Deutsche Bank AG (DB) 2013 Q1 法說會逐字稿

Ladies and gentlemen, thank you for standing by.

Welcome to the first-quarter 2013 conference call of Deutsche Bank.

(Operator Instructions).

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

Please go ahead, sir.

Yes.

Thank you.

And good morning from Frankfurt.

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

We have with us today our Co-CEO, Anshu Jain, and our CFO, Stefan Krause, who will lead you through the highlights of this quarter.

We will have a question-and-answer session at the end of their remarks.

As you know, we've already provided you with all the documents yesterday, which you'll find on our website.

Please be reminded of the cautionary statement regarding forward-looking statements at the end of the presentation.

And with that, I would like to straight hand over to Anshu.

Thank you, Joachim.

And good morning, everyone.

Before Stefan goes through his detailed presentation, I would like to take you through our current capital position and capital strategy going forward and then put that in the context of our first-quarter results.

Capital strength is a core part of Strategy 2015.

We began this journey with a Basel 3 pro-forma core tier 1 capital ratio of below 6%, which was behind the leaders in our peer group.

In September, we stated publically that our aim is to raise that to 10% by first quarter 2015.

We listened carefully to many stakeholders, regulators, investors, analysts and commentators as we developed our strategy and subsequently.

The message was clear; resolving the capital issue had to be our top priority.

For two consecutive quarters we beat the targets we set ourselves.

In nine months we raised our Basel 3 tier 1 ratio from below 6% to 8.8% versus a raised target of 8.5%.

This is equivalent to a capital raise of over EUR10b.

To do this organically represents the fastest capital buildup of any major peer during the period.

And we achieved this through disciplined risk reduction.

Since June we reduced risk-weighed assets by EUR103b.

We're aware of some suggestions that we achieved this risk reduction mainly through model adjustments.

So let me say clearly, those suggestions aren't founded.

We achieved the bulk of this by true asset sales and hedging.

For example, the non-core operations unit has contributed some EUR50b of this total.

In the first quarter alone it disposed of a further EUR9b of assets at or above carrying value.

We're now reporting on a package of three measures to strengthen our capital structure.

These are, firstly, continued strengthening of our capital base [fed] by organic means, in good measure, through accelerated risk reduction.

Secondly, the capital measures announced today, which form part of the capital toolbox we discussed last September.

This would take us from the Basel 3 pro-forma ratio of 8.8%, which we've achieved organically, to approximately 9.5%.

That ranks us today as one of the best capitalized banks of our global peer group.

And thirdly, our intention to potentially issue up to EUR2b of additional subordinated capital over the next 12 months.

This third measure reflects a duty that we take very seriously.

We're not only responsible for the sound commercial functioning of the institution; we must also ensure that Deutsche Bank is [resolvable] in the eyes of the most demanding requirements for changing regulatory landscape around the world.

This further reflects our commitment to contributing to a stable and reliable financial system on which society depends.

In addition, these measures allow us to take advantage of organic growth opportunities in a changing competitive landscape.

We want to give ourselves optionality to take these opportunities sooner and turn them into lasting value for shareholders.

Today we can say that the so-called hunger march is over.

We can now accelerate the process of taking advantage of growth opportunities and simultaneously look forward to the day when we can return more capital to shareholders.

Crucially, I'm pleased to report that in the first quarter we delivered strong profitability on this higher capital base.

Post-tax return on equity was 12%.

For the core Bank it was 17% on an annualized basis compared to our 2015 aspiration of 15%.

Q1 is seasonally a good quarter for us.

But this is an early indication of the franchise's ability to produce strong returns in what remains a challenging and uncertain market environment.

Despite reducing costs and risk-weighted assets, we continued to take market share and deliver in each of our key products and regions.

Let me now give you some highlights of our progress.

CB&S, our investment banking division, has performed strongly.

For CB&S headwinds have been stronger in Europe, both from regulation and a tough environment.

Some have suggested that European heartlands would lose ground to North American competitors.

We don't see that.

Our CB&S franchise has proven very robust.

In key areas we've actually gained market share.

The right-sizing we carried out last year as part of the operational excellence program, far from weakening the franchise, has actually strengthened us.

Our performance in German retail banking has also been a driver of our first-quarter results.

PBC has just delivered its best quarter since we consolidated Postbank back in 2010, excluding cost to achieve and purchase price allocation effects.

Revenues benefited from growth in lending, thanks to record new production levels, running at EUR300m per week.

We made market share gains in our German mortgage business, where volumes are up by 10% year on year.

Revenues from investment products are up 8% year on year as clients return to equity markets after some disappointing quarters.

We held the cost base flat and Postbank integration continues on track.

Strict risk discipline is paying off.

Provision for credit losses was at a record low.

GTB has produced profits in line with last year, although the revenue environment remains very tough, with pressure from both margins and near-zero interest rates, and this challenge may continue.

In Asset Wealth Management, building an integrated platform is a long- term effort, but we're on track and producing results.

Underlying revenues are up year on year, with a shift towards active assets.

Underlying costs are benefiting from last year's restructuring.

Very importantly, net money flows have turned positive for the first time in five quarters, although we expect this to remain volatile.

Turning to costs, we're aware that historically cost control has been a challenge for Deutsche Bank, which is why we're very pleased with the operational excellence program which is on track.

In the first quarter, in line with plan, we made savings of around EUR200m and booked costs to achieve of around the same amount.

We remain committed to delivering our target.

We made further progress on cultural change in the quarter.

The GEC is leading the process of operationalizing cultural change and cascading it through the organization.

We implemented recommendations of our independent compensation review panel, and these are influencing compensation policy and practice.

So looking forward, litigation expenses are hard to predict as they depend on the outcome of legal processes.

Despite the relatively benign outcome in the first quarter, litigation expenses are likely to be a higher burden in future quarters.

Furthermore, regulatory uncertainties exist.

We talked about competing in the US, so let's also openly concede that the regulatory challenge in Europe is fiercer and broader-based.

European universal banks are uniquely faced with additional measures which are either implemented or under discussion, the financial transaction tax, compensation reform under CRD IV, bank levies and new proposed capital requirements for foreign banks operating in the US.

We're hard at work on mitigation plans which will allow us to adapt our model to a changing environment, as we have successfully in the face of other challenges in recent years.

It's been noted, not just by us but by senior regulators and central bankers, that the balkanization of regulation will create unintended consequences, not just for us but for the wider economy.

So summing up, when we launched Strategy 2015, we identified five key levers, capital, costs, competencies in our core businesses, clients and culture.

We are delivering on all of those, in particular on capital, where we are now among the best capitalized banks in our global peer group thanks to the measures I've just discussed.

Of course the operating environment will remain volatile and hence we remain vigilant in the face of uncertainties.

