Deutsche Bank. Chief Executive Officer. Merrill Lynch Banking & Insurance CEO Conference London, 8 October 2008

Transcription

1 Deutsche Bank Dr. Josef Ackermann Chief Executive Officer Merrill Lynch Banking & Insurance CEO Conference London, 8 October 2008

2 Agenda 1 Performing strongly through the credit crisis 2 Sustaining capital and funding strength 3 Investment banking: Leveraging a strong platform 4 Further expanding stable businesses 5 Summary Investor Relations 10/08 2

3 Market turmoil continues Phase 1: Phase 2: Phase 3: Phase 4: Phase 5: Phase 6: Phase 7: Phase 8: Credit crisis starts in the sub- prime segment Knock-on effects on leveraged loans Spill-over to interbank money markets Interim recovery as Fed starts easing More write-downs, coordinated central bank action over year-end Monoliners, de- leveraging and recession fears hit market Tentative recovery halted by bad macro and financial news Banking industry suffers relapse Credit spreads (1) (in bp., left axis) Spreads in interbank market (2) (in bp., right axis) (79) bp. (3) (16) bp. (4) Jun 2007 Oct 2007 Feb 2008 Jun 2008 (1) itraxx Crossover series 6 (5 years); index of sub-investment-grade -rated credit default swaps (2) 3-month EURIBOR minus 3-month Eonia swaprate (3) Compared to peak on 10 March 2008 (4) Compared to peak on 17 December 2007 Sources: Datastream, Bloomberg Investor Relations 10/08 3 Sep

4 The outlook remains difficult with banking book assets under pressure Rising delinquencies in the U.S. (1) Loan loss provisions of leading banks (3) 6% Consumer loans Credit card loans Real estate loans 5% 4% 3% 2% 1% 0% In EUR bn ~2.5x Corporate default rates also moving upwards (2) % Europe 10% U.S. Aug 2008: 3.3% % Nov 2007: 1.0% 0% Q 2Q 3Q Q 1Q 2Q 2008 (1) Delinquencies in %, Source: Federal Reserve (2) Trailing 12-Month Issuer-Weighted Spec-Grade Default Rates, Source: Moody s (3) Loan loss provisions per quarter from Top 10 non-asian banks by market cap (Citi, HSBC, BoA, JPM, Wells Fargo, BNP, Santander, Intesa Sanpaolo, Royal Bank of Canada, US Bancorp) and DB Note: HSBC only report half-year figures for provisions for credit losses (for this chart assumed to be spread evenly between each quarter) Investor Relations 10/08 4

5 However, mark-downs are trending lower Selected peers: Reported mark-downs (1) Aggregated mark-downs (1) In EUR bn MER UBS LEH MS (4) (3) (3) (4) (3) C SOC (3) CS (3) In % of shareholders equity pre-crisis (2) (3) (4) GS (3) BoA (3) JPM Q07 2Q08 3Q08 In EUR bn Q Q Q (1) Net of hedges, includes mark-downs from trading activities and charges against available for sale positions (2) Shareholders equity as of 30 June 2007 (3) 3Q2008 results have not yet been published (announced write-downs included where applicable) (4) Diverging fiscal year Note: Converted into EUR based on FX rate of respective reporting period Source: Company disclosures Investor Relations 10/ Q

6 Deutsche Bank remains a relative winner through the crisis Aggregate IBIT, 3Q2007-3Q2008, reported, in EUR bn JPM GS (1) (2) (2) 3.3 MS (1) CS (2) LEH (1) (4.2) UBS (2) C (2) MER (2) (19.8) (18.5) (18.7) (1) Diverging fiscal year (2) 3Q2008 results not yet published Note: For peers IBIT reflects IBIT attributable to the shareholders of the parent; translation into EUR based on average FX rate of respective reporting period Source: Company disclosures Investor Relations 10/08 6

