Deutsche Bank AG (DB) 2022 Q4 法說會逐字稿

Hello and (foreign language) So once again, welcome to everybody, ladies and gentlemen, here at Taunusanlage, Frankfurt. I also would like to welcome all those who once again have joined us in front of their computer screens. During the pandemic, we have all learned that virtual format also have got their advantages. So we retained some of the good elements. And that means you cannot only follow us in the digital format, but you can also send us questions via Zoom or e-mail. And you can do so in German and in English.

Furthermore, all of the participants can also follow the event in both languages in 2 channels. And like last year, on the German channel, we will not translate the English questions-and-answers. So that's where you will always hear the original, which has been the request of the past.

And furthermore, this year, the event is not only broadcasted on our website, but also on LinkedIn for the first time. So welcome to all those who have joined us on LinkedIn. So it's going to be a true hybrid event.

And that's why we've also try to make sure with our arrangement and set up here that you can follow the event in the best way possible. Please give us your feedback on this later on as well. Now so much for my introduction. Let's start with our CEO, Christian Sewing; and our CFO, James von Moltke, who will now give you an overview of the results of the year 2022 and also an outlook on to the next year. And then I'll be back here for the Q&A session.

And with that, it's over to Christian Sewing.

Ladies and gentlemen, dear analysts, I'd also like to extend a warm welcome to all of you. Now after 2 years of meeting only virtually, I'm very pleased that many of you have come to Taunusanlage in person again. Of course, I'd also like to extend an equally warm welcome to those who have joined our Annual Media Conference digitally.

Now today, we're looking back at a year that was marked by political tensions, economic challenges and human suffering. Now this applies first and foremost to Russia's war of aggression against Ukraine. Even after almost a year, the images of the horror that this war brings to the people continue to stun me. Now at the same time, I admire the courage, resilience and solidarity of the Ukrainian people.

It is our hope they will be rewarded for this, and it is our duty to support them in their fight against the aggressor. Now this is about nothing less than defending our values and freedom. The war, ladies and gentlemen, has also created serious economic consequences, especially with regard to the energy and commodity markets.

This has contributed to making 2022 a year of economic challenges. The year of extreme volatility in the markets, a year of price increases, not seen in decades, a year of massive but necessary central bank responses.

Now all in all, it's been a year of complexity and uncertainty. Ladies and gentlemen, the Management Board is very proud of what we've achieved as a bank in this environment. As announced this morning, we closed 2022 with a pretax profit of EUR 5.6 billion, which is an increase of 65%. We've thus turned in the best result in 15 years. Now this is indeed a milestone for Deutsche Bank. We owe this success to strong growth in our client business, but also to further reduction in costs.

Now let's start with revenues. Compared to 2021, which was already a very good year, we were able to grow revenues by another 7% to EUR 27.2 billion, the highest figure since 2016. Even though, at that time, we were still active in more businesses, such as in equity sales and trading.

Now this exceeded our expectations at the beginning of the year and is well above the EUR 25 billion revenue benchmark we set ourselves for 2022, this year at the beginning of our transformation.

At the same time, we maintained cost discipline. We reduced noninterest expenses by 5% year-on-year to just over EUR 20 billion. We adjusted costs in spite of increasing prices declined by 3% on a currency-neutral basis. We're just as disciplined in managing our risk, something which is particular important these days.

Our loan loss provision at a rate of EUR 1.2 billion or 25 basis points of average loan volume was higher than in 2021 granted, but in such a challenging environment, this is still a very moderate level. We thus underlined what has been distinguished -- what has distinguished us for many years. Now this is first-class risk management.

These results show 2 things. First, how well we held our ground in another challenging year? And secondly, how successful our transformation has been over the past 3.5 years.

Ladies and gentlemen, we achieved the key goals we set ourselves in 2019. And this, despite the double shock of pandemic and a war in Europe that back then, no one could have foreseen. When it comes to a post-tax return on tangible equity, we had set ourselves a target of 8% for 2022. Today, we posted a reported ROTD -- ROTE of 9.4% for 2022. Admittedly, this includes a valuation effect on deferred tax assets, but it still reflects our improved profit outlook. And as you know, we had already notified the market of parts of these effects.

In terms of costs, we shifted from an absolute target to a cost/income ratio over the course of the transformation. Now we had set ourselves a low to mid-70% target for the end of 2022 and at 75%, we remained in this range despite the cost pressures in an inflation environment. Finally, we also kept our promise that we will always maintain a solid balance sheet during our restructuring.

At the end of 2022, our CET1 ratio stood at 13.4%, and thus clearly above our benchmark of 12.5%. When it comes to a leverage ratio, we delivered almost exactly on target. Now these are just planned figures. But actually, they are the expression and the result of immense efforts and great achievements of our employees.

They have taken on our strategy from day 1 and identified with our goals, despite all the restrictions and sacrifices and cuts for them that came with it. And even in the most difficult times, they've given their all to ensure that we as a bank can be there for clients in the best possible way.

Now this commitment cannot be overestimated. And on behalf of the entire management board, I'd like to thank all my colleagues in our bank most cordially for this. Everything that we have achieved during these 3.5 years of transformation, we achieved, thanks to you. It is your success story.

Ladies and gentlemen, let me take a closer look at what we have achieved in recent years in order to get where we are today. I'd like to do this looking at the 5 priorities that we established in 2019.

Priority #1 was the exit from nonstrategic businesses and activities. And here, we delivered consistently. We exited Institutional Equity Sales & Trading and divested our hedge fund business as well as the IT subsidiary, IT subsidiary, Postbank Systems, and most recently, our network of personal financial advisers in Italy.

Now our impressive progress here is reflected in the figures of our Capital Release Unit. Since the middle of 2019, we reduced leverage exposure from noncore activities by slightly over 90% and risk-weighted assets, excluding operational risks by more than 80%.

At the same time, we realigned our 4 core businesses so that they deliver maximum value for our clients. Now this was our second and, as I see it, most important priority because this focus on clients is what enabled us to achieve the stable and balanced growth of recent years.

Let me give you a few figures. Although we exited businesses and reduced our balance sheet, our revenues in 2022 were almost EUR 2 billion higher than in 2018. At the same time, our bank has become much more diversified. Nearly 2/3 of its revenues now come from our so-called stable businesses. A significant share of this is generated by the Corporate Bank and the Private Bank.

Now after having suffered from low interest rates for a long time, they can now finally realize their full growth potential. In 2022, both divisions have achieved double-digit revenue growth and record results. Now James will show you in detail later.

Asset Management had a harder time last year, so almost all asset classes experienced a slum. Now against this backdrop, it held up well with only a slight decline in revenues. And despite the decline in stock market valuations last year, now since the transformation began, assets under management have increased by more than EUR 100 billion.

Now hope this is not to diminish the performance of our investment bank. With its focus setup, it has shown a strong -- actually excellent development since 2019. Many had feared that clients would leave us because we no longer offer equity trading. Instead, we consistently gained market share because clients appreciate our specialization in the fixed income and currencies business.

Now thanks to the strength, we were also able to more than compensate for the industry-wide dry spell in origination and advisory last year. Now this shows that we are well balanced, not only as a bank as a whole, but also inside of our divisions.

All in all, ladies and gentlemen, we thus exceeded the earnings forecast that we made at our invested deep dives in 2019 and 2020 in all our businesses. Our third priority was to reduce costs. I have already touched upon this, but let me mention the most important figures again.

At 75%, our cost/income ratio is now 18 percentage points lower than in 2018. During this period, we reduced our annual run rate of costs by more than EUR 3 billion. Thus, we have shown that Deutsche Bank can reduce costs, can economize, something that you and others, well not entirely without merit, have doubted for a long time.

And we will continue to monitor our expenses closely in the future in order to continue the successful path. We will not let up on cost discipline. This means that we will deliver the next EUR 2 billion in savings by 2025, as we announced last year in March. Over and above this, we are working on additional measures to reinvest in our business and counteract inflation. But one thing is also clear, cost discipline must not come at the expense of our future viability. And this is why we promised, and this is priority number four, we promised in 2019 to invest a cumulative EUR 13 billion in our technology by the end of 2022 and to reinforce our internal control systems with a further EUR 4 billion investment.

Ladies and gentlemen, we did not only keep these promises but even made nearly EUR 15 billion available for technology projects in order to make faster progress in this essential area for the future. But this is paying off. We streamlined our technology landscape and decommissioned a number of programs and apps.

This has helped us to reduce our technology costs by EUR 300 million year-on-year in 2022. Thanks to our strategic partnerships with Google Cloud and NVIDIA as well as our own progress. We're using more and more cloud-based apps. Last year alone, we doubled the number.

Now this makes us faster and more efficient. UNITY, one of the most sophisticated and complex banking IT project ever is now on the home stretch. At the turn of the year, we transferred 4 million private clients account from Postbank to Deutsche Bank Systems. Well, admittedly, -- not everything went smoothly, and there are still some restrictions for clients.

But we are working on it. And at the same time, the team that's been driving the implementation of UNITY for years is already preparing the next big customer migration at Easter. Across the bank, we've also strengthened our controls, amongst other things, by increasing the number of employees in control functions by more than quarter.