Now let me hand over to Stefan, who will go through the presentation.

And after that we both look forward to taking your questions.

Thank you very much.

Yes.

Thank you, Anshu, and good morning to everybody.

I would suggest that we turn to page two of the presentation, which starts and gives you an illustration of our capital position.

Anshu already talked you through the background of our equity rates, but let me provide some further color.

The equity rates announced yesterday is embedded into, like Anshu said already, into a comprehensive capital plan with a view to CRD IV, it's important to optimize our entire capital structure until 2019 to reflect regulatory requirement.

First, we have seen a period of very strong organic capital build from a Basel 3 common equity tier 1 ratio of below 6% at the beginning of 2012 to a ratio now of 8.8% by the end of the first quarter of 2013.

Second, after adding more than 280 basis points organically, we now add approximately 70 basis points through our exercised issue, which takes our pro-forma fully loaded Basel 3 ratio from 8.8% to approximately 9.5%.

With 9.5%, we are already now already covering the core tier 1 minimum capital requirement as well as the capital conservation buffer and the G-SIB requirement which only becomes effective in 2019, which means that we meet this requirement already six years ahead of time.

With our announced third measure of the package we will also strengthen other elements of the capital structure.

Our current capital structure, as per the first quarter, encompasses 3.9% hybrid tier 1 and 1.7% Tier 2, aggregately in excess of future CRD IV requirements.

To manage the transition, however, we anticipate issuing EUR2b in the form of additional tier 1 and tier 2 capital instruments over the next 12 months, equating to an increase of our current total capital ratio of more than 50 basis points.

Such issue will not only allow us to transition to a CRD IV capital structure, but it also will help manage our leverage ratio and, as Anshu said, improve our resolution planning.

If we go to page three, page three shows you the development of our pro-forma Basel 3 common equity tier 1 ratio since December 2012, again illustrating our strong improvement of more than 280 basis points which we achieved organically.

And then the extra uptick we target through our extra issue, leading to a pro-forma core tier 1 ratio of approximately 9.5%.

Our strong momentum to date, including the further capital supply measures announced, put us in a position of strength vis-a-vis regulatory requirements and also positions us very well in our peer group.

With 9.5% already now, there's a very clear and visible path to our long-term target of 10%.

In fact, with only 50 basis points to go, we have gained further flexibility to take market opportunities as we keep unlocking capital from our non-core unit and building capital through earnings.

So let me move to the quarterly results.

And I will start to say within my time at Deutsche Bank, this has been now the most straightforward quarter I've had.

For the first time in many quarters there are no current issues that require special attention.

So I will focus barely on the presentation of the Group and the segment results.

And for that, let's go to slide five.

So on slide five, I just would like to highlight now that we have introduced a post-tax return on average active equity metric.

And the reason we've provided this number to you was to give you the ability to track our performance against our target of greater than 12% for the Group.

This quarter it actually stands at 12.3% annualized.

The leverage ratio is currently 21 times.

It is our ambition to further improve this ratio.

After taking the capital issue off the table, we will now focus on balance sheet optimization and balance sheet efficiency going forward.

On slide six now for the Group you can see that we reported a pre-tax profit of EUR2.4b and a net income of EUR1.7b.

The pre-tax profitability in the core Bank was EUR2.6b.

The core Bank's post-tax return on today's average equity is 16.5% annualized so, as you can see, very well ahead of what we anticipate in the future it to be.

Our full-year target is greater than [16%] for the core Bank.

I talk more about this later in the presentation.

And let's turn to page seven.

And you can see the revenues were broadly stable year over year.

The revenue environment for each of our business continues to be challenging.

I think Anshu referred to this.

We continue to face obviously the distortions caused by the extraordinary monetary policy needed to support global growth; the impact of fiscal consolidation, both here in Europe and in the US; and the effect of a very low-yield environment depressing our activities, which obviously are more dependent on interest income level.

Despite this challenging environment, if we adjust the first quarter 2012 for the impairment of our now-disposed [ex service] holding and the impact on both periods of the Abbey Life gross up and [CBA/PBA] effect, revenues would have been only slightly down year over year.

On page eight you see our provision for credit losses that for the first quarter was EUR354m, an increase of EUR40m from the prior year's quarter, with lower provisioning levels in PBC being partially offset by a single one-off event in GTB.

Although the provisions for credit losses in Q1 this year are higher compared to last year's first quarter, we do not see any trends deriving from this.

Our Q1 provisioning levels are in line with our plan for the current year and overall remain very low.

Let's move on to the interesting topics on cost on page nine.

You see on a reported basis our costs are down EUR370m or 5% year on year.

On this slide we also show you our adjusted cost base which excludes the effects of cost to achieve, policyholder benefits and claims, litigation impairments of goodwill and other severances and other disclosed one-offs.

And this view basically aligns our external disclosure with the way we manage our costs internally.

On this basis expenses are also down 5%.

We are pleased to report this decline in non-interest expenses because it does reflect our renewed focus on cost management and cost discipline at the Bank.

However, we continue to focus our attention on investing in longer-term process and efficiency improvements as part of the operational excellence program.

Therefore we expect that in the near future, due to the irregular [CtA] timing, movement in the reported cost base don't give much of an indication, just as a note of caution when you do your planning.

General and administrative expenses declined by EUR368m or 12% year over year, reflecting the more disciplined cost management and lower litigation expense which more than offset the increased cost to achieve.

Compensation and benefits declined by 3% year over year.

Within this, compensation excluding variable compensation costs is 4% lower, mainly as a result of the headcount reductions made in the second half of last year.

Variable compensation costs have increased 3% as the impact of lower deferred award amortization in 2012 will only become pronounced in the last three quarters of this year.

Please note litigation expense was only EUR132m in the quarter.

This amount would have been substantially higher.

But as a post balance sheet event we recorded EUR592m as 2012 charges rather than as first-quarter charges.

You therefore should not assume Q1 litigation expense to be any indication for our run rate of 2013, I must say regretfully.

The timing and size of litigation expenses going forward is unpredictable.

However, we have assumed continued headwind from litigation, our budgeting and capital planning for the next couple of years.

Let's move on now to page 10.

There you can see how we're making progress on the operational excellence program.

This quarter we only spent EUR221m on the operational excellence program, but our full-year plan is EUR1.7b, as we have communicated previously.

Our CtA is released obviously on an initiative-by-initiative basis.

We have good visibility on the remaining EUR1.5b planned for the last nine months of this year, more than EUR1b of this amount attributable to confirmed initiatives or initiatives in execution.

The remaining amount has been detailed or validated already.

So this year's expected to be the peak year of costs associated with the operational excellence program.

