assessed] under this different methodology.

At the end some of these assets we may hold to maturity and then they will move back to par and therefore technically they will have no losses.

Again, if at the inception of these assets we would have just taken this different decision that we didn't want to trade them but we didn't want to hold them for maturity and sell them, the decision would not even have appeared.

As you know we had a couple of lumpy exposures in there.

One of them was Actavis which we have sold, that we are in the process of selling to give you an example.

So now what this portfolio enables us to make quite reasonable decisions at what point we want to sell and at what cost if any, we have to sell.

The second increase from the EUR2.5b reserve reporting from the EUR2.1b to the EUR2.5b reserve, the evaluation of this so-called reasonable possible losses above reserve is an appraisal at the end of the quarter on a case-by-case basis of material and significant cases that are disclosed in our financials.

In every quarter, some cases experience obviously movements in their inherent risk such as increases or decreases or payments to claimants.

In addition, cases may be included that were not previously.

So the increase from EUR2.1b to EUR2.5b is just partly due to new cases that have just [cut] and obviously I caution you this number in this current litigation environment may be subject to changes.

To the point in time versus through the cycle question, at this stage we would honestly not see a meaningful difference that would arise from using through-the-cycle or point-in-time default measures of risk weighted assets.

Also let me add that the loss severity is anyhow estimated on only historical data sets and hence it's an important point of Basel 2.5 risk-weighted assets is largely the same in either concept, whether it be 2.5 or 3.0.

In other words we don't see this as a black or white issue indicated in your question, and we certainly see the differences to be quite minimum.

Then to your fourth question if I got it right, Anshu had mentioned that the EUR3b savings are net.

That they are incurred as we had said, to our run rate for the first half of 2012.

I just explained why we chose that starting point.

We thought that that's the best reflection of our current cost base, with its current footprint and its current exchange rate and it's currently significantly increased regulatory cost requirements and we felt that this was the better attachment point to quote to you.

But again just bear with us to September.

I'm sure we will provide you with some more granularity at that point.

Great, thanks.

Thank you.

The next question is from Fiona Swaffield of RBC.

Firstly on the cost base or the currency impacts, I wondered if you could give us something similar for revenues.

Because I assume there would have been a big impact from revenues so how much did the weaker euro impact the revenues Q2 on Q2 or half on half.

I'd be interested in that number.

The second is the euro periphery loan book.

I haven't had time to read all the detail yet.

But I wonder if you could talk us through what's happening on credit quality there.

Because there doesn't seem to be much rise in the loan losses in the PBC international, so could you comment on Spain and the conditions in your book there?

Then the third is the (inaudible) of models, market risk versus standardized and the fundamental trading review.

I don't know if you've got any further thoughts on how that could potentially impact your risk-weighted assets over time.

Thanks.

Okay thank you, Fiona.

Okay, let's go, I'll give you some details.

So if you have your pencil and pad I will give you some more details.

The revenues in CB&S were plus EUR300m and it's now the exchange rate effect.

On the Group it was EUR440m, the impact positive.

Negative on LLPs of each [EUR10m] and the non-interest expenses in CB&S were negative EUR265m and on the Group as we disclosed EUR360m.

For the first half, I'm willing to provide you the first half numbers too if you like.

Ye, please.

The revenues are EUR570m positive for CB&S.

EUR775m positive for the Group.

The LLPs are the same, EUR10m negative and then obviously non-interest expenses were EUR440m in CB&S and the Group were EUR600m.

So this is to that question.

The second on the credit quality, our peripheral loan book has seen some really modest upticks in loan loss provisions.

We don't see it because it's not that big of a book, but just some modest upticks.

But when we look at our loss absorption ratio, that takes into account our pricing for new business, that actually has developed favorably and you see that over the last couple of years, we've done some -- quite some good work on improving the quality of our non-German European credit book.

And that we have had some really favorable developments in this overall.

Also we do see obviously a slight uptick in delinquencies in some of these markets.

Then your last question was the models.

We are still assessing the latest Basel review of the trading book.

This is obviously something we will monitor, but we feel that at this stage, the ultimate outcome is so uncertain that we don't think that to give you any impact at this time is appropriate because we still have so much uncertainty around it and so much discussion with our regulators.

As you know we are (technical difficulty) a strong percentage of modeling throughout the rest of the half year.

And maybe as we do that we might be able to give you a better number.

Thank you.

I will now hand back to Mr. Mueller.

Please continue with any other points you wish to raise.

Thanks, Michaela.

This concludes our second quarter conference call.

I would like to thank all of you for your interest in Deutsche Bank.

Let me emphasize that we understand you have many good questions around our initiatives and statements, and we really promise to you that we will as usual provide full transparency around those.

It was very important to our co-CEOs to provide you with an update on our strategic review today so please bear with us for another six weeks until Investor Day.

With that, goodbye and see you on the road.