We are fully aware though that there's still work to do in this field. All investments in technology and controls were funded with our own resources. And this is also true, by the way, for the expenditure on the restructuring of our bank. Now this goal, our fifth priority, was also considered unattainable by many observers in 2019.

In the past 3.5 years, our CET1 ratio remained above our target of 12.5% in every quarter and generally fell slightly below 13% twice in the period. And this was despite the fact that regulatory changes during this period negatively impacted our CET1 ratio as did the costs of our transformation. We managed to offset these effects with the steadily increasing profitability of our core bank, but also thanks to the success of our Capital Release Unit.

At this point, I'd like to clear up a common misconception. Contrary to some pessimistic forecasts, this entity has done exactly what its name implies. Namely, freeing up capital through the rapid reduction of risks. James will explain this in more detail in a second.

Now ladies and gentlemen, all this has laid the foundation for us to return more capital to our shareholders. Now after distributing a significant sum for the first time last year, we want to take the next step this year and propose to the Annual General Meeting an increase in the dividend by 50% to EUR 0.30 per share.

Now ladies and gentlemen, we are, of course, aware of the fact that a dividend in this amount can only be an interim step. Sharing our success with our shareholders is an essential part of our strategy. We set ourselves a target payout ratio of 50% for 2025, and we aim to return a total of EUR 8 billion in capital for the years 2021 to 2025.

We are and remain committed to this amount, despite the uncertainties in the geopolitical and economic environment. Our ambition is supported by the continued increase in profitability, which we also expect for 2023 as well as a robust capital structure.

Now of course, share buybacks also remain part of our tool kit for the current year. However, we continue to exercise prudence and want to retain a degree of flexibility regarding the next step. At present in view of the given macro and regulatory environment, we consider it too early to make any statements of volume and timing for buybacks in 2023.

We are optimistic, however, that uncertainties will further diminish in the course of the year and that we will be able to reward our shareholders for their loyalty in this way.

Now already now, stock market reactions are increasingly positive. Between July 2019 at the beginning of the war in Ukraine, our shares had increased by 90%, which was the highest level since the beginning of 2018. This is before the entire market took a dive when the war began.

In the meantime, the shares have made up a large part of these losses and analysts' comments are more friendly, with 8 out of 17 analysts that actively cover shares currently recommending them as a buy. This is almost half. Only 2 have a sell rating.

Now this hasn't happened for many years. We see positive reactions from other quarters, too. In the past 18 months, we received 4 upgrades from leading rating agencies. Most recently, in October of last year, Moody's raised our bank's credit ratings for the second time in 14 months, and in the midst of a period of economic uncertainty.

Now this is a very important signal of trust and confidence, which brings dual benefit because clients can do more business with us, and at the same time, our funding cost decrease. Moreover, we received multiple awards across all businesses.

Now to highlight just one. In 2022, we were named Bank Risk Manager of the Year by the trade journal Risk.net and this for the second year in a row. In the year, ladies and gentlemen, which risk management is more important than it has been for decades, this award is particularly valuable.

What is just as valuable and gratifying to us is a very positive feedback from our clients and the unwavering support of our employees for our path. Now all of this encourages us to continue on our path with determination and confidence.

Now in a moment, I will explain the next stage of our strategy. But first, James will give you a more detailed overview of our figures for the past year. James, over to you.

Thank you, Christian, and a warm welcome from my side. I would like to discuss our 2022 financial results in more detail. As Christian mentioned, pretax profit was EUR 5.6 billion for the year 2022, up 65% over 2021.

Despite the headwinds in the global economy, we delivered our best results for 15 years. The turnaround in profitability since we launched our transformation in 2019 is considerable. Profit growth was driven by sustained revenue growth in our core business, together with continued cost discipline.

At the same time, risk provisions remained contained despite the challenging macroeconomic environment. Profit after tax was EUR 5.7 billion. In addition to growth in pretax profits, we recognized a valuation of adjustment of EUR 1.4 billion on U.S. deferred tax assets in the fourth quarter, which is the result of our strong performance in our U.S. business since the start of our transformation.

This positive effect is a partial reversal of the negative valuation adjustments we recognized in 2019. Therefore, this does not have an impact on the amount of the taxes we pay. This positive tax effect contributed about 270 basis points to our full year 2022 post-tax return on tangible equity.

Let me now look in more detail at the drivers of this profit growth, starting with revenues. In 2022, revenues grew 7% year-on-year to EUR 27 billion. As a result, we have increased revenues every year during our transformation. This reflects our more focused business model, which enabled us to offset the impact of business exits.

We demonstrated our ability to support our clients, particularly well in a volatile and uncertain economic environment. Everyone of our strong core businesses contributed to this revenue growth since 2019. This revenue growth has been accompanied by substantial cost cutting. We have reduced annual costs by around EUR 3 billion since the pretransformation year of 2018.

In 2022, noninterest expenses were EUR 20.4 billion, which is down 5% compared to 2021. Adjusted costs ex transformation charges and bank levies were flat to 2021, but down 3%, if adjusted for FX movements. We achieved these reductions since 2018 despite our investments in technology and controls, which Christian has discussed, and also despite inflationary pressures and despite business volumes, which are at a significantly higher level than what we expected 3 years ago.

Against this backdrop, we achieved a cost income ratio of 75% last year, above our initial ambition at the beginning of our transformation, but still down 10 percentage points year-on-year and down even 18 percentage points compared to 2018. We have thus proven our ability to grow and invest in our businesses while retaining cost discipline.

Let's now turn to our risk management. Our provision for credit losses remained contained in 2022 despite a slowing economy in the context of the war in Ukraine. Provision for credit losses was EUR 1.2 billion in 2022, which is higher than in the more favorable economic conditions of 2021. But still, at 25 basis points of average loans, it was still contained.

This is in line with the guidance which we gave back in March of last year, shortly after Russia's invasion of Ukraine. Deutsche Bank's loan loss provisions as a proportion of average loans are significantly below our peer group average. That is the result of our high-quality and well-diversified loan book, around half of which is in Germany, and it is also proof of our disciplined risk management.

As Christian will discuss in further detail, we are also turning slightly more optimistic regarding the economic development. And all of this gives us confidence that in 2023, provision for credit losses will remain between 25 and 30 basis points. And currently, we expect this to be rather at the lower end of that range.

Let me now turn to capital, another key dimension of our transformation strategy. We finished 2022 with a Common Equity Tier 1 capital ratio of 13.4%, comfortably ahead of our target minimum of 12.5% at all times throughout the transformation. And we have faced not only the impact of absorbing transformation-related costs but also the impact of changes in regulation.

Together, these impacts have resulted in a reduction of our CET1 ratio by more than 270 basis points. However, these impacts have been offset not only by growing profitability but also by the success of derisking in our Capital Release Unit.

That unit has contributed around 45 basis points to our CET1 ratio during the transformation process. I will come back to this in a moment. First, let's discuss our 4 core businesses. Let me start with the Corporate Bank.

In 2019, we said that the corporate bank would play a crucial role for Deutsche Bank's refocused business. And our 2022 results demonstrate that. Revenues grew 23% to EUR 6.3 billion compared to the prior year, its highest ever level since the foundation of that business.

And here, we have recorded strong growth across all business areas. Rising interest rates and business volume growth, including EUR 18 billion in deposit growth and a EUR 9 billion increase in average loans during 2022, contributed to 39% growth in net interest income.

Fee and commission income grew by 7% during the year. The Corporate Bank also more than doubled its profit before tax to EUR 2.1 billion, leading to a post-tax return on tangible equity of 12.5%.

The profitability was not only driven by growing revenues, but also by a 5% reduction in noninterest expenses. The Investment Bank grew revenues in 2022 by 4%. Growth was driven by our fixed income and currency business, which grew by 26% to EUR 8.9 billion. This is the highest level for 10 years.

The realignment of this business, as a key part of our transformation strategy, has paid off. Growth in FIC more than offset the impact of significantly lower revenues in origination and advisory of EUR 1 billion, against a backdrop of significantly lower activity across the industry.

Profit before tax in Investment Bank was again substantial at EUR 3.5 billion, although slightly below a very strong year in 2021. This partly reflected a 6% rise in noninterest expenses, driven by FX movements and higher bank levies than in the previous year. The investment bank's post-tax ROTE was 9.2%. The private bank also had a very successful year. Revenues grew by 11% or 6% if adjusted for specific items, such as the gain on the sale of our financial advisory business in Italy and the impact of the BGH ruling, which impacted revenues in 2021.

We delivered solid revenue growth in both the Private Bank Germany and the International Private Bank. We also attracted new net business volumes of EUR 41 billion in 2022 which included EUR 30 billion of new net inflows into assets under management and EUR 11 billion of new net client loans.

The Private Bank thus delivered profit before tax of EUR 2 billion more than 5x higher than in 2021. This was also driven by a reduction of noninterest expenses by 11%, thanks in part to lower litigation and restructuring costs. Adjusted costs came down 5%, which partly reflects the benefits of transformation measures and disciplined cost management. As a result, the Private Bank delivered a post-tax ROTE of 10.6%.

Let's turn to our Asset Management, DWS, which demonstrated resilience in a year of very challenging financial markets. Revenues were down only slightly, reduced by 4% to EUR 2.6 billion during the year. A 4% rise in management fees was more than offset by substantially lower performance fees. Profit before tax also came down by 27% to EUR 598 million, reflecting this modest decline in revenues and also a 10% rise in noninterest expenses.