But in Q1 we saw lower expenses that we expect to ramp up over the next quarters.

And then also the net savings will become more visible than in 2014 and 2015, as you can see from the chart when the investment starts to taper off.

Let's turn to page 11.

You see the profitability here.

We are in a faster start than last year, as you can see.

Pre-tax profit increased by 28% year over year, while net income increased just 18% due to the higher effective tax rate in the quarter.

As I mentioned earlier, for the first time we're showing a post-tax return on average activity of 12%, as you can see.

Also started at this quarter, average equity is allocated to the business on a fully loaded Basel 3 basis.

This means the allocation of capital is now consistent with the communicated capital and return-on-equity targets we set in our Strategy 2015 plan.

For the full year 2012 we have therefore allocated an additional EUR5.9b out of consolidation and adjustment.

As you might expect, the effects are most pronounced in CB&S, whose average active equity increased by EUR3.6b, and in the NCOU which received EUR1.8b of additional allocated equity.

And there is, by the way, a slide in the appendix which details some of these charges if you have further questions about this reallocation.

On page 12, the now very famous page 12 that we have been tracking for many quarters, here you can see how well the capital ratios have improved.

Obviously the chart is still under Basel 2.5 before talking to Basel 3 on obviously the subsequent pages.

We finished the quarter with a Basel 2.5 core tier 1 ratio of 12.1%, 70 basis points higher than at the end of the fourth quarter 2012.

The increase in our core tier 1 ratio is a result of our Q1 net income as well as the continuation of our successful de-risking program which I will talk more about later on.

With regard to our tier 1 ratio, let me put two things into perspective.

This ratio, which only a few years ago managed to achieve a target of greater than 10%, and to 8% to 9% before that, now stands at 16%, and this under the more stringent rules of Basel 2.5.

And actually, looking at our capital raise, it stands at even 16.7% and our common equity tier 1 ratio at 12.8%.

In other words, on a like-for-like basis, we've more than doubled our capital ratio over the last five years, meaning since March of 2008.

Let's review the capital and risk-weighted asset developments in the quarter a bit more in detail on the next slide, which is page 13.

Our regulatory capital increase is mainly driven by net income which added EUR1.7b to our core tier 1 capital, while smaller movements through reductions in capital deduction items and FX were offset by our dividend accrual and other smaller items, as you can see here on the chart.

We achieved a reduction of approximately EUR9b in Basel 2.5 risk-weighted assets since the year end.

This primarily reflects the Basel 2.5 effects of our de-risking program on credit risk RWA, which was largely achieved by asset sales and hedging and to a lesser extent by parameter recalibration.

These reductions were partly offset by moderate increases in market risk, RWH.

So let me move on to page 14, which we -- now I move to the Basel 3 framework.

And as Anshu already said to you, our fully loaded Basel 3 pro-forma core tier 1 ratio for March was 8.8%, comfortably above our set target of 8.5%.

Starting from Basel 2.5, we first see a EUR61b risk-weighted asset increase in relation to Basel 3 in the phase-in case, which is EUR13b lower than what we reported at year end 2012, mainly attributable to increased clarity and more precise application of the proposed rules in Europe as well as the further [CVA] hedging.

Moving on to the fully loaded case, we then see a EUR6b risk-weighted asset reduction as the 10%/15% threshold comes down and hence more CtA are deducted and no longer risk-weighted.

On the capital supply side, phase-in rules allow us to apply capital deductions like goodwill to additional tier 1 capital such as hybrid first so that our reported core tier 1 capital will actually increase.

Our pro-forma core tier 1 ratio with phase-in will hence be 13.6%, far above all regulatory requirements.

In the Basel 3 fully loaded scenario, all deductions would be against core tier 1 capital and we would see a EUR19b capital decrease compared to the phase-in scenario.

These EUR19b of deductions relate mainly to goodwill intangibles as well as deferred tax assets, but also to items such as our net pension fund assets, [CVA], minority interest and others.

This gets us to our pro-forma Basel 3 core tier 1 ratio on a fully loaded basis of 8.8% for March month end and to approximately 9.5% after our capital measures announced yesterday.

We now turn to page 15.

Let me give you an update on our capital demand which we first spoke to you about in our Investor Day last September.

At that time we committed to a Basel 3 risk-weighted asset equivalent reduction of about EUR90b, as you remember.

And we said this would happen over the course of the second half 2012 and the first quarter of 2013.

We subsequently increased our target to greater than EUR100b.

And now, with EUR103b risk-weighted asset savings since June 2012, we have fully delivered on our target.

And I would like to summarize our measures today as the accelerated de-risking initiative is coming to an end this quarter.

First, about 60% of our RWA savings have been achieved through asset sales and hedging, with outright sales contributing the clear majority.

We then had a reduction in our VaR multiplier, which was approved by the BaFin from 5.5 to 4.0, driving another 11% off the reduction.

Here you should take note of the recent BCBS report on market risk, where you can see that our reduced multiplier is still conservative when compared to peer average and significantly above the minimum 3.0 required under the Basel rules.

The rollout of BaFin-approved advanced models contributed a further 13, and I can almost say only a further 13, as we increased our advanced model coverage in line with our German regulations to meet a minimum 92% coverage ratio by the end of 2012, notably one of the most stringent requirements of any regulator.

Improved process and data discipline, including the recognition of netting agreements on collateral received as well as other improvements in our data infrastructure contributed a further 17%.

We understand that there are some of you who are concerned about risk-weighted asset reduction from models.

So let's again assume that all modeling changes we implemented, under close watch of our regulators, by the way, would be taking back.

We would only lose EUR13b of our EUR103b risk-weighted asset reduction, which basically would mean that we would be still meeting our EUR90b target we set ourselves and we would still exceed our 8.5% ratio target.

So in the first quarter 2013, we saw all asset sale hedging related reduction now only coming from our non-core unit, which will remain a source for continual reduction in capital demand going forward.

For the core businesses, however, we did not see and do not plan any net risk-weighted asset reductions.

Going forward, a good amount of the capital relief generated in the NCOU will be redeployed into the core businesses to support the 2015 strategic objective.

So in the coming quarters you should not expect the magnitude of our risk-weighted asset savings seen over the recent quarters to continue, but capital to be freed up on a much more moderate basis and, as I said it, redeployed for growth and opportunities in the marketplace.

So let's turn now to the segmental results briefly, on slide 17.

I start with CB&S.

The first quarter 2013 saw a significant improvement in market sentiment and increased risk appetite compared to the second half of 2012.

However, CB&S revenues were down 4% year over year due to the absence of [IPO]-driven liquidity in the prior-year quarter.

After a strong January, driven by sustained risk appetite, capital markets activity tailed off in February, reflecting concerns over the US sequester and Italian election, before picking up again in March as fears of a global slowdown faded on strong economic data.

