- 6 hours ago
Category
🗞
NewsTranscript
00:00I'd like to get into the first quarter numbers, get your overview of what we saw in the first quarter.
00:04Thank you, Oliver. Thanks for having me, and I'm excited to be here and as my first quarter as CFO.
00:10Look, coming in in my first quarter and also the first quarter of the strategy that we laid out at
00:16Investor Day,
00:16I couldn't be more pleased with the results that we have.
00:20Both targets that we set out at the Investor Day, return on tangible equity and cost-income ratio on the
00:25return on tangible equity,
00:26we printed 12.7% up from 11.9% last year, very close to the 13% that we
00:33were aspiring for, cost-income ratio below 59%.
00:36Again, consistent with the target for our 28th target of 60%.
00:40So all in all, super pleased.
00:43I think what's also very encouraging is that the performance was delivered by all four of our businesses.
00:49And thinking about the trading desk, obviously, FIC, something that is of high interest to our audience,
00:54and usually the shining star here coming in sort of flat.
00:58Obviously, FX played a sort of a proportion there.
01:00What happened exactly on the FIC?
01:02Yeah, look, I think, as you mentioned, FX has certainly played,
01:05the headwinds from dollar, euro, year over year certainly played a role.
01:09That said, first quarter last year was a record quarter for FIC.
01:12So I think matching a record performance in these conditions, I think, gives me a lot of confidence
01:18that not only have we been able to overcome the FX headwinds, but able to match a fantastic first quarter.
01:24Obviously, there is a little bit of a March impact in there that impacted the results,
01:28but all in all, I think FIC held its own.
01:30And looking at the trading risk, drilling down a little bit more into sort of credit emerging markets, FX trading,
01:35that was stronger.
01:36What sort of accounted for that strength?
01:38Clearly, look, we have been investing in our FX business for a while,
01:41and it really was managed the risk really well.
01:43Like most U.S. banks, we saw rates being a little bit under pressure,
01:47but credit and FX continue to outperform our expectations.
01:51And looking at the U.S. banks also, commodities trading did very well.
01:54You're having a little bit of FOMO on the commodity side.
01:56There has been some talk about Deutsche Bank wanting to sort of reenter that space more aggressively.
02:00Is that something you're looking at?
02:01I really like our business mix.
02:03Look, I learned from a very smart guy a long time ago that we don't do strategy by envy.
02:08So I would say the business mix that we have in the FIC business,
02:10but broadly in our asset-gathering businesses, I think that's what we really want.
02:15And I'd like to get a picture of, so far in this quarter, what trading looks like.
02:18Has it gathered a bit more momentum?
02:20What are you seeing?
02:21Look, clearly April started constructively.
02:24I think the jitters that we saw a little bit in March,
02:27the market seems to have absorbed and settled into this new rhythm.
02:31We'll see where things go from here.
02:32It's really early.
02:33We're only one month in.
02:34But I think that the performance that we've seen so far,
02:37not just in FIC, but across our businesses, is pretty encouraging.
02:41And what we haven't talked about yet is the great uncertainty,
02:44the great unknown, the war in Iran, which, you know,
02:46every sort of other day we have a sort of slightly different understanding
02:49of what exactly is going on.
02:51I'd like to get an understanding for how that factor works its way
02:54through the business over at Deutsche Bank.
02:56Does it help on the sort of trading side, a bit of volatility,
03:00while on the other side, obviously, we see growth forecasts in Germany
03:03being radically slashed?
03:04How does that work through the business mix at Deutsche?
03:06So it's a little bit of all of the above,
03:08but the beauty of having a business mix that we have
03:11is that in periods of uncertainty,
03:13clients want risk management and advice both on the institutional side
03:17but also on the private side.
03:18You saw that in the first quarter,
03:20we brought in $22 billion of net new assets
03:22across wealth management and asset management,
03:24and a lot of that was actually deployed.
03:26So I do think in this geopolitical environment,
03:29if you have a bank that has the risk management capabilities
03:32that we have, for example, on the fixed income side,
03:34and then you have the advice capabilities
03:36that we have on the wealth management side,
03:37it kind of plays to your strength.
03:39Clearly, there is a lot of uncertainty
03:42around how long this conflict will last,
03:45what the impact is going to be on the inflationary pressures
03:48that we will not only face in Germany but also in Europe.
03:51On the other hand, there's a little bit more conviction
03:53around potentially what it looks like
03:55for an interest rate environment.
03:57And generally, a higher interest rate environment
03:59is beneficial to us.
04:01So there's puts and takes of this conflict
04:03depending on how long it lasts.
04:05But all in all, I think what we have seen
04:07in the first quarter, and we continue to see,
04:09is that the bank is now resilient to operate
04:12in all kinds of economic environments.
04:14But thinking about, so the ECB has put out three scenarios,
04:16the base case, the adverse case, and the severe case.
04:18What are those three cases for Deutsche Bank?