The rise in costs reflected strategic hirings and investments in technology and also a normalization of certain noncompensation expenses such as travel and marketing activities, which recovered from the low levels during the pandemic.

Costs also included an impairment on intangible assets related to a historical acquisition, which we recognized in the fourth quarter. Let me conclude by coming back to the Capital Release Unit. That unit has delivered on or ahead of our expectations on all dimensions.

The CRU has consistently -- has been consistently successful in freeing up capital from nonstrategic activities. The unit reduced our leverage exposure by 43% to EUR 22 billion in the course of '22. And that brings us to a total reduction of 91% since the unit was created.

Since the beginning of 2019, this has contributed around 55 basis points to Deutsche Bank's leverage ratio, which was 4.6% at the end of '22, which is in line with a target of approximately 4.5%. The CRU also made continuous progress in reducing risk-weighted assets in 2022.

At year-end, RWAs were EUR 24 billion which is down by 63% since the creation of the Capital Release Unit and significantly ahead of the target of EUR 32 billion. Excluding allocated operational risk RWAs, the RWA reduction since mid-2019 is as much as 83%. Furthermore, the CRU has also successfully reduced the cost of this derisking.

In 2022, the unit reduced its loss before tax to EUR 932 million, down 32% year-on-year. The CRU has reduced adjusted costs by around EUR 2.5 billion that is more than 75% compared to pretransformation levels. As a result, as mentioned, the CRU has been net capital accretive for Deutsche Bank, as the benefit of RWA reduction for our CET1 ratio since the beginning of 2019 has outweighed the negative impact of the cost of derisking in the same period.

This not only enables us to deploy more capital to finance the activities of our clients and grow our core business, but also supports our aim to distribute more capital to our shareholders. All in all, the CRU has fulfilled its mandate. As we announced this morning, it will cease to be reported as a separate segment. Its remaining portfolio will, in the future, reported under the Corporate & Other segment.

That includes our review of the 2022 review -- results. And now it's time to look ahead. And for that, I hand back to Christian, again. Thank you very much.

Thank you, James. This brings us to what lies ahead. The geopolitical and economic situation is complex, no doubt about this. But we are prepared for it. And we have already proven in the past that we can deal with such situations. In addition, the latest data suggests that the global recession is likely to be milder than feared or that it may even be averted altogether.

There are many reasons for this encouraging development. Well, the swift and decisive response by governments has had a clear positive impact and also stabilized consumer confidence. At the same time, companies have once again proven to be very robust and resilient, and they are looking into the future with more optimism, especially since China reopened after the COVID lockdown.

In Germany, the IFO Business Climate Index improved for the fourth consecutive months in January and the economic expectations measured by the Research Institute ZEW were back in positive territory for the first time since Russia's invasion of Ukraine.

Also, the very mild weather has also played a major role in energy prices falling sharply. So that all in all, we are getting through winter rather well. Now it looks as if us Europeans just had a bit of good luck on our side in a very difficult situation.

But that's next? Our economists expect that the German economy will be flat in 2023 and that there'll even be a slight growth of 0.5% in Eurozone. They believe that the U.S. economy will grow by 1.1%. For 2024, however, the outlook for the U.S. is less favorable for the second half of the year. This is due to there being a danger that significantly high interest rate will trigger a recession in the second half of the year.

Now I have no doubt that both the Fed and the ECB will continue to raise interest rates, and it's important that they do. Ladies and gentlemen, a departure from this path would jeopardize the fight against inflation, and thus, pose a risk to long-term economic development.

Now this is why we are supportive of the central banks continuing on their consistent course. Now why do I see risk? Now because inflation might be stickier than many people think. So far, we expect an easing of consumer prices for 2023 and then even more so for 2024.

However, we should not lose sight of the risks included in this forecast. Those come, in particular, from the labor market, where there is a shortage of skilled workers in Europe as well as in the United States. Also, the reopening of China, which is, of course, to be welcomed, could also have a strong inflationary effect if Chinese demand for goods and raw materials were to rise rapidly during the year.

And this is why, ladies and gentlemen, we must not let up now. So all in all, we are now slightly more optimistic, as I already said. But of course, there are still uncertainties and the volatility that characterized the past year will certainly be here to stay to some extent in 2023 because inflation is still present and other risks have not gone away either.

This applies, first of all, to the war in Ukraine with its unforeseeable outcome but also to other conflicts such as the tensions between the United States and China. The tense situation with regard to global supply chains has eased somewhat, but they remain fragile and prone to disruptions. Same applies to energy supply, especially in Europe.

The multiyear refinancing wave, which starts this year brings a number of challenges for companies and countries. At the moment, they are more confident because risk premiums have come down. However, weaker borrowers, in particular, still remember well how funding costs soared last year.

In a volatile environment with rising interest rates, repetition of this cannot be ruled out entirely. So we will still have to deal with a variety of risks. But in the past, we impressively demonstrated that we can manage our own risks. And we want to continue to do what we've already done successfully in the past crisis years, namely managing our clients' risks.

We help them to secure the investments in assets to gain access to liquidity and short-term financing and to hedge against those risks. At the same time, however, it is important not to lose sight of the future despite all the concerns about the present.

Need to prepare for digital and sustainable transformation has not diminished at all. And we are also working on this with our clients. Now persistently high volatility due to shifts in the macro environment, advancing digitalization and transition to a sustainable economy, these are the 3 trends we highlighted as the key economic drivers for the coming decade at our investor's deep dive in March last year.

Now we also explained to you back then, why, as a global house bank, we see ourselves particularly well positioned to support our clients with these trends. This is because we've been their financial partner in all matters for years and through every cycle, and we know their needs. Because we have a unique global network and can provide local expertise in around 60 countries worldwide. Because we are an experienced risk manager and adviser and have the balance sheet strength to provide financing. And because we offer sophisticated products and modern digital platforms by deploying the entire spectrum of our bank for the benefit of our clients.

The past year underscored how we feel these strengths with life and how much our clients appreciate and need us as a global house bank, especially in times of high volatility and uncertainty. Ladies and gentlemen, more than 80% of all revenues generated by the corporate bank in 2022 came from clients who purchased more than 1 product from us.

Now this shows the depth of our client relationships. We accompany our clients on an international scale. More than half of our revenue is generated with global companies headquartered in Germany were booked outside our home market.

Compared to 2021, our corporate coverage team increased revenues by more than 40% across our fixed income and currency products suite, especially driven by FX and interest rate hedges. So we are the risk manager of our clients.

And this of course is due to the overall environment, but it also shows how much our clients trust in our risk management expertise. And clients also rely on our ability to find solutions for them. This is reflected in the many tailor-made and often innovative products that we launched last year.

Now we are happy to say that many of these solutions now have a sustainability component. Our clients' demand for sustainability solutions continued to be high in 2022 despite the economic uncertainty. But it is good news because we must not let up in the fight against the climate crisis.

Deutsche Bank will continue to contributing to a more sustainable economy. In 2022, we appointed Jörg Eigendorf whom you all know well, as our first Chief Sustainability Officer. He cooperates with all businesses and infrastructure functions to ensure that we embed sustainability even more firmly in our processes, develop attractive ESG products and solutions, and in particular, intensify. And in particular, and I think this is the most important thing, intensify the transformation dialogue to support our clients on the road to becoming more sustainable themselves.

Now this is the only way we can achieve the ambitious sustainability goals we have set ourselves, we have set for the economy as a whole. Now in 2022, we managed to do this. We surpassed the mark of EUR 200 billion in sustainable investments and findings that we set ourselves. Let me remind you that we had originally set ourselves this goal for the end of 2025 and then brought it forward twice.

Achieving this now is an important success and the first major step on the way forward, which is to lead us to EUR 500 billion by 2025. Now at our sustainability deep dive on March 2, we will further elaborate on our next steps on our sustainability journey.

I don't want to anticipate this now, just let me say, we have a lot in store. And this, ladies and gentlemen, is not only true for sustainability, but for the entire bank. At last year's Investor Deep Dive, we announced that the transformation of our bank shall be followed by a phase of sustainable profitability.

A phase, in which we use our strong position in all businesses -- in all 4 businesses to expand market share, a phase in which we continue to increase revenues and profits without letting up on cost discipline, as I just mentioned, and a phase in which we generate significant amount of capital and return.

On the one hand, we wanted to use this to make hard distributions to our shareholders and on the other hand, to reinvest in our business in order to enable further growth. Of course, in this phase, we are also focused on making rapid and significant progress with regard to the controls and regulatory deficits that partly exist in some areas.

Ladies and gentlemen, this is just as important for us as an increase in profitability. After all, ladies and gentlemen, strong controls are the foundation for sustainable growth, and we know that we still need to get better here.

Last year, we defined the following goals and ambitions that we want to achieve by 2025. And today, we are reaffirming these. An average annual revenue growth of 3.5% to 4.5%, equivalent to a revenue level of more than EUR 30 billion at the end of that period.

Cost income ratio of less than 62.5% on the basis of a roughly the same annual costs. As mentioned at the beginning, we are planning to make savings by 2025 that will go beyond the EUR 2 billion originally announced. Thus, we aim to preserve the space for investing in future growth in spite of the high inflation.