With this environment, CB&S continued to operate at low-risk levels in the first quarter of 2013, maintaining VaR levels in line with year end 2012 and with, by the way, no negative trading days in the quarter.

Year over year our Basel 2.5 risk-weighted assets are down 16%.

Non-interest expenses were materially lower in -- than the prior-year quarter, which was really a significant achievement, with reductions in both compensation and non-compensation costs, reflecting solid progress on the operational excellence program.

On restructuring, we have now materially completed the 1,500 headcount reduction announced in CB&S and in the related infrastructure functions.

On page 18 you can see that the first quarter 2013 debt sales and trading revenues compared well with the previous year despite less favorable market conditions due to the absence of LTRO-driven liquidity, as I said, and a slowdown in activity mid quarter.

As a part of our 2015 strategy announced at the 2012 Investor Day, we've not integrated our GFFX and our rates and credit trading businesses into a single fixed-income and currencies business in order to realize further efficiencies of scale.

Global liquidity management saw revenue down significantly year over year, primarily due to a very strong first quarter in 2012 when the businesses benefit from lower rates resulting from the excess market liquidity driven by the LTRO.

Rates and flow credit revenues were lower as strong performance in credit, especially in the US and Europe, was offset by weaker revenues and rates driven by lower volumes in Europe.

FX saw another quarter of record volumes, but revenues were slightly down year on year due to the lower volatility and ongoing margin pressure.

DB, by the way, was ranked number one in the Greenwich FX 2012 ranking.

Credit solution revenues were higher year on year, driven by increased client demand, reflecting increased risk appetite and a general rally in Asian credit market.

On page 19 you can see our equities revenue that increased year on year, driven by strong cash equities and derivative revenues.

Cash equities are up year on year, supported by positive market sentiment and a solid performance in electronic trading, reflecting ongoing investment in this business.

Cash equities also benefited from a strong performance in the ECM business.

Even with lower levels of volatility, derivative revenues were also higher, driven by the better performance in Europe and especially in Asia.

Prime Brokerage revenues were in line with the prior-year quarter, with increased global balances and revenue growth in APAC, reflecting the ongoing strength of our franchise in that region.

On page 20, I turn to corporate finance.

Global corporate finance fee pools were in line with the prior-year quarter, with strong capital markets in the US offsetting declines in Europe and Asia.

In the first quarter 2013, we maintained the record global market share that we achieved in 2012.

In EMEA, we are ranked number one.

Higher year-over-year revenues in equity and debt origination were offset by lower year-over-year revenue in the advisory business.

First quarter 2013 was a challenging quarter for the advisory business as lower fee pools were exacerbated by a record global [field count].

The fee pool was driven by a small number of large deals.

However, our advisory pipeline looks very solid and is significantly up versus the same time last year.

Deutsche Bank EMEA market share increased across all ECM and DCM products from full year 2012 except for investment grade loans.

On page 21 we'll talk now about our global transaction banking.

As you can see, the income before income taxes in GTB was EUR309m in the first quarter 2013.

Revenues remained stable compared to the prior-year quarter, both on fee and interest income.

On the one hand we remain challenged by the progressive decline in interest rates and compressed margin.

But on the other hand we've been able to compensate this trend through monetizing our deal pipeline.

This quarter was adversely impacted by an increase in our loan loss provisions, primarily attributable to a single client credit event in trade finance.

In general though we do not observe any broader deterioration of the credit counterparty risk across the portfolio.

Compared to the first quarter 2012, trade finance continued to benefit from high demand for financing products.

Trust and security services came under pressure due to the aforementioned low interest rate environment.

Cash Management benefited from strong deposit volumes.

So let's go to page 22.

Our AWM is off to a good start this year, I can really say, in both its operating performance and its continued execution in integrating our various asset and wealth management businesses.

Revenues, excluding the Abbey Life gross up, increased by 4% year over year.

More favorable equity markets, improving fund flows and positive asset mix shift from defensive to more actively managed products drove the revenue increases across all of our products.

The reported IBIT of EUR221m includes EUR14m of cost to achieve related to the operational excellence program.

The compensation and benefit savings from the first phase of our restructuring program executed in the second half of last year are largely overshadowed by the variable compensation effects I mentioned earlier in the presentation.

Lastly on AWM, I'm happy to report positive net asset flows with more than EUR6b of inflows across Wealth Management and Asset Management, Anshu already referred to this, which compares favorably to outflows of EUR8b in the first quarter of 2012, and EUR22b in the full year of 2012.

And last but not least, let's move on to page 23, our Private & Business Clients business that achieved a very good result in the first quarter with a reported IBIT of EUR482m.

Revenues continued to be challenged by the low interest rate environment.

And the ongoing integration of Postbank is also evident in the expense base.

Adjusting the recorded IBIT for cost to achieve as well as for PPA effect, the IBIT would have been approximately EUR650m.

The improvement year over year is primarily driven by a continued reduction of risk costs and increased credit product revenue.

We have been successfully growing our loan businesses, especially in German mortgages, and have benefited from extended margins in other European countries.

Lower deposit revenues due to the near-zero interest rate environment are somewhat offsetting the positive trend though.

Advisory Bank in Germany achieved a rebound compared to the second half of 2012, benefiting from lower-risk provisions and higher revenue.

Sales activity over the past three quarters has developed positively.

New mortgage business volumes have reached record levels and investment revenues have picked up considerably.

The year-over-year IBIT decrease was driven by several non-operating effects, cost to achieve and an intangible impairment this quarter which masked the otherwise growing profitability.

Advisory Banking International reported a very good result, increasing IBIT year over year.

The business division continued its solid performance in Southern Europe despite the ongoing crisis and benefited from a higher Hua Xia contribution.

Consumer Banking in Germany posted a strong result, benefited by increased credit product revenue and strict cost and risk discipline.

As already announced at the Investor Day last year, cost to achieve related to Postbank integration will now be reported as part of the operational excellence CtA from 2013 on.

Overall CtA spend has already increased year over year and, as already seen in previous year, CtA will most likely significantly increase in the second half of the year.

And I can also report to you that the Postbank integration continues to be well on track.

On page 24 we have our consolidation and adjustments piece.

As you can see, the pre-tax loss in C&A was EUR255m this quarter compared to a loss of EUR432m in the prior-year quarter.

The more favorable development was primarily attributable to lower negative revenue effects from valuation and timing differences.

The variance in mid- to long-term US dollar/euro [stated] spreads had a significantly smaller impact on the mark-to-market valuation of our position.

In the prior-year quarter these effects amounted to negative revenues of approximately EUR320m.

By this quarter they were negative EUR160m.