7 Credit crisis results in a flight to quality Flight to quality in prime brokerage as hedge funds shift assets to the most financially stable banks. (Hedge fund managers and market observers, June 2008) As well as from the surge in overall bond market volatility the rates businesses of investment banks have benefited from flight to quality trades. (Credit Suisse report, July 2008) The differentiation between winners and losers in the banking industry will widen over the next months. (Merrill Lynch report, July 2008) M&A in banking: Flight to Quality is a key factor. (American Banker, July 2008) Market shares in investment banking are going to be reshuffled. (Bernstein research report, August 2008) Investor Relations 10/08 7

8 and the flight to quality has benefited Deutsche Bank Selected examples PCAM Strong net new money inflows 3Q2007 2Q2008 (in EUR bn) GM Market leadership in FX Number of monthly transactions #1 in global FX market Market share of 21.7% AM PWM PBC Total CF Build-out of position in M&A DB rank and global market share (1) # 4 22% Jan 2006 Jan 2007 Jan 2008 GTB Growth in custody business AuC volume / stock prices; indexed (Jan 2007 = 100) % Assets under Custody # 8 19% # 9 13% (13)% MSCI World Index H2008 Jan 2007 (2) Aug 2008 (2) (1) Announced transactions (2) Per beginning of the month Sources: Deutsche Bank; Euromoney FX Poll May 2008; Thomson Financial as of 30 June 2008; Datastream Investor Relations 10/08 8

9 Agenda 1 Performing strongly through the credit crisis 2 Sustaining capital and funding strength 3 Investment banking: Leveraging a strong platform 4 Further expanding stable businesses 5 Summary Investor Relations 10/08 9

10 Key exposures have been managed down Carrying value (1), in EUR bn Leveraged Finance Commercial Real Estate (3) Unfunded Funded (39)% (43)% (2) Non U.S. U.S Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q (1) Exposure represents carrying value and includes impact of synthetic sales, securitizations and other strategies; for unfunded commitments carrying value represents notional value of commitments less gross mark-downs (2) Total commitments (3) Carrying value reflects total loans and loan commitments held on a fair value basis after risk reduction and gross mark-downs Note: Figures may not add up due to rounding differences Investor Relations 10/

11 Loan loss provisions remain at relatively low levels Provision for credit losses, in EUR m Single counterparty relationship Q 2Q 3Q 4Q 1Q 2Q Investor Relations 10/08 11

12 Capital and balance sheet leverage targets BIS Tier I ratio (Basel II) Balance sheet leverage ratio (1) Pro-forma U.S. GAAP (2) 9.3 % ~10 % 40 ~30 30 Jun 2008 Target 30 Jun 2008 Target (1) Total assets after pro-forma U.S. GAAP netting divided by total equity (2) Assets per IFRS adjusted for pro-forma derivatives netting, pending settlements netting and repo netting; repo netting estimate based on proportion of nettable repos under U.S. GAAP at date of transition to IFRS Investor Relations 10/08 12

13 Strong funding base Unsecured funding, in EUR bn, as of 30 June Includes EUR 44 bn of term money Short-term wholesale funding Fiduciary, clearing & other deposits Capital markets Retail deposit 30 Jun Jun 2008 Investor Relations 10/08 13

14 Deutsche Bank s relative strength: The market s verdict 5-year senior CDS, in bps 1 July October , CS JPM BofA BAR UBS C MER GS MS Source: Bloomberg Note: Scales have been adjusted to improve visualization Investor Relations 10/08 14

15 Agenda 1 Performing strongly through the credit crisis 2 Sustaining capital and funding strength 3 Investment banking: Leveraging a strong platform 4 Further expanding stable businesses 5 Summary Investor Relations 10/08 15

16 Investment banking remains a highly important business Sales & Trading revenue pool*, in EUR bn (17)% DB current market share: ~10% E 2009E S&T equity S&T debt * Reflects Top 15 firms; excludes mark-downs and fair value gains / losses on own debt Source: Company reporting, DB, Coalition Investor Relations 10/08 16

17 Dislocations in the competitive landscape: Fewer leading players March 2008 Current Bear Stearns JPMorgan Chase JPMorgan Chase Merrill Lynch Bank of America Bank of America Lehman Brothers Chapter 11 Goldman Sachs Morgan Stanley Goldman Sachs Morgan Stanley Wachovia Citi Deutsche Bank Citi* Deutsche Bank * Acquisition pending due to Wells Fargo offer Investor Relations 10/08 17 Acquired by Converted to Bank Holding Company