On this basis, we aim to achieve a posttax return on tangible equity of more than 10%, while at the same time, keeping our CET1 ratio at around 13%.

Finally, we have set ourselves a target of capital distributions to our shareholders totaling EUR 8 billion for the years 2021 to 2025. The payout ratio is to rise to 50%, as I already mentioned.

Now this continues -- these objectives continue to apply. No ifs or buts. Given the volatile environment and the many uncertainties, the path to this goal may not always be linear, mind you. However, we have the right strategy, the right business model and most importantly, the right team to be successful in difficult times. And we want to get better every year.

Now this also applies to 2023. And please bear with me, ladies and gentlemen, month of January strengthened our confidence, absolutely so. As things stand, and thanks to high interest rates and for the business growth, we expect our revenues this year to be roughly around the midpoint of a range between EUR 28 billion and EUR 29 billion.

We expect our costs to be essentially flat compared to 2022, and also our loan risk provision should be roughly where it was in 2022. So all in all, ladies and gentlemen, this would mean that we can achieve yet another increase in pretax profit this year.

Now this is what all of us at Deutsche Bank are working towards with discipline, with absolute determination, with absolute focus on our clients. In times like these, our clients do need Deutsche Bank. We saw exactly this in 2022. They need their global house bank. And the need for global house bank will increase further, ladies and gentlemen.

Thank you for your attention. James and I look forward to your questions.

(Operator Instructions) Thanks, Christian. Thanks, James. And this brings us to our Q&A session. (Operator Instructions) Now we've got about 1 hour for our Q&A session. (Operator Instructions) And the first question comes from Tom Sims from Reuters. No, I'm Tom Sims today, says the lady, and then Marta Orosz, yes.

Yes, Marta Orosz from Reuters. Could you please be a bit more elaborate on this positive tax effect and explain it to us? And well, according to the news in the fourth quarter certain settlement costs for litigation and regulatory measures were also posted, could you give us some more details on this as well?

Thanks for the question. Please forgive me if I answer it in English. I still do not feel fully at ease in German in such a Q&A session. The DTA, it is we have a net present value of the benefits of future tax savings associated with our tax characteristics. So essentially to do with past losses referred to as tax loss carryforwards. We have to value those on the balance sheet from time to time.

And when there's evidence that the value of those tax characteristics has increased based on, frankly, the greater estimate of future profitability of our U.S. operations, then the value of those attributes goes up. And we run it through the P&L in this quarter, EUR 1.4 billion.

Recall that in July of '19, we actually wrote off about EUR 2.8 billion of the deferred tax assets and at that time, reflecting a more conservative view of the future value of those assets. So from time to time, they are revalued in our accounts just like with peers, it is a bigger number than we anticipated.

As Christian mentioned, we were seeing some of this as a likely event this year. We also had a smaller amount in 2021. On the litigation item, we really don't speak to the individual events or matters that drive our litigation provision, simply it was higher than we expected, and I'll leave the answer at that. Marta, thank you for the question.

Then the next questions on my list from Michael Maisch, Handelsblatt; Olaf Storbeck, Financial Times; and then (inaudible). But now first, Michael Maisch from Handelsblatt. Well, it seems that the list is not fully up to date. Well, first [Jasmine], but the lady is not using a microphone. I am sorry.

In the year 2022, this tax effect saved your return target, I think because I think it was 2.7 percentage points and the cost/income ratio also was near the upper range of what you wanted to achieve after adjustments. So against this backdrop, I would like to know what went wrong so that you needed this tax effect to reach your targets?

And what gives you the confidence or where will all the improvements come from that will allow you to reach your targets in 2025, unless you have another positive tax effect?

Well, let me start, [Ms. Jasmine]. Now first of all, if you have reached what you have achieved today after 3.5 years of transformation, I think that is something nobody here would have expected. So we are absolutely satisfied.

That's a great result for the bank. The bank is on absolute growth trajectory. Nobody would have expected a stable business to grow the way they did. And that gives us the overall confidence also looking ahead that more than 10% of return on tangible equity can be achieved.

So against this backdrop, I think we should not just focus on that single tax effect alone. We've got a solid, robust and a bank, which is able to generate profit in a sustainable manner and gain market shares. Number one. Secondly, we've always said that we will have that tax effect in 2022. And last year, to be fair, in the beginning of the year and also in 2019, there are 2 things we had not expected especially the terrible war in Ukraine.

And if you look at the valuation adjustments this year, I think we managed them very well with EUR 1.2 billion. And of course, they are EUR 300 million or EUR 400 million higher than planned initially. But I think that's something which is easy to understand for everybody. And at the same time, and that's something that is beyond our control. We had to pay higher levies into the European banking fund.

And of course, there are also some impacts over the last 2 or 3 years related to the pandemic or if you look at the volatility in the markets. And of course, there's one or the other cost increase that was impossible for us to predict. So achieving this return target of more than 8% or slightly below 8% if we adjust for the tax effects, which we had not planned for.

I mean we had included EUR 400 million beforehand. And then I'd like to come back to another number where we also had given ourselves a target which shows that in a volatile environment, we achieved what we wanted to achieve. We said that the core bank will achieve 9% return on equity and I think, James, in 2022, we are at 8.5%.

If you now take the higher loan loss provisions into account due to the war, then this takes exactly to the 9%. So I can only repeat what I said, great results, this bank delivered, especially all of its employees. And if I then see that in every quarter we increased our market shares also in the last quarter in many areas. And if I look at the start into the year, then I'm not worried at all about our targets for 2025. And I think the 8.5% in the core bank is without the tax effect?

Yes, that's absolutely right.

Yes. Thank you for that addition.

Thank you very much. Next question now, Olaf Storbeck from Financial Times. Please wait for the mic.

I've got a question on Adani. Last autumn, you completed 2 transactions with or for Adani. And on that occasion, you also accepted shares as collaterals. How many of them do you still have in the books? How high are the risks for the bank? And has there already been a margin call or will there be one?

And my second question is about DWS, Stefan Hoops, now quite frankly, says that the free float should be increased in order to make the share more attractive, what's your view on this? And what do you think about Mr. Hoops suggestions to change the covenant structure and also to possibly get rid of the so-called KGaA structure?

No, let me start and James, you jump in at any time, please. Now Mr. Storbeck, I think you will understand that you will not comment on individual clients. We cannot do so. I can only refer to what James has told you in the most impressive manner that over the last 15 years in risk management, in almost every year, in relative terms, we did better than our peers. And this proves that we've got our risks under control that we can structure and diversify them. And against that backdrop, I'm really quite confident in this regard.

The second thing about DWS, now first of all, I'm always happy about new incentives and new impetus, that's what we need. Otherwise, we'd not be able to make progress. First of all, I'm absolutely happy about how quickly Stefan Hoops got accustomed to this new job and what he achieved in DWS.

You know that 2022 was not an easy year, and then an easy environment. So he achieved quite a lot. And of course, the fact that we are thinking about the ways to make the share more attractive. Of course, that's normal. That's always what we need to do, but there's nothing to announce in this regard. And if there's anything we need to discuss, then we first do that internally.

Thank you very much. Next questions (inaudible) Please wait for the mic. Just a second.

One of the 2019 targets had always been to cut 18,000 jobs. Now if you look at your headcount and this did not happen. Maybe you can tell us will you cut jobs and will you also increase the headcount at the same time? And vacancies is my next question. I think you've got some more than 2 years ago. So where do you want to further increase your headcount?

And the second key question for me is about cum-ex. Now how many employees are currently being investigated and how many of these are current or former Board members? And what is Deutsche Bank still facing in this regard?

Now when it comes to head count, and I think that's the difference to the numbers that you're quoting of previous years. Now there are three things to bear in mind. Number one, during the transformation, Mr. (inaudible) of course, we also went through a learning curve, and we went through a whole lot of internalization because that turned out to be more efficient and more cost effective for us.

So we did not plan by positions, but by costs. And therefore, a lot of external employees were internalized. We were happy about that because that gives us much more efficiency. And I think it's about 6,000 jobs of this kind. And then in the same period, there is one thing which we did not do in spite of the crisis, we did not stop hiring people from universities, graduates, because I think this bank has to invest into its future.

We always had cost discipline is important, but please not to the detriment of our ability to shape the future. Every year, we hired thousands of graduates, which was also slightly above plan. And then there are two more things to take into account Mr. (inaudible) and I also announced this quite frankly, and I think James already gave you the number.

In the control environment, we increased headcount by more than a quarter. We now feel at East now. I think we are now on the right track, but we just needed to hire more people in this function. And the other thing, and that's what makes me most happy is growth, Mr. (inaudible) We are now a much stronger bank with much higher revenues. And if you've got significantly higher revenues, then of course, we also need to support from employees in the businesses, but also in the infrastructure functions.

And all of this results in what we changed last year, namely that we switched from absolute numbers to the cost/income ratio because that allows us to much better manage the bank into the future. So against this backdrop, I think this is the answer to your question. But this does not mean that we're not keeping a close eye on our headcount.

And we've also been able to show you that we can decrease this. Now unfortunately, we are not able and allowed to comment on cum-ex because these are ongoing proceedings. So I cannot comment this any further. I hope you will understand.

Thank you very much. Well, we now continue with (inaudible) then (inaudible) and then (inaudible) Now first, please, (inaudible) from Bloomberg.