Additionally, the widening of credit spreads on our own debt produced a mark-to-market gain versus a loss in the prior-year quarter.

Non-interest expenses also include a lower bank levy accrual year over year.

Finally let's turn to the development of our non-core operations unit.

As I mentioned earlier, the de-risking in NCOU has been a key factor in the Group's organic capital debt story.

So in the first quarter we successfully reduced Basel 3 risk-weighted asset equivalents by EUR15m, primarily through the sales of securitization assets and the final disposal of the structured credit portfolio and other bond portfolios that were originated by Postbank.

Together these disposals resulted in a core tier 1 ratio improvement of approximately 30 basis points after taking into account the pre-tax operating results for the quarter.

Favorable market condition allows us to sell these assets at or above carrying value, resulting in incremental net gains from this de-risking activity.

And revenues improved quarter on quarter, primarily due to the favorable market conditions, which had a positive impact on market and CVA, while underlying costs remained stable.

So finally I come to my last page on slide 26.

We had laid out an ambitious plan to reduce Basel 3 risk-weighted assets from EUR141b at June last year to approximately EUR90b at the end of March 2013 in the NCOU.

And I can really -- and I'm pleased to announce that we have achieved this milestone.

With 28% reduction of balance sheet assets that equates to a 35% reduction in Basel 3 equivalent risk-weighted assets or EUR3.2b of capital accretion since June 2012 when these assets were assigned to the NCOU.

This includes the EUR2.3b cumulative pre-tax operating loss since June 30, 2012.

Our EUR15b Basel 3 risk-weighted equivalent saving was achieved primarily from de-risking activity with the following notable transactions, approximately EUR5b in relation to the [commutation] of specific CDS positions, as with the monoline insurer, together with the disposal of the underlying bond portfolio.

Further savings from de-risking of other IAS 39 assets accounted for an additional EUR2.7b reduction in Basel 3 risk-weighted assets.

And by the way, you can see in the appendix the gap between our book and fair value on our IAS 39 portfolio was reduced to EUR1b.

Then we had approximately EUR3b from sales of the structured credit and high-yield portfolios within our Postbank business.

I can confirm that we remain on track to achieve our target of EUR80b of Basel 3 risk-weighted asset equivalents by year end.

But we expect the pace of reduction in assets and associated capital demand to lessen over time.

With capital accretion in the forefront of our decision-making process we will continue to evaluate the rationale of exit versus hold to take advantage of market conditions and to optimize and protect shareholder value.

And we continue our progress on de-risking during the second quarter as we have reached an agreement to sell our legacy US commercial real estate portfolio that we inherited with our Postbank acquisition.

We expect this transaction to close this quarter and to deliver a further Basel 3 risk-weighted equivalent reduction of approximately EUR2b.

So thank you very much for your attention, and we're looking forward to your questions now.

Thank you, ladies and gentlemen.

(Operator Instructions).

The first question is from Kian Abouhossein of JPMorgan Securities.

Please go ahead.

Yes.

Hi.

Thanks for taking the question.

The first question I have is regarding risk-weighted assets.

You're now at EUR380b Basel 3. At the Investor Day, Stefan, you guided towards a number of EUR434b due to some business growth.

Should we dismiss this EUR434b by 2015 or is that still relevant going forward?

Or should we think more the current level of risk-weighted assets is a good level that we should assume as a run rate?

And in connection to that, you have a tier 1 Basel 3 target of 10% plus by 2015.

I'm wondering if -- is it not more realistic that we should really think about this more as of end of this year?

And why don't you want to bring this 10% plus target up, i.e.

closer to the current time period?

The last question I have is regarding FBO and if you could give us an update of, one, how you think about the debt-to-equity swap, if you had a discussion with the [FET] and with the BaFin about that, the amount that you think you would have to swap.

And secondly, any discussion around funding, i.e.

local versus still Group or [tracked] funding, if you could give us an update where you stand in that respect, how you read the FBO proposal.

Thanks.

Thanks, Kian.

I think a couple of good questions.

From today's perspective, to answer your first question on the EUR434b, I would say that we should think about it a little bit lower now.

Currently if we look at the business opportunities I think that we would see this a notch lower, certainly above the EUR380b level, but lower than the EUR434b.

That's our current thinking.

And when we look at the appetite that the business has and what the business needs in order to fulfill their target, it's in between these numbers.

And then you asked me on the 10%.

Obviously I don't think it takes a genius to calculate that we have really gotten very close to the 10%.

Nevertheless, we want to preserve our optionality and therefore obviously we have not given an update on this target.

But you can assume that obviously we are inside of this 10%.

It was important for us to be inside of this 10%.

So we've fully taken the capital concern off the table.

So for right now, let's stay with our guidance.

But I would say we're pretty sure that we'll achieve this target by 2015 now.

Then on FBO, we -- I would say that I described to you in previous calls that we think that we can -- even the worst-case scenario of these rules were to come in place, that we had a plan put together to meet the requirements, that especially the leverage requirements and that because for these leverage requirements, tier 1, tier 2 instruments can be used, we feel very comfortable that we will be able to -- doing this swap of debt to equity and especially then eventually debt to equity-like instruments, achieve what we need to do in the United States.

The problem that remains though to the FBO are still unclear.

We haven't learnt any additional.

The proposal is out and we have commented on the proposal.

You've seen a lot of lobbying going around and we are now awaiting until we can see the final route.

So therefore I regretfully have no update for you.

We haven't learnt anything additional in the last couple of weeks about it and let's wait until final text is out.

Okay.

If I can just -- one more very quick one.

On page 15, the asset sale and hedging numbers, the core and non-core, can you just tell me how much of that EUR43b plus EUR18b is hedging versus asset sales?

Yes.

Hold on, Kian.

Sure.

About 90% is asset sale.

Okay.

Perfect.

Thank you.

So the majority by far is asset sale.

Okay.

Thank you.

The next question is from Daniele Brupbacher of UBS.

Please go ahead.

Good morning and thank you.

Just a question on the OTC to CCP transition.

And one of your US competitors, JPMorgan, gave quite some specific guidance earlier this year.

I think it was in February.

Could you just share your thoughts with us regarding what the potential revenue impact could be for Deutsche just also around re-pricing margins and capital consumption in that context?

And just a second question on compensation in CB&S.

I think the comp ratio was like in the first quarter last year, 38%.

It then approached the 40%-ish level, which was the level you had over the past few years.

Is that how we should think about compensation ratios this year as well or is there any reason that it could be different, for example, the structure of compensation these days, etc.?

Thank you.

Okay.

On -- in your question on OTC/CCP, it's difficult to predict at this stage.

Now we're still awaiting the final set of regulations and we expect impact of these regulations will obviously be known once they're fully implemented.