18 Our investment banking franchise has demonstrated robust underlying performance Leading investment bank CB&S revenues (1) 3Q2007 2Q2008 (in EUR bn) GS JPM (2),(4) MS (3),(4) LEH CS C (4) 8.1 with strong operating earnings CB&S revenues before mark-downs and losses (in EUR bn) Reported revenues Mark-downs and losses (5) Average quarterly revenues Ø4.3 MER UBS Sales & Trading Investment banking Loan products 1Q 2Q 3Q 4Q Q 2Q 3Q 4Q Q 2Q 2008 (1) Converted into EUR based on average quarterly FX rates; CB&S revenues of DB include other revenues (2) Excluding Principal Investments (3) Excluding Investment Revenues (4) Diverging fiscal year (5) In the context of the credit crisis Source: Company disclosures Investor Relations 10/08 18

19 Repositioning the platform toward growth prospects Business Line Overall revenue trend Exploit leading positions in growth products Continue investment in strategic priorities Global Finance & FX Core Rates Distressed Debt Equity Derivatives Emerging Markets Credit Trading (excl. Prop) Cash Equities Prime Brokerage Commodities Reduce exposures in structured/inventory products U.S. RMBS CRE / CMBS / SPG CDO Leveraged Finance Investor Relations 10/08 19

20 Agenda 1 Performing strongly through the credit crisis 2 Sustaining capital and funding strength 3 Investment banking: Leveraging a strong platform 4 Further expanding stable businesses 5 Summary Investor Relations 10/08 20

21 Stable businesses have proved their resilience Income before income taxes In EUR bn Quarterly development >2x In EUR m % GTB AWM PBC Ø Q 2Q 3Q 4Q 1Q 2Q Note: based on U.S. GAAP, 2003 based on structure as of 2005, based on structure of 2006; 2006 onwards based on IFRS and on latest structure, GTB: 2003 adjusted for gain on sale of Global Securities Services Investor Relations 10/08 21

22 and their contribution to RoE in challenging markets Pre-Tax return on equity* (in %) % H H H H2008 GTB AWM PBC Stable businesses aggregated * Annualized Investor Relations 10/08 22

23 GTB: We will further build on a successful platform Example GTB Strong momentum Income before income taxes (in EUR m) 4x supported through bolt-onon acquisitions # 4 commercial bank in the Netherlands ~35,000 corporate and SME clients Approval by regulatory authorities pending Acquisition of U.S. hedge fund administrator USD ~10bn of assets under administration Domestic Custody Acquisition of domestic custody business in Turkey Note: 2003 adjusted for gain on sale of Global Securities Services Investor Relations 10/08 23

24 PBC: The next phase of our strategy Advisory Banking Significant investment in our core competencies PBC Growth and efficiency programme Consumer Banking Building a European Consumer platform - Expanding number of qualified - Setting up a 'state of the art' online Advisory banking staff banking solution - Profitable branch expansion, mainly in Germany, Italy and Poland - Redesign collections and recovery management Efficient platform - European consolidation of middle offices into few locations - Integration of credit operations in middle- / back-offices Investor Relations 10/08 24

25 PBC: Key elements of future profit growth Organic growth Strategic thrust Strengthening Advisory Banking in core markets Germany, Italy and Poland Establishing European Consumer Bank Targets for 2012 (excl. acquisitions) Pre-tax ~ EUR profit 2 bn Extending franchise in Asia Net revenues > EUR 8bn Efficiency Acquisitions Improving efficiency of credit, operations and IT processes / retail standards Establishing or enhancing international presence Cost / income ratio < 65% Investor Relations 10/08 25

26 PBC and Postbank: A powerful basis for co-operation As of 31 December 2007 Clients & distribution Clients (m) Branches 855 1,650 Mobile sales force ~ 4,300 ~ 3,200 FTE (000) Brands PBC Financials (in EUR bn) Revenues IBIT* Customer loans Customer deposits * Income before income taxes Investor Relations 10/08 26