I've got two more questions. The first one on buybacks. Other banks have announced major buybacks and dividend programs. Deutsche Bank did not do so, although the CET1 is above the target of 13%, and in spite of the positive macroeconomic outlook you gave us. So could you give us more details on why you want to refrain from these actions? Although you said there will be share buybacks in 2023, if I remember it rightly.

Then deposit better. Now how much is that at Deutsche Bank? And what is this going to be during the course of the year?

Thanks, Mr. (inaudible). Well, you gave the answer yourself to the first part of your question. Yes, we will do buybacks. That's part of our EUR 8 billion capital return between 2021 and '25, which we committed ourselves to. And we're going to stick to that, no doubt about this. I think you can see a continuous increase of the dividend, as we also announced today.

And buybacks is part of our toolkit in this regard. And of course, we remain committed to what we promised. But -- and I gave you a detailed outlook onto the geopolitical and economic situation. We want to wait during the next couple of months to see how the economy evolves.

First and foremost, of course, we want to stand by our customers and clients whom we want to support -- and I'm firmly convinced that looking at our development in the past few years, I'm absolutely convinced that buybacks are part of our toolkit. Now we have taken a conservative approach at Deutsche Bank, which served all of us well.

And if you've got a clear picture, then it's the right time for us to take these decisions and I'm quite confident that we will all reach that point in 2023. But let's wait for the first quarter, next couple of months. But if it continues as now, then I'm quite confident. James?

Deposit beta. So essentially, how quickly do banks pass on interest rate rises to their customers. We model that in our forward-looking analysis as do all other banks. And as you've heard from some of our competitors the banking industry in a sense is outperforming what its models might have suggested for a beta.

In other words, how quickly interest rate rises are being passed to customers. This interest rate cycle is quite unusual in two characteristics. One is the level from which we are moving; in Europe negative in the United States essentially 0; and also the pace at which we're moving. In a sense, I think the models don't capture those entry point articles.

And so we're traveling, as I think many of our peers are, well below the model betas. We would expect that to begin to catch up over time. But while that lag is persisting, it's been a benefit to the interest rate-driven earnings of the banking sector, including Deutsche Bank.

Okay. Next question is from (inaudible)

I have three questions. First two with regard to the Corporate Banking. The revenue increase was quite extreme. Since 2019, revenue increase had been flat now that there are interest rate to have, the revenues go up. So I'd like to know how much in percentage points is attributable to higher interest rates?

How much of the leap in revenues? And then also additional question, what does it take in Corporate Banking to be sustainably profitable and also to earn the capital cost in a sustainable fashion?

And last question with regard to loan loss provisions. In which areas -- which areas worries you the most? Is it rather private clients, retail clients, real estate? What worries you this year?

Of your two questions, you'll see on Page 7 of our final financial data supplement, we show the composition of revenues in the corporate bank over the years. And I referred to it also in my prepared remarks, so net interest income was up by 39%, fee and commission income up by 7% and there are other components of the revenues in the corporate bank as well.

Your point about sustainable profitability. As I -- in a sense, just answering (inaudible) question, we've come from, what I would call, an unnatural environment for interest rates that had a significant impact on the corporate bank and also the private bank.

So negative interest rates essentially meant that a big portion of our business, the deposit books were structurally unprofitable, but we are seeing now a resumption or a normalization of that performance, which has had a dramatic impact. But we think that's sustainable because it is a normal environment to have positive and ideally upwardly sloping yield curves.

And so the corporate bank can now benefit from that. And I would call that a normalization, but we think it's sustainable. But I think it's also important to bear in mind, Christian referred to how we are serving clients as a risk manager, as a payments counterparty, as a global network as well as a lender and deposit taker to clients in the corporate bank.

And as we build the business volume as transactions grow up as the assets under custody go up in the business, so too will the business rise. So you're seeing it not just in the interest income, but also in other forms of income. And we do believe that, that growth in revenue is sustainable.

Additional answer on sustainable growth in the Corporate Bank. Yes, we do, of course, benefit from the interest rates, but the most income is outside of net interest income. So -- and I think this just shows that the underlying client business is very strong. This was also the case in the past few years, but here, we had, so to speak, a negative compensation due to the negative interest rate.

But the growth, be it with deposits, be it with payments, be it trade finance there is growth. This is just a reality. And when I look at the figures for the next 2 years in our plans, I can tell you that the growth in percentages will be bigger, the growth outside of NII, which just shows that the growth of revenues, the growth of business is sustainable in corporate bank.

And don't forget, it's not just like this an investment bank, but for cash management in global terms, the four rating upgrades that we got had an enormously positive effect because many large clients, many institutional clients of us who use us for cash management, for example, have a look at the counterparty rating, of course.

And to those four upgrades, we got a lot of tailwind. So I'm not worried about the sustainability of the business with an eye to sustainable revenues in the Corporate Bank. Also, the same is true for the return on equity. I'm very happy that this core business of Deutsche Bank is positioned as it has and it will become even more enjoyable, just wait and see.

Now loan loss provisions. We don't because -- we manage well. We don't have any concentration risks that would raise major doubts with James or myself. Of course, when it comes to sectors of industries, wherever you have funding or refinancing risks and high interest rates have to be paid. You have to keep the eye on the ball or down about is, for example, commercial real estate, sometimes also leveraged lending.

It's also due to the fact why our risk appetite was reduced already in the first quarter of last year because, of course, we saw what happened there. And when it comes to the normal company client and private client business on a global scale and in Germany, we are very happy about the diversification in our portfolio.

James already mentioned it. Half of the loan book actually is based in Germany. And the lion's share made up of, for example, private mortgage business with moderate loan-to-value. So -- and we also have proven that we have great underwriting conditions and requirements.

So in a year without a war and without this inflation, we'll be higher. But I think at the rate of 25 basis points we are well on track, and we can stand up to competition.

The consumer loan portfolio and, in particular, mortgages, first of all, a loan to value, so a conservative loan to value in the loan book is the first protection. But importantly, the structure of the German mortgage market is one where most of our clients have locked in fixed rates of interest for a long time, on average, 13 years.

So the refinancing risks in our portfolio are actually very limited in -- over the next several years as that rolls over. And that's, I think, an important feature of why we're confident.

All right, this gets us to our first question from Zoom by (inaudible) from AFP.

Can you hear me well?

I have a bit of an echo. Okay.

My question is on clients. Clients seems to be very, very important. We can feel this in your answers, the speech mentioned it about 30 times. Now can you give us an idea of how the number of clients has developed? Were you able to win new clients last year? Or did revenues increased primarily because you penetrate clients deeper, so you sell more products per client?

I don't know Santander said that they have 160 million clients. Well, perhaps that will be a dream figure for you. But could you give us a figure, ballpark? Also Credit Suisse, Goldman Sachs, perhaps for idiosyncratic reasons, but they will be laying off thousands of people.

Now one of the colleagues already asked about the number of employees on your headcount, can you exclude as you stand here today that there will be a number of redundancies because the cost pressure will remain as it is.

Thank you. I start, and James, please add to that later. 160 million clients, I'd love that. You're absolutely right. But I mean, we believe this as an ambition or wish, but not as a target, okay? Right. I mean, to refer, the revenue increase is, of course, due to a deeper penetration of our client relationships. I cannot give you the customer or the client figures in the various and the different businesses because every business and every division is different in that respect.

I think I just mentioned that when it comes to the corporate bank and investment banking, we have an increasing number of clients. Why is that? Because, as I mentioned, our ratings became better. And we do feel quite clearly that many customers are looking for an alternative to American banks, especially in investment banking and trading, for example. It is what it is.

They want to have alternatives. They want to have alternative banking relationships. Doesn't -- changes nothing about the fact that the American competitors are, of course, excellent banks, but they want an alternative. And I think this is also reflected in our market share.

Yes, we have a deeper penetration of client relationships, but also the additional clients in wealth management, private clients as well, increase of clients here, we benefit from a continuous growth. We invested in this area. Also when it comes to -- we hired, for example, additional relationship managers in Germany and outside of Germany.

So it's a clear growth path. And I'd say it's a mixture of deeper customer relationships and new clients. But what's important for me is that clients approach us and say, "Hey, you're back and you can be my expert."

So clients do appreciate our deep expertise. And I think we're on a good path here. Briefly on Goldman and the other figures. Well, first of all, I cannot comment what others do. Let me just say two things. A, as with the previous question. In 2018, we did have to reduce headcount, unfortunately so, right?

So this did -- and if you take a 3 to 4 years' average, we reduced headcount more than our competitors. But some of our competitors increased headcount considerably in the last 1 or 2 years, and they are taking this back now. So on your question, we will be saving the EUR 2 billion, and we have incremental programs that were decided in the management Board. So there is no guarantee that we will not be reducing headcount in this, that or the other way, but we also want to grow. We want to invest, for example, in technology, we want to get stronger there. So that will be the honest answer to your question. I hope this answers your question (inaudible).

An update on the list of questioners: (inaudible) and (inaudible) Deutsche Taichung.

I have a few questions on the CRU. If I see this correctly, the portfolio has still not been reduced as you envisaged. So the leverage exposure is still twice the size you had planned. And the analyst consensus expects EUR 1.9 billion on a cumulative basis up until 2025.