And revisions to method in particularly I think we are some years from implementation away.

In terms of central clearing, we don't expect any meaningful impact.

Introducing CCP clearing doesn't in itself change much for this overall in the economic.

And in any case, liquid IRS has been cleared for many years.

Moreover, there are also likely to be some incremental revenues which could accrue from demand of collateral management and clearing services.

So as I said, we don't really expect any meaningful impact.

On your compensation ratios, yes, we had a 38% in CB&S.

We have told you that we intend to stay below 40%, so in that sense I think this is -- the first quarter is more in line.

I told you that obviously some of it is a result of the headcount reductions we had and therefore obviously we'll see the impact in the first quarter of that.

But we remain to -- in our guidance to stay around to below 40%.

Okay.

Thank you very much.

The next question is from Mr. Jeremy Sigee of Barclays Capital.

Please go ahead, sir.

Good morning.

Could I ask -- I've got a micro question and then a more big picture question, please.

So the micro question is just very specifically, of the EUR221m Group CtA and the EUR132m Group litigation that you identify, how much of that is in non-core and how much in core?

I just wondered if you could give us the split.

That's the micro question.

The big picture question, and it's linking back to the earlier question, if you're likely to get to your 10% target actually this year, is the implication that your capital ratios drift higher than that, say towards maybe something like 12%, perhaps in view of the [Tarello] issue or in view of your still above average nominal leverage?

Okay.

I can start with the first question.

Obviously our CtA is fully in core.

So all the EUR221m is in core?

Yes, core.

Okay.

Thank you.

And the litigation, the EUR132m?

The litigation, about half/half.

Half and half.

Okay.

Thank you.

The next question is from Kinner Lakhani --.

No.

Hold on a second.

Excuse me, sir.

There was a second part to the question.

And Jeremy, our answer to the second part of the question is quite clear.

As we said earlier, we are targeting 10%.

Don't forget we are issuing this tier 1/tier 2 debt in the amount of about EUR2b.

Based on all the simulations we've done, that is more than adequate to take care of all the regulatory uncertainty, even resolving towards our more pessimistic scenarios.

And hence we've made it very clear; I said that in my opening comments, we would be committed to returning capital back to shareholders as we meet and exceed the regulatory minimums that we've been set.

Excellent.

Thank you.

The next question is from Kinner Lakhani from Citi Investment Research.

Please go ahead.

Yes.

Hi.

Good morning.

So a few questions, firstly on the non-core, where you have EUR91b RWAs.

I just wanted to get a sense of how much decline you would expect on a three-year view on a purely passive basis by maturity and/or repayment.

Secondly, just coming back to your point on capital above and beyond this 10%, what could we consider in the medium term as a normalized payout ratio, a normalized dividend payout ratio?

And thirdly, just on the deferred comp charge, could you remind us what kind of deferred comp charge you would expect in 2013 and 2014 versus what was charged off in 2012?

And also, looking at slide nine, if I annualize Q1 it suggests that your cost savings or your cost base, your run rate is about EUR1b lower than the first half of last year.

Is that how you're thinking about it?

Thank you.

Sorry.

[It's a problem with] my mic.

Kinner, let me start on your question on the EUR90b risk-weighted assets, like the roll-off in the normal course of business in the next three years.

It's about EUR30b to EUR40b risk-weighted assets.

So that would be my guess on our -- looking at the asset composition on a do-nothing scenario in terms of accelerating that.

Then your next question was related to the capital above 10% and payout ratio.

We have not given out the payout ratio at this point in time.

At the end, in our world, it's the Supervisory Board that makes the proposal to the AGM, obviously supported by a proposal that the Management Board [is].

We have always said that once we're above -- on or above the 10% that our ability to return capital to shareholders, to increase dividends, is given.

And a very strong part of our move and our decision to move quicker on capital this time was obviously the fact that we saw how competitors in the market have moved on and is returning capital to shareholders, is increasing dividends.

And we had the feeling that we had to put and give the optionality to Deutsche Bank as well.

And that's why we accelerated our effort to get close to this 10% threshold.

So it just gives us optionality and enables us to do it.

But again, we have not disclosed the payout ratio.

But I can, I think, speak for the Management Board; we remain very committed to increasing dividends in the near future as well.

On your question on the deferred comp, it's -- I don't remember if that question was the charge, what is the charge expected in 2013, 2014 versus 2012.

Well I believe that that it's going to be obviously lower because we have started to reduce the deferral amount, as you remember, from our year-end accounts.

So we are in 20 -- we were in 2012.

And in 2013 we still have a large chunk of the old, which was a higher deferred piece to deal with, and therefore deferral pieces are coming down.

Now the next question was on the run rate.

We disclosed that we will save an additional EUR1.2b, which however can be offset by further growth.

And that's why I also -- I have always cautioned you -- the analysts to say let's not forget what we have in the program.

It's a program that will really lower run rate cost, but as we position the Bank to maybe take opportunities of growth and we see growth, obviously then please consider that there will be some offset.

And that's why we continue to track more to -- in 2015 to the 65% basis cost/income ratio.

That's the bigger driver for us to achieve as we don't know how revenues are going to continue.

But if you asked me this question to give you a guess, I think the number is likely to be around EUR1b if you take it that way.

And I think that's all your questions.

Yes.

Thank you.

Yes.

That's great.

Thank you.

The next question is from Huw van Steenis of Morgan Stanley.

Please go ahead.

Morning.

Thanks ever so much for the presentation this morning.

Two quick questions.

You have to adopt -- adapt your business structure in Germany for [hybrid Christie trading cards] and hedge funds.

Could you give us any update on how far advanced you are on that and any particular impact on capital or funding?

And number two is you look to the US rules.

Do you -- just in the way that you've anticipated some of the rules by the capital increase, should we expect also you'll issue more or your debt in dollars or do you think you'll just wait until the rules are actually printed?

Thank you.

I can take the second one.

Yes?

Well then, let me take quickly -- I'm just going to take the second one.

So on issuance in the US, we've done everything which we needed to do.

We now intend to wait and see what finally comes out.

At this point we would have no further plans for any issuance beyond what's been announced already.

Thank you.

And to your first question, obviously there's no real clarity yet on the German structural proposals.

They're out in proposals so we have to wait final resolutions.

Our current view is that the impacts are very manageable.

Okay.

Thanks.

That's very helpful.

The next question is from Mr. Christopher Wheeler of Mediobanca.

Please go ahead, sir.

Yes.

Good morning, everybody.

Just a couple of quickies.

First of all on the cost to achieve, Stefan.

Obviously you were telling us to look for that EUR1.7b this year, I think, and EUR1.5b next year and [EUR200m] the year after.

And obviously you've only pushed through EUR221m.

Can you give us some kind of clue as to whether your estimates for the year, the restructuring charges will change?

That's the first question.

And the second one, I'm going to go into the very tricky area once again of the FBO and just try and get my head around the fact that when you put the -- or the information into the market about what's going on around both capital and funding, you were obviously being fairly conservative, particularly around funding.

And that was really on the back of concerns about losing the large exposure, the fact that you -- the large exposure, the issue on your intercompany debt would fall away and you might have an issue there and that the actual cost of local funding would go up.

I'm getting the impression that this concern about losing the cancellation of the large exposure rule has gone away a little bit.

And also that I'm hearing that your view is that if you do have to raise more funding locally it could be done pretty close to where the Group rate is.

Are they fair comments or are you still, as you said earlier, going through the fine print?

Thank you.

Yes.

Okay.

First of all on the -- the way to think about the CtA, I had referred to it in my presentation, and we plan CtA based on specific measures.

So these are IT projects or efficiency projects where the investment money is spent.

Obviously a large part of these projects are in -- you have to see in the planning phase, so they're not really -- they're -- if they need to get support, if they need to get IT, they are obviously ordering all this now.

That's how you have to think about it.

And obviously we -- the way we will receive the bill is obviously in a tendency later.

That's why you always have to think about a ramp up of the CtA throughout the year.

Any of the severance costs would be the same.

We obviously have to first implement the efficiency measures and then if redundancies are -- we are able to realize redundancies then obviously the severance payments will come at a later stage.

So that's how you have to think about this whole program.

It's a ramp up.

We will stay at the EUR1.7b.

Current plan shows that the full-year number that we plan is still EUR1.7b.

And of course by the end of the year, give or take on timing of projects, we still believe we will be very close to that.

The EUR221m was now the beginning, and therefore just think about the second quarter some more and then ramping up to the third and fourth quarter.

At the same time, of course, then our achieved synergies are also ramping up.

That's as we also had a lower level of synergy realization in the first quarter and that's how this more or less stays in line.

Don't forget we have a net EUR100m negative planned between the EUR1.6b in savings and the EUR1.7b in expenditure for this year.

On FBO, again I think that the final framework is not available yet.

So I like that you've perceived that we are a little bit more relaxed about it.

And certainly we have learnt a little bit more about how to be able to deal with it internally.

And when you read our confidence it's more with the fact that we have a plan in place that gives us confidence that we can deal with the direct impacts of the FBO and that we also have by now developed some confidence in how we can deal with the large intercompany exposure.

By the way, we do not believe at this point in time that we could fund more inexpensively or equally inexpensively in the United States directly.

It's just on how we perceive that we could manage the business.

Some part obviously of our plan is also some balance sheet reductions that we will do on the Group as well that gives us further confidence that the exposure in the United States will be manageable without P&L impact and without damaging our franchise in the United States.

But again, the final rules, we have to wait for final rules.

And final rules are unresolved at this time and let's see until we get the final framework.

Okay.

Thanks, Stefan.

I appreciate it.

The next question is from Ms. Fiona Swaffield of RBC.

Please go ahead, madam.

Hi.

I have questions in a couple of areas.

The first was on your fixed income result.

Would you consider that you're losing market share and do you think that maybe de-risking has impacted this business or is it something to do with the base effect in your view?

The second area is on the cost savings.

I just wanted to understand the moving parts to the final endgame, because you did give in Q3 quite a useful bar chart.

So on the organic growth, could that be quite significant as an offset because there's a small word -- it says reinvestment at the bottom.

But I'm trying to understand how significant could that be as an offset to the EUR4.5b when we're looking at the end absolute cost base.

And just the last question is on the leverage ratio but using Basel 3 exposure.

Are we anywhere near being able to have a number on what that could do to your US GAAP assets if you -- once you move to Basel 3?

I don't know if you looked at that, because we've obviously had numbers from some others.

Thanks.

Fiona, let me take the first question.

As we said already, there's been a considerable amount of discussion over the last few months about our sales and trading business and investment banking platform.

And as we said very clearly to you this morning, we're very gratified with where we stand, so both in terms of outright performance of that sales and trading in the first quarter.

Deutsche Bank had a top three position, which is where we've been on average for the last many quarters.

And also on a year-over-year basis our percentage decline in revenues is very much in line with the top five.

So both from that measure but more importantly from what we hear from clients and what we see in league tables and so on and so forth, fixed income currencies and commodities have always been and continue to be an area where Deutsche Bank has a strong and dominant franchise.

Okay.

Let me start with your organic growth and the planned cost reductions.

It's a good question always.

And what we are struggling with, to be honest, and I think you're struggling too, is yes, we have set out a EUR4.5b cost target and now everybody is asking us on which base it is and it's therefore projecting a fixed cost target for 2015.

And to be honest, this is a little bit unrealistic because I would say that at the end of the day, if there's growth opportunities, of course we are not going to constrain on cost, our ability to grow.

And that's why we clearly state that the more important ratio to keep in mind that we're really clearly committing is -- and that at the end is the core ratio is to 65% cost-to-income ratio.

And now depending on where revenues turn out to be in 2015, this may either yield a higher savings or requirement on the EUR4.5b or lower net impact because we might have some additional growth opportunities that of course we at that point in time will then use.

Nevertheless, the way the program itself is set up is really to achieve EUR4.5b run rate.

So we are going to plan to take out EUR4.5b cost, and it -- that obviously are really efficiency gains.

This means really lowering the base run rate.

And then from that point of view, at the efficiency levels that we achieve with the EUR4.5b, then continue to run the Bank.

But of course, if there is -- and that's what the reinvestment means, if there's growth opportunity we will not -- we will allow -- obviously a large portion of our run cost, especially in the operational side, is volume-dependent cost.

Obviously if we get more transaction, if we will have more business then obviously we'll have respective cost increases.

So that's the way to think it.

I understand that it sometimes can be a little bit confusing.

We will therefore separate, and that's what we committed to you, we'll separate the program achievement and show where we track against the EUR4.5b so you have transparency on that.

But in terms of the reported cost line, if we have significantly higher revenues there might be obviously a net expense.

And we don't know at this point how much it is.

As you know, we were a little bit cautious on our revenue projection in 2015 because we didn't know exactly how the environment is going to change and therefore we did not want to have a plan that was driven -- an achievement of the 65% cost/income ratio mainly based on an achievement of very high revenue targets.

So that was on that.

I think that was the last.

And then on Basel 3 leverage and our US balance sheet, etc., etc., of course, as I said in my presentation, we had a really successful program on focusing our core tier 1, our Basel 3 core tier 1 ratio now.

And I think we have been very, very successful with that.

We will move the same level of attention now to address our leverage issue on a Group basis.