27 Envisaged areas of co-operation between Postbank and PBC Mortgages / home finance Rationale: Postbank is a market leader in prime segment for standard mortgages DSL may become preferred provider in this segment for PBC Postbank (BHW) and PBC will explore cross-sell opportunities for their respective products under the brands of BHW and db Bauspar Investment products & advice Rationale: Postbank seeks opportunities to increase product penetration of its core clients DWS and X-markets may become preferred providers for Postbank Explore possibilities to offer PBC s standardized Discretionary Portfolio Management and active advisory products to customers of Postbank Joint purchasing / infrastructure Rationale: Realise economies of scale Parties will explore benefits of joint purchasing power, and of sharing development and running costs Parties will explore cross-usage of IT know-how and system modules Investor Relations 10/08 27

28 Building on our turnaround in Asset and Wealth Management Net new money, in EUR bn (41) (38) 2003* H2008 * PWM not restated for Rued Blass Investor Relations 10/08 28

29 Capturing share of new money through the crisis PCAM, in EUR bn 5.9% 3.4% 3.0% 2.7% 1.8% (3) (2) (6) (6) (3) (8) 1Q 2Q 3Q 4Q 1Q 2Q (27) 1Q 2Q 3Q 4Q 1Q 2Q 1Q 2Q 3Q 4Q 1Q 2Q 1Q 2Q 3Q 4Q 1Q 2Q 1Q 2Q 3Q 4Q 1Q 2Q NNM, in EUR bn xx Aggregated g NNM 1Q2007-2Q2008 in % of invested assets at 31 Dec 2006* * Annualised Investor Relations 10/08 29

30 Agenda 1 Performing strongly through the credit crisis 2 Sustaining capital and funding strength 3 Investment banking: Leveraging a strong platform 4 Further expanding stable businesses 5 Summary Investor Relations 10/08 30

31 The crisis has validated our business model Leading global investment bank with a strong and profitable private clients franchise Mutually reinforcing i businesses A leader in Europe Powerful and growing in North thamerica, Asia and key emerging markets Investor Relations 10/08 31

32 Meeting challenges, seizing opportunities Investment Banking Focused investments in a core business Exploit relative strength Reposition toward growth areas Leverage strong position in emerging capital markets 'Stable' businesses GTB: Continue to invest/ expand PBC: Launch the next phase Expand Advisory Banking Align Consumer Banking Postbank co-operation AWM: Exploit momentum of asset flows Growth products Client segments Capital, liquidity and exposures Continue to manage down key exposures Strong core capital ratio Strengthen liquidity via strong funding base Disciplined capacity and cost management Strict management of risk and cost Leverage strong liquidity and funding base Committed to solid core capital ratio Investor Relations 10/08 32

33 Cautionary statements This presentation contains forward-looking statements. Forward-looking statements are statements that are not historical facts; they include statements t t about our beliefs and expectations ti and the assumptions underlying them. These statements are based on plans, estimates and projections as they are currently available to the management of Deutsche Bank. Forward-looking statements therefore speak only as of the date they are made, and we undertake no obligation to update publicly l any of them in light of new information or future events. By their very nature, forward-looking statements involve risks and uncertainties. A number of important factors could therefore cause actual results to differ materially from those contained in any forward-looking statement. Such factors include the conditions in the financial markets in Germany, in Europe, in the United States and elsewhere from which we derive a substantial portion of our trading revenues, potential defaults of borrowers or trading counterparties, the implementation of our management agenda, the reliability of our risk management policies, procedures and methods, and other risks referenced in our filings with the U.S. Securities and Exchange Commission. Such factors are described in detail in our SEC Form 20-F of 26 March 2008 under the heading Risk Factors. Copies of this document are readily available upon request or can be downloaded from This presentation may also contain non-ifrs financial measures. For a reconciliation to directly comparable figures reported under IFRS refer to the 2Q2008 Financial Data Supplement, which is accompanying this presentation and available on our Investor Relations website at Investor Relations 10/08 33