This is at least what I read in the consensus. So I'd be interested to know as to whether this is in line with your guidance or if your guidance is different? I mean the losses also result from relatively high administrative costs. Will they be reduced markedly when you transfer back to the corporate and others? And another question, I mean these are mostly trading assets. Why is it not being transferred to the investment bank?

On the assets that remain in the CRU portfolio that's moving into Corporate & Other, I draw your attention to Page 53 of the analyst deck that we published this morning where we give you the details of that portfolio.

You're correct, relative to the 2019, the original target we set in July of '19, which was lower than where we are now. We did raise that target then subsequently reflecting a number of features, including that we simply didn't attach the liquidity reserves that you see to that portfolio, which was about $6 billion or is about $6 billion at the end of last year.

So we adjusted that target, but relative to that adjusted target we're below and comfortable with where we stand. The answer to your question is this portfolio will simply run off over time. Most of it at this point is -- has been worked to the point where we would simply allow the contracts to run off.

There's no clear avenue to accelerate that. And therefore, there's -- the management of assets of that nature is quite different from what the investment bank does, which a little bit gets to your third question, the reason to keep it as a segregated portfolio is, in a way, given how different those assets are from the assets in the core businesses, you don't want to distract the core business management, those client dialogues and so on with the questions to do with the CRU.

We can isolate it, we can risk-manage it and see those assets out to their maturity. We also show on Page 53, by the way, the weighted average maturity of what remains is about 6 and 7 years. On the cost side, I would say we hit the target of EUR 800 million or less than EUR 800 million for the CRU costs in 2022. It's still a rapid decline from here.

So I would expect costs supporting those assets to be half or even less than half in '23 in that EUR 800 million and probably half again of that in '25. So the costs, and particularly, the allocated costs of the CRU run off pretty quickly, which means to your question about the remaining losses there with essentially 0 revenues or a very small negative revenue item, it's really a question about costs being pushed out of the company that will drive the profitability or the drag of that portfolio to be reflected in Corporate & Other in the future.

Does this answer your question? I hope so. And the next question. Go ahead.

Just a couple of questions. Number one, can you give a bit of flavor in terms of customer behavior when it comes to corporate and households at the beginning of the year. And second is the outlook for the investment bank. What you're seeing now and what should you expect and we expect in the coming quarters, including leverage financing?

Yes, let me start. The customer behavior is, as I tried to outline in my prepared remarks is, in particular, in Germany, cautiously optimistic. But there, you really have to also differentiate, Patricia, between the clients.

We clearly see the global corporates also in Germany, navigating through all the challenges in 2022. I would say, in a quite mature and solid and robust way. Why? Because they have a lot of alternatives. They can move supply chains faster than a smaller mid-cap company.

So the concerns also in the economy is different from large-cap companies to mid-cap companies, in particular, mid-cap companies who have difficulties to pass on the prices, they are obviously then more concerned about the outlook and hence, it is so important to get the inflation down.

Inflation is the poison of the economy and hence, we need to get control over this one. So it's not actually such a sectorial question. It's in particular question, large-caps versus mid-caps. And hence, the EUR 200 billion support program, which, in my view, will not be even fully used, but was for giving support and also moral support was the right signal actually to the corporate world.

In the retail area, from a credit behavior we cannot see any meaningful or material deterioration, be it on consumer finance, be it in the mortgage area. People have obviously built up their savings a lot through the COVID time. They are benefiting from that.

You can see in certain areas, you saw that in the second half of '23 that, in particular, people with lower income they changed a little bit their consumption behavior and went for different products, so you could see that and listen to the corporates in this regard.

But when I overall look at the strengths of our employment market, and if we manage to now get the inflation down, I do think that actually we have a chance to go through 2023 without a material decline in consumption also of the private people.

So if you compare it to the second half of 2022, more optimistic, but it really depends on, sort of, say, the background of the clients and also in what kind of business they are. And on the corporate side, you really have to distinguish between large corporates and mid-caps and small-caps.

Outlook IB, as James was saying, and James should add, but look, we had an outstanding FIC business, not only in 2022. I think what Ramnayak has done in reorganizing the FIC business is exemplary, and we will thrive on that.

Now do we see exactly the same amount of revenues in 2023 in the FIC business as 2022? Potentially not. But if I just look at the underlying flow business in January, then they're on full speed. And I can see that people want to deal and want to do business with Deutsche Bank also in the FIC business.

The good thing about the investment bank is that we are standing on three legs, and this is underestimated. We have a fantastic FIC franchise. We have a very mature financing business, and we have the O&A business. We believe, and there are first indications that the O&A business in '23 is coming back, not to a degree like we have seen it in '21, but it's coming back and that will, in my view, compensate a potential decline in the FIC business. So in this regard, I'm very positive on the Investment Bank. And as I said, January has shown that we are here on the right track.

Yes, I'd only add, I completely agree with Christian's comments. I sometimes think of it as a transition from macro to micro. So macro had an extremely strong 2022. And in the microeconomic products, so episodic transactions, financings in M&A, equity, debt capital markets, in particular, leveraged debt capital markets and the credit sort of asset class as a whole, 2022 was a very weak year.

In our case, we were fortunate, as Christian mentioned, the macro business has performed in a spectacular way. And so as we transition, you could see a reasonably consistent revenue performance, but with an underlying sort of portfolio mix shift there. And again, that makes us feel quite good about both the franchises we have and the mix of businesses that we have, Patricia. Thank you for the question.

Thank you. Then we have another Zoom question, which comes from Isabella (inaudible) with (inaudible).

I have two questions. The first question is on the global Deutsche Bank. If I'm not mistaken, 50% of your revenues come from outside Germany. So the global business is important. And Italy should be your biggest market outside Germany. So how important has been the Italian market contribution to your results?

And then if I may go back to the Capital Release Unit, a question on your overall assessment because I remember, bit of the excitement when you launched it, it's a very unique tool. And do you think that this has worked well? And as it is called Capital Release Unit, what is the capital aspect of it and the EUR 5 billion capital that should have been released with it?

Thank you, Isabella. Let me take the first question, and James will take the second one. First of all, we miss you here in Frankfurt. You're always a visitor to Frankfurt. So next year, you are coming here personally, too.

And yes, Italy remains a key market for Deutsche Bank. There is no doubt. Actually, I was there last year in June from the 14 to 16, I enjoyed it. And so definitely it's on our key markets. And I can even tell you, Isabella, that the 50% I was citing was only with the corporate relationships, which we have here in the home market that with the home names in Germany of the corporate names we even do more than 50% of revenues with them outside Germany.

The overall revenues, and James will have the numbers, outside Germany is even higher than 50%. And I think we should be around 60% or even higher than 60%, James, but you will know these numbers. And as I said, we committed to 60 countries. I do think in a situation where we are right now, that you need global expertise, but also regional know-how.

This global network is essential for our clients. And therefore, our strategy to be in Asia to be in the U.S. and in North America in parts of South America. But of course, one of the key players in Europe and obviously, also the Middle East. And in Europe, Italy is the strongest market for us after Germany, and you will understand that this shall not change for Deutsche Bank.

Thank you for the question on CRU. So there are a number of ways of estimating the capital that was released by the CRU over its lifetime. I gave two numbers in the prepared remarks.

One was 55 basis points of leverage exposure and the other was 45 basis points, if you look at the CET1 ratio. And the calculation there is if you start on June 30, 2019, and carryforward the difference of -- in those -- in the denominator in those ratios, that's your benefit and you would subtract from that the net losses that were accrued over that 3.5-year period of time to get a net number of 55 on the leverage ratio or 45 basis points on the CET1.

The other way to look at it is, Isabella, as you correctly point out, is the tangible common equity, we finished the fourth quarter with an average allocated tangible common equity to the Capital Release Unit of about EUR 2.7 billion. And relative to where we started, which I think was at 6.5, it's a very big reduction in that allocation and is a big part of how we have shifted the way that the capital is allocated in the organization as a whole towards the core businesses incidentally towards the Corporate Bank and Private Bank as part of our strategy and away from the businesses that were deemed noncore at that time.

All right. Another quick update. I've got another 10 names on my list. So we have to start minding the time (inaudible) will be next. And so first, please Barbara (inaudible).

Mr. Von Moltke, now you got me confused. Can you repeat that explanation? So the released capital, as you said, would be about EUR 4 billion, that would -- was my first question? And secondly, Mr. Sewing regarding asset management, you referred to the difficult circumstances of last year, yes, of course, but there was also a net outflows of EUR 20 billion, isn't that also due to the green washing allegations against DWS? And how do you want to regain and rebuild confidence?

What I was citing was the remaining capital, not how much was released. So the remaining tangible common equity on an average basis in the fourth quarter allocated to CRU. You can see that on Page 24 of our financial data supplement is EUR 2.7 billion.

Yes and then also -- was there a follow-up question? Yes, maybe we can take the follow-up first.

Yes, but how much was released? Now I understood EUR 2.7 billion. Starting point was EUR 6.5 billion, so the difference would be EUR 4 billion?

Like EUR 4 billion. That's correct. But I can get you as a follow-up, the number of where we started on a restated basis at the end of 2018, for example. I'll follow up for you with that number. It gives you the precise difference.