And then we have a subset of this, is that based on the fact that the current [Tarello] proposal might end up being -- which we don't know yet, but may end up being also a leverage constraint in the United States.

We obviously will go on and go ahead and reduce whatever is not required to the US balance sheet obviously to change that.

To give you only a simple example that I've shown, for example, our Mexican subsidiary assets are reported within the US group.

That's not, at the end of the day, really US assets and that's something we could obviously move to another subsidiary, only to give you an example that this is -- what we're not -- what we are talking about are not measures that are necessarily or that will not cut into our P&L or hampering our business.

You will think about the great level of liquidity that the Bank has, obviously some of that liquidity we have in the United States as well.

And obviously as we capitalize stronger there might be some opportunities there as well, to give you a view.

Just to follow up, what I was trying also to get at was we know the US GAAP balance sheet of just over 1.2 trillion, but would it be -- is there any indication of how much higher it would be under the new Basel 3 total exposure method?

About -- I think our calculations are about half higher, in between the -- that's the best estimate I can give you, in between IFRS and the US GAAP.

So it is significantly higher calculated on that basis.

But we're not concerned about it because, don't forget, everybody -- if we finally get to a harmonized view on leverage, that will be a good thing to have across the industry because then at least the days on which we calculate and the definition on which we calculate this leverage will be the same.

Thank you.

Yes.

The next question is from Mr. Stuart Graham of Autonomous.

Please go ahead, sir.

Hi.

I have a couple of detailed questions and a bigger question.

The detailed questions, page 87 of the interim report, your Basel 3 calculation, the other negative has gone from EUR3.9b to EUR3.2b.

I wonder what drove that in the first quarter.

And then the second detailed question is you've re-boarded EUR10b of trading assets.

You restated your assets up by EUR10b.

I wonder if you could explain what that is, please.

And then the bigger question is on the rationale for the capital raise.

I hear you that essentially it's listening to shareholders because I guess some people would say it's a big illogical raising capital with a discount tangible book and then holding out the prospects of quicker dividends.

But if I understand it correctly you're saying that's what shareholders wanted and you've responded to that.

Could you also just comment on the attitude of regulators?

Were they passive in this process or was there encouragement from your lead regulators to raise equity as well?

Thanks.

Good morning, Stuart.

We'll answer your questions in reverse order.

Let me take your big picture question first.

It'll give Stefan time to prepare his answers to your more detailed questions.

Let me begin by reminding you that this management team started with a core tier 1 ratio of 5.9%, made you a promise that we would hit very ambitious goals by the end of 2012, met and exceeded that.

We then restated those goals up to 8.5% in the first quarter of this year and met and exceeded that.

So we come at this capital raise from a position of great strength.

There should be no doubt in anyone's mind that we could have reached there organically.

So why then this shift?

Why then this capital raise at a discount, as you say, to tangible book?

There's a number of factors that have played a role in our thinking.

Let's start with basic math.

We were asked to raise capital by virtually a unanimous opinion across investors and analysts in June, again September, again December.

So the reality is that that feedback isn't brand new.

The difference of course is that if you begin with a starting point of sub 6% or even sub 8%, which is where we were at the end of last year, we don't see how a meaningful capital raise even could get us to the point where the capital issue would simply be taken off the table.

This is the first time that we can actually do that.

Now you're right in saying there's a premium to doing it, there's a cost to doing it.

The cost is the 10% dilution.

The premium is to tell our 100,000-person organization that we're back to being focused, to getting on the front foot, to focusing on our clients, to focus on growth.

And clearly our own appreciation of market circumstances is more positive than it was in September.

Equally crucially, we felt that gaining that period of time, without being specific as to what it is, but several quarters, where we could be operating with optionality is worth a lot.

Some of you have been wondering if we have visibility on new unknowns, and maybe that's a very polite way for you to have asked me that question about the regulatory view.

The regulatory view's been the same all the way through.

And there's no doubt we enjoy greater confidence with regulators at 8.8% than we did at 5.9%.

So certainly we have turned to them and asked for more time.

We had that time.

So clearly there are tail risks with all banks.

We have our tail risks as well.

They're no different from what we thought they were back in February or March when we last communicated with you.

But what has changed is the very rapid progress we made on organic capital formation, gave us a launch pad when in one fell swoop we could hit all of the targets, where no matter which way you look at it there's no gains in the fact that when Deutsche looks at its key peer groups that we now have higher core tier 1 ratios than all of them.

That was a tremendous opportunity and one we felt we should take.

But just to be clear, this was your decision.

There was no gun to the head from a regulator.

This was management's decision?

Our decision, no gun to our head, no visibility on any new unknown that we didn't know over the last multiple months.

Great.

Good to hear it.

Thank you.

And sir, I stood right next to Anshu, so I know there's no guns and anything.

It was really a discussion we had in the Management Board after this great result we had and after the great result on capital.

And honestly, if we would have just presented to you the good result, everybody would have asked -- so what's next?

And we just anticipate the what's next.

Just take off the capital topic off the table.

You guys have always requested it.

We always said priority is organic first and that's at the end what we did.

And now I won some time to get to you the detailed answers.

Thank you, Anshu.

And so the first one is obviously on the reduction that was on the negative from EUR3.9b to EUR 3.2b.

Well what's the driver?

As you know that it's lower [DTA] and also lower deduction given this higher capital.

There is this 10 to 15 rule in place that these are maximum allowable limits.

And then obviously because of the higher capital, obviously the deduction went down.

And this is what this number reflects, so it's this 10, 15 rule on DTAs mainly.

And then the second thing on the balance sheet is we have an adoption of IFRS 10 that changes the scope of consolidation and therefore we had increased -- we had to include some non-material entities that previously were not part of our consolidation group and rules.

And that increased the trading assets by EUR10b mainly.

That was the main thing.

I guess my question there though, these are not JVs where you've sold assets to hedge funds, provided them with financing and then --?

No.

Now the scope of consolidation has been increased, so it's just immaterial -- formerly immaterial entities.

So Deutsche Bank is 8,400 legal entities.

And obviously in a large consolidation you always have entities that are immaterial and you don't therefore consolidate.

And now according -- there's no rules out of IFRS 10 and we consolidated these entities.

So it's as simple as that.

Thank you.

Yes.

Let me now hand back to Mr. Joachim Mueller for his closing remarks.

Yes.

Thank you.

So this concludes our first-quarter analyst call.

Thanks for your interest and more importantly for your support.

Any questions that you have, please come directly to IR.

Happy to answer them.

And otherwise we'll see you on the road.

Have a good day.

Ladies and gentlemen, the conference is now concluded and you may disconnect your telephones.

Thank you for joining and have a pleasant day.