Deutsche Bank's Trading Unit Can Gain Market Share, CFO Says

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00:00I've looked at the numbers and the numbers for the third quarter, all the ones I've seen seem

00:04to be better than the estimates. What are you most pleased with about the way that the quarter has

00:09performed? Well, look, Anna, thank you for the question. It's a record quarter for Deutsche

00:15Bank. And really, the pleasing thing is really is two things. All businesses are showing momentum

00:20and have been doing so for the nine months and the three months. And we're on track to achieve

00:25our targets that we set out for 2025 all the way back in 2022, which is a return on tangible equity

00:31above 10 percent and a cost income ratio below 65 percent. And as you say, all the numbers are

00:37pointing in the right direction this quarter. And can I home in a little on how you're performing

00:42in FIC? Because it does seem as if you've done better than some of the Wall Street averages,

00:45in particular around rates trading. I wanted to ask you about where you've managed to get some

00:50strength in that business. Yes. So macro has been strong all year, up all together in the FIC

00:58complex this quarter, 19 percent. And on an FX adjusted basis, that's, I think, in line with

01:03the best of our competitors. As I say, macro products have been strong all year. But in this

01:08quarter, credit trading also came through with very strong results. And so we like what we're seeing

01:14in terms of both sort of the market tone, but also our capabilities, our ability to gain market share

01:21in this in this environment. And the September Fed rate cut, has that helped to drive volumes,

01:27hedging, rethinking of strategies in that area? Well, certainly in investors and also, if you like,

01:34real money. So duration managers are looking to position ahead of the Fed moves. We're expecting a

01:40move today. And I think the market is pricing one in for later this year as well. There's also been

01:46a fair amount of volatility. It hasn't been by any stretch of the imagination at record levels, but

01:52there's been a fair amount of volatility all year. That's obviously be conducive to the businesses.

01:57You've also seen some strong performance in your asset-backed finance business and then the

02:01securitization of those assets as well, James. How sustainable is the growth in that area?

02:06Well, let me start with, we've been in that business for a very long time, over 20 years in

02:13what we call FIC financing. And it is essentially secured financing, as you say. The spreads have

02:20no doubt been under pressure as more money comes into that market. But at Deutsche Bank, we've been

02:26able to innovate and be in sort of new structures, new underlying asset classes. And that served us very

02:32well in terms of the fund book pricing. So we're confident about that business going forward,

02:38but obviously very aware that there's more competition, both from the other banks as well

02:42as the private credit industry. And talking about private credit, we've seen a lot of focus on that

02:47area, of course. I don't see any mention of any specific provisions for losses around some pretty

02:52high profile collapses recently. I'm thinking of Tricolor and First Brands over in the United States.

02:57Ambipar in Brazil got a lot of headlines as well. Have I just missed those? Or has your business

03:02been successful in avoiding those pitfalls?

03:07We have, Anna. So you haven't missed anything. We weren't directly or indirectly exposed to any of

03:12the high profile cases recently. Without chest beating, we think it speaks to the underwriting

03:18and monitoring of the portfolio. That portfolio is highly secured, low LTV. As I say, we've been in the

03:27business for a long time. So we know our sponsors and have good capabilities to sort of monitor the

03:33exposures and the underlying assets. So we're pleased to have been able to avoid in this instance,

03:38those recent high profile cases you mentioned.

03:41Yeah, even if there's been no direct or indirect exposure, as you say, it's caused a lot of people

03:46to just check again at their exposures, in particular in the United States, perhaps,

03:51and other areas. Have you been doing that? Have you been taking another look at some of the

03:55exposures just to make sure that you're happy with everything?

03:59We have. You know, in an environment like the one we've seen, where a lot of capital is coming

04:03into the market, obviously you worry that that has resulted in, call it over-exuberance,

04:09and lax underwriting standards. First of all, we are strict and disciplined about our risk appetite

04:15and maintaining underwriting standards. But secondly, you get to learn from the experiences

04:21and naturally conduct a read-across in your portfolio. We've done that exercise. We're

04:26comfortable with the portfolio. But obviously, we're vigilant as well to make sure that there's

04:30nothing that looks or smells like those recent events in our books.

04:35So, let's just say...

04:36So, let's just say...

04:39Let's just be gentle.

04:44Let's just do this.

04:49Cheers.

04:50Cheers.

04:55Cheers.

04:56...

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