And to your other question, now first of all, these kind of allegations of course, are never good for business. But if you look at our peers, and if all in all, if you look at development over the years, then DBS has not only developed in an outstanding manner, but it has shown that it was able to increase its reputation.

It managed the turnaround. So for that reason, especially for the second half of 2022, we saw a significant improvement in terms of clients. Now to be honest, there was hardly any trouble there. Further details will certainly be answered by DWS, which is publishing its numbers today as well.

All right. So this has -- have been all the answers for Ms. (inaudible) Fine, then we will continue with Ms. (inaudible) from FAZ.

I've got two questions. No, I've understood that you're not too much worried about loan defaults neither from private consumers now from corporates. And you several times pointed out that you attach great importance to internal risk management and monitoring. Now here, I would like to know whether in 2023 or also already in 2022, this has been adjusted, so if there has been a kind of credit crunch, which means that the loans are not even granted anymore because you just raised the bar or tightened your criteria, but then the strategy forward?

I mean it sounds like a bit kicking the can down the road, which is not too bad. But on the other hand, our investors also getting a bit nervous or getting excited so that you've got to tell them that what's coming after restructuring? I mean somebody will have to ask the questions. So I do so, for example, about potential merger or -- I mean that's the white elephant in the room, or you could also stay on your own. I'd like to know whether you're thinking about these things? Because I do not believe that you're not thinking about it at all.

Well, I did not say that I'm not thinking about the strategy of Deutsche Bank. So credit defaults or tightening the credit granting criteria. Well, it depends on the sector and leveraged lending, for example, in the first quarter, our risk appetite for new funding was already lowered -- and it is similar for the one or the other financing projects in commercial real estate.

So fortunately, and that's what Mr. Von Moltke's slide has shown. Fortunately, we're coming from a very conservative risk management basis. So there's not such a major need for adjustment. But you can see it every week, every month, and that's also important in our risk management. Now we also have to see what customers are using.

And in 2022, we saw many customers went for short-term financing because they wanted to see their liquidity and that they rather called fewer long-term financing off. The same goes for the construction industry. If interest -- cost of materially increased due to inflation, then we also see a decrease in housing credits.

Fortunately, we are so well-diversified that we can compensate for this in other businesses. So here, customer demand is the one that matters. And then strategy. Well, we do have a clear strategy, which we also communicated to you in March 2022. And this is, yes, an evolution, not a revolution. We feel like these with the four businesses and four divisions, but we know that in each of these divisions and also in each of our infrastructure units, we still can and have to get better.

And for that reason, we all know exactly what we need to do until 2025. When it comes to client-facing units or infrastructure units. And in the last 3 years, it really paid off that we focused on ourselves alone. We are more advanced than many thought. We got where we wanted to get.

And if in 2025, we have got more than 10% in this environment, that's something I'm fully convinced of then let's wait and see what happens then.

Thank you very much. Next question, (inaudible).

Well, thanks a lot. Now in fall, we had the wonderful IPO of a Stuttgart-based carmaker. You were also a bit involved in it, but only a bit not the way it should be. And obviously, this was also a bit of an issue at your company that this was not so pleasant.

Now what are the consequences you've drawn from that to avoid this from happening again? Did you talk to them? I mean you said that you exited equity trading, and this did not have an impact. But maybe it did. Could you please elaborate on how you're going to handle this and how you want to avoid this in the future?

Well, I cannot guarantee you that this is not going to happen again, but we will leave no stone unturned to get better on our side. Well, Mr. (inaudible), what can I tell you? Of course, this hurt us very much. It hurt me very much because that was an IPO, which we would have loved to be part of, but you've got to respect the client's decision. And the good thing is -- but that's for clients to say, it's always sounds better if they say it themselves. But I think we contributed very much to the successful IPO of Porsche as an absolute leading retail coordinator, that's also the feedback that we got.

We learned where we were not that good, but that stays internally. And -- so what we learned stays in the house. I can tell you that we did learn our lesson, of course, that's obvious. And the good thing is that we see exactly that attitude in our team. That's like in sports.

If I lose a tennis match, then I've got to accept it, but I've seen how I can get better and that's what we do here as well. And if you look around in Germany and Europe and if you're involved in 9 out of 10 IPOs on a local basis, then we are there, aren't we.

All right. Next, we've got (inaudible).

Please help me. Now I've read a sentence in your employee letter saying that in global competition, we want to get into the attack mode. Now as you're choosing your words very deliberately, this sounds more than just growth. Now what do you mean by attack? What does this mean in global competition? Where do you want to take market -- gain market shares?

Well, I'm not going to give you the exact details. But I think if we win market shares on a consistent basis, then this means attacking for me. That's positive competition then. I think what was most important 3.5 years ago to identify those businesses where we've got the potential, the possibility to attack, whether it's a corporate bank, whether it's a FIC business, whether it's in wealth management, which Claudio de Sanctis created in Asia and how we are winning market shares there, that's outstanding.

Just after this conference, look at the wealth management results in the fourth quarter versus our peers. Well, that's something we do not have to hide. That means attack. Attack doesn't mean that we have to resort to inorganic measures. We want to grow where we are strong, and we've got the capacities for that, and that's a positive kind of attack.

(foreign language)

This is not what we want to communicate. But what I can tell you one thing. We have good and constructive discussions in the management board, the GMC and also with our direct reports. I think tonight, we have several thousand people that we're talking to, and we will be addressing weaknesses quite openly.

I mean if we can do more on the cost side, we have to do more there. And I meant it when I said in my speech that when it comes to remediation, regulatory controls, et cetera, we do have to make progress in 2023. No ifs and buts. And if I say that, it will show you that you cannot be satisfied with everything all the time.

(foreign language)

You started off very emotionally with Russia, but you still have more than EUR 800 million in terms of loan commitments. How do you want to bring that down? What are the precautions or provisions? Did you fear some pressure because as others are bringing -- competitors bringing it down faster? And how many of your IT people move to Germany?

I can add. Look, the remaining book in Russia is almost exclusively lending to multinational corporate subsidiaries of multinational corporates in Russia. We've actually brought that book down, I think, pretty considerably and in particular, the contingent book.

We've done no new business in Russia, and we are in the process of winding down, consistent with our contractual obligations, regulatory obligations to clients and the regulators domestically. So we're quite pleased with the progress there.

Equally, related to the Russia Tech Center. I think Bernd Leukert and his team were very, very quick and agile and first of all, reducing our reliance on those development or developer capabilities, resources and shifting to other centers opening the center in Berlin, we've made significant progress.

We're not going to share individual numbers of resources in the 2 locations, but suffice it to say that we've made a lot of progress in replacing the capabilities that we were previously looking for from the tech center in Russia prior to the war.

The only thing I'd like to add is that we always said we continue to reduce things to bring it down. But when it comes to our global companies that have subsidiaries there, we will bring things down in lockstep with them. So necessarily then this takes time. So it's totally in line with our strategy and what we set out we would be doing. Is your question answered, Mr. Baumgartner?

which comes from Christopher Spink from IFR, Chris, can you hear us?

Yes, yes. I just wanted to go back -- you gave some outlook for the investment bank in the current year. And you said that January has started well. To what extent do you think the elevated levels of the FIC business last year were a new normal, which we can expect for some time to come? Or is it -- how much of it is a temporary thing related to the events of last year?

And secondly, I'd just quite like to know you were talking quite a lot about commercial real estate. Do you think that there might be surprises there looking at maturities coming up and some and how tenants might reorganize their portfolios in the year ahead?

So Chris, maybe I'll start on the first, and Christian may take the second, and we can add thoughts. It's an interesting question you ask because I remember several years ago, there was this idea that there was a secular downward drift of the total FIC of the total FIC revenue wallet and within which you had some cyclical behavior as well.

I do think, and I'm going to speak my own opinions, but obviously, after a discussion with Ram, I do think we've turned a corner and there is a secular increase in FIC revenues coming or that we're in the middle of or at least started. And there will be cycles around that secular increase.

2022, no doubt, was a high point in the cycle. But I think the underlying benefit is there or improvement is there. What is the reason for that? I think the level of indebtedness in the world will continue to grow, perhaps shift a little bit by country, region, corporate sovereign, what have you, but the support for that will continue.

I think in an environment where long-term liability holders need to continue to service those liabilities, pension assets, life insurance assets, what have you, that is going to continue, and we're going to have a large generation of pensioners coming with the baby boom.

The complexity of the markets, the more countries coming into developed currency locations and issuance currencies. All of those things, I think, speak for secular growth in the business. We think we're well positioned around that, both in our issuance and in the market making and institutional sides of our business. So we think there's a good trend that's begun in fixed income and our -- the outlook we would have is that, that will continue.

Look into your second question, I didn't mean that when I said that obviously, the commercial real estate sector is a sector which we need to watch. I don't have no specific concerns or specific areas, but I do think that with obviously the higher interest in the refinancing, for some of our borrowers and for the overall environment, it is getting more challenging.

And that means that you need to obviously monitor it very closely. Again, I do think from the structure of the book as [Oliver] is presenting it, again, diversified good LTVs and I think strong underlying developments or strong underlying assets. And therefore, I'm not particularly concerned. But from an overall segment point of view, it is one which needs, in my view, more watching than a normal corporate segment.

Chris, I hope that covers your questions. Yes. Good. Okay. (inaudible) Okay, we have 4 names on the list. We will just about be able to do this (inaudible) and a second question from (inaudible) So (inaudible) from the ARD. (inaudible) News.

I have a question on possibly credit defaults, for example, are already answered. But [buffin] warned just recently that due to an increase in interest rates, many SMEs might go bankrupt. Don't you share these concerns?

And then consolidation of the European banking sector. Mr. Sewing you always talked about this -- you said that the banks have to do their homework in particular, the Commerzbank. Commerzbank now posted a billion -- a profit in the billions. Now would it be a good moment again for a German merger? Might you be interested in parts of Credit Suisse? Or do you believe that you will raise to glory again, without any mergers and acquisitions?

Well, of course, let me say, let me do away with one rumor. I never said that banks have to do their homework. I said we have to do our homework. And I'm happy about the profit of Commerzbank. But when I talk about homework and people doing their home I always talk about our own bank and not about others.

Now SMEs going bankrupt. I think we should be very cautious about this because German economy in a very, very difficult year 2022 has proven to be incredibly robust and resilient. We have wonderful family companies, SMEs, midsized companies who do everything they can in order to go through these very difficult years.

Yes, perhaps we might see an increase in insolvencies in 2023, more so than in 2022, but a wave of bankruptcies, people talking about a wave of bankruptcies, I think that's exaggeration, which should calm down perhaps a little. We don't see it in our portfolio. Now talking from my position as the President of the Banking Association, I don't see it either.

And also my colleagues, the same is true for the savings banks, for example. [The first bank] has a very good overview. Yes, there might perhaps be a high number of insolvencies, but I would never talk about an insolvency way for example. And there is no data to support this. Consolidation banks, consolidation, yes, there will probably be consolidation, but it's not on my plate at the moment. We want to grow on our own steam.

Okay. We will continue with brief questions and brief answers. (inaudible)

Quick question, but I would like to have a comprehensive answer, if I may. Okay, this is Postbank or the integration of Postbank IT. You mentioned in your speech, Mr. Sewing and also before the annual media conference that you spend a lot of money for moving into the cloud, now the first product is on the market.

And obviously, the market doesn't like it too much. So how fast will you be in correcting that? I mean do we have to expect from the beautiful new cloud world that it will be less expensive and more efficient for the bank but actually not very much in line with the expectations of the clients?

Well, I'm very happy about the migration and how it was done over Christmas and New Year, forming clients and accounts where migrated. And yes, we did have individual problems, in particular on Monday morning and on Tuesday. I mean the failure that we had on Thursday had nothing to do with the migration at all, the technical migration of assets and customers, et cetera, went absolutely smoothly.

Then when it comes to -- but on Thursday morning, we have problem with online banking. We are awfully sorry. We've got to learn from that. We can certainly get better here. But we had a couple of thousand complaints. I mean every complaint, is one complain too much.

But if you migrate 4 million clients and accounts, this is still something where it shouldn't be negative only. But this was the biggest and most complex IT migration in the European banking system since we had to start for migration. So I know I think kudos to Mr. (inaudible) wonder teams and how they managed to do things.

But one is also very -- one thing is also very clear, it's one of the things that happens that happen shouldn't happen, and they will, of course, do everything they can in order to make things even more smoothly around Easter for the next migration.

You asked about online mobile banking and the cloud capability. So as Christian just outlined, the New Year's transition was very large and complex. And not only did we move the back-end systems to the Deutsche Bank system, those accounts, but also introduced the new online mobile banking capability. We are -- the great thing about the cloud is we're now in a position to add features very, very rapidly in an agile fashion over the coming months.

So we think we'll see dramatic improvements as features are added to our capabilities. There are some limitations that the current setup, so while we're in the middle of the remaining transition of accounts over the next several months, there are some limitations of the features we can offer seamlessly to clients in that mobile world, that will also resolve itself.

So we're quite confident the path we're on in terms of that mobile app and the cloud environment that we've gotten in is the right direction and the clients' customers will see very rapid improvements in our capabilities in that area.

Okay. Great. Short answer. We might have a go in the short answer for the next question. Okay, from (inaudible)

One additional question on M&A. You always said that you want to have done your homework by the end of 2022 before you might look into any larger mergers and acquisitions. You now said that this will remain the case till 2025. So does this mean that asking for bigger consolidation, Europe is only lip service, and there's nothing that you seriously have on your agenda for the next 2 years?

Also, you posted a -- you said that there will be a higher pretax income for 2025, will this also apply for after tax? And have you set up any provisions when it comes to the Postbank litigation? And -- or is this still an contingencies? And also, you said you cannot exclude further headcount reductions, are there any concrete plans, for example, as you publish them in 2019?

Look, with the EUR 1.4 billion DTA adjustment, it's going to be hard to beat, and we wouldn't expect necessarily adjustments of that order of magnitude. So the post-tax impacts may be more muted than the prepaid tax. And as it relates to Postbank, I think we've been reasonably clear that we see that as a contingent liability. We think although it's gone back to a lower court, the facts and the legal situation have developed, by and large, in a positive sense, and so it remains a contingent liability.

On the first question, Mr. (inaudible), I asked for the capital market union and the banking union, and I still expect banking consolidation, but I'm not asking for it, I believe it will happen, but the prerequisite for that would be a banking unit and a union and the capital market union because otherwise, a consolidation doesn't make sense, if we don't have the necessary prerequisites on a regulatory basis.

And this is why for years, I've been asking for capital markets and banking union. And I believe that we'll not be able to do the green deal without a capital market union in Europe. It's the most essential point. So I remain -- I maintain what I said. There will be banking consolidation, but we have to have the prerequisites. Reduce in headcount reduction, plan -- concrete plans for further headcount reduction.

As I said, we have the 65.2% is our cost-income ratio target, which has said that we take out EUR 2 billion in terms of costs in 2025, and we'll take incremental measures over and above this. At some juncture, this will lead or might lead to a situation where we will be reducing headcount.

I mean the path of the private bank alone will mean that further branches will be closed and thus headcount will be reduced. In other areas, we increase our headcount. So we take the cost income ratio as a point of guidance. But also internally, everybody knows that we cannot absolutely exclude any further headcount reduction. This would be a lie. We can't say that.

And at the end, an additional question by (inaudible) Financial Times.

I've got 2 questions, I fear. But one is a follow-up to what you just discussed. This incremental cost program, which you've mentioned once or twice, now maybe I didn't pay close attention before, but what exactly does this mean? Has that been approved by the Management Board now? And what is its magnitude?

Does this mean that there's another -- a new cost-cutting program at the bank? I'd be grateful to you if you could elaborate on this? And then question number two, and I've understood that you don't want to give us any details on litigation costs. Now I have noted that 1/3 of it has been attributed to Capital Release Unit.

Now this is a unit which you said does not generate any revenues, hardly any RWAs left. So how can it be that these unexpected litigation costs are -- have been allocated to the CRU that looks a bit arbitrary from the outside?

So on the second point, there, I think I'm more comfortable speaking to the fact pattern because many banks have it. And that is we have a Polish mortgage, an FX mortgage book that was one of the asset groups that went into the CRU. And like other banks, we've been building legal provisions there and particularly in 2022.

Around the cost environment, perhaps I'll start. Look, we're always sort of trying to peel the onion and look for additional areas where we can achieve efficiencies. So when we have specific measures that we can attach future gains to, we often refer to them as key deliverables.

There's a program. There's often an investment attached to that. And there's management accountability associated with delivering those future benefits. And then as we go through time, we see more opportunities and we can speak about more measures that we can take.

In this case, I think an important thing to realize is, we see more inflation in the outlook than we -- today than we would have done, say, a year ago. And I think where Christian's comments are really headed is, we, therefore, need to do more to offset that inflation and those additional measures will help us do that.

So in the net, it wouldn't change really the overall picture of the future forecast that we talked about in March, but with higher inflation, we're going to have to work harder to offset it.

Now when it comes to measures Mr. [Storbeck] and I think you've seen this if you look at your own newspaper, the longer you work there, the more areas you find where you can better and where processes can be made more efficient. Let me give you 3 examples.

Infrastructure, now here in individual areas, we still have duplication, which means there are 2 units doing similar work, and that's what we want to combine or merge. And then in Corporate Bank and Investment Bank, thanks to the good front-to-end processes. We have just seen that further savings are possible if these front-to-end processes are rolled out to other areas. And if it just comes to booking a loan that was granted, then we're also looking at our geographical or location setup how we can streamline there.

And then there's another area and here I'm looking at (inaudible) because again and again, he's shown us what is possible in terms of technology. The whole world is currently talking about a new chat system.

So if you look at the changes brought about for our processes in automation, that's a major lever. And if you turn the blind eye to this, this would be a severe mistake. So in our daily doing, we always learn new things. And of course, we also need to think about machine learning and AI, where we have to and can make the bank better. And these are the incremental measures that we take to achieve what James has mentioned, maybe to counter increasing inflation.

All right then. Thanks a lot. So this marks the end of our list of questions and also marks the end of our Annual Media Conference. Thanks to all of you for joining us either here in Frankfurt personally or in front of your TVs -- of your screens. If you've got any further questions or comments then, as usual, you can contact us in the communications department. Apart from that, have a nice day, and thank you and bye-bye.