04:20I think the severe case would be
04:22that the conflict is prolonged beyond a certain period,
04:25and there's a real energy shock,
04:27and inflation gets to a point
04:29where it really starts impacting growth.
04:31Look, the base case would be
04:33that the conflict is over,
04:34hopefully in the second quarter,
04:36from our perspective.
04:37There's certainly a little bit of a lag
04:39from the effects of it,
04:41but I feel that we are in a pretty good situation
04:44to deal with, honestly, all three of the scenarios.
04:47The bank has a really good business mix,
04:50and this was something that I found
04:51very encouraging coming in,
04:53that not only I have a fantastic retail franchise,
04:56but I also have a great institutional franchise.
04:59And looking also at credit provisions,
05:00I see they're up a bit more
05:02than had been anticipated,
05:03to about 520 million euros.
05:06We heard from Jamie Dimon yesterday
05:07warning about a possible credit recession.
05:09Deutsche Bank also has large exposure
05:11into the private credit market,
05:12about 5% of your loan book,
05:14the biggest within Europe.
05:15So what are you seeing
05:16within the private credit market specifically?
05:17Are you having any concerns there?
05:19Is there a conversation about de-risking from there?
05:22Oliver, private credit continues
05:23to be a non-story for us.
05:25It just stayed at around 5% of our book.
05:28It is very well protected.
05:30We have great structural protection.
05:32We have a very diverse set of underlying borrowers.
05:35We have great visibility into collateral.
05:37And not only that,
05:38we haven't lost any money in this portfolio ever.
05:41So I feel very comfortable.
05:43As you know, we were one of the first banks
05:44to put the disclosure around private credit
05:47about the size and the scale of our portfolio.
05:49And I'm really glad that the other U.S. banks
05:51have now actually,
05:52and the European banks have actually followed.
05:54And what I see is actually very encouraging.
05:56But most banks actually seem to have underwritten
05:59this book really well.
06:01Remember, unlike the global financial crisis,
06:03banks are not in a first loss position here.
06:05We have structural protection.
06:06The advance rates are extremely low.
06:08So from my perspective,
06:10I only know my book really well.
06:12I feel super comfortable.
06:13The credit provision that you saw in this quarter
06:16was a management decision to take an overlay
06:18related to exactly the topic that you raised before,
06:21which was the uncertainty around the microenvironment.
06:23And we thought it would be prudent
06:25to have an overlay
06:26in case this conflict runs a little bit longer
06:28to be protected.
06:30So thinking about that,
06:31that does then point to
06:32some of the very specific concerns
06:34you have about a prolonged sort of conflict.
06:36How bad do you think it could be,
06:37it could get in terms of credit provisions?
06:39Is this just a sort of insurance?
06:41Is that what you're sort of indicating?
06:43But really, where is your concern in there?
06:44Yeah, so I think, look, the provision,
06:46as you saw, was less than $100 million.
06:49So clearly, our expectation is not
06:52that this is a pervasive impact
06:54and a long-lasting impact.
06:55But I do think that it's better to be proactive
06:58and take into consideration
07:00the macroeconomic factors
07:01that may not be reflected in consensus.
07:03So it was really done
07:04out of the abundance of caution.
07:06And if things improve,
07:08the overlay will come back to us.
07:10And I think that probably
07:11if there wasn't a war going on,
07:12we'd be talking about AI
07:13a little bit earlier in this conversation.
07:14There's been a lot made
07:15of this sort of mythos model
07:17put out by Anthropic.
07:18They had been saying
07:19that they were going to roll it out
07:20to some UK banks.
07:21Are they going to roll it out to Deutsche Bank?
07:23Is it important to you
07:23to get a hold of that model
07:25and test it out?
07:25Look, I mean, broadly on AI,
07:27I still strongly believe
07:28that it's a net huge positive
07:30for Deutsche Bank.
07:32Now, along with opportunities,
07:33there are also risk management.
07:35So we look at our cybersecurity
07:37and our AI deployment
07:38on a holistic basis.
07:40So I won't comment
07:41on any individual providers or models,
07:43but I can assure you
07:45that we look at the totality
07:46of the AI-related information
07:48in the marketplace.
07:49And we, as a large global bank,
07:51have the sophistication
07:52and the tools
07:52to address any vulnerabilities.
07:54And so it's something
07:55that I know there was a call
07:56between the ECB
07:57and some of the banks.
07:58I presume Deutsche Bank
07:59was a part of those conversations.
08:01Sort of what is the concern
08:02there at the ECB?
08:03What is that conversation like?
08:04Look, we have conversations
08:05with our regulators regularly
08:07on all kinds
08:07of risk management topics.
08:09And this, you know,
08:09cyber and AI-related risks
08:11is constantly on the agenda.
08:12So it's not,
08:13I wouldn't say that the conversation
08:15is only about one or two models.
08:17Again, we look at the,
08:18we scan the totality
08:20of the landscape
08:20and both the opportunities
08:22and the threats.
08:23And then we have
08:24great capability in this bank
08:25to actually protect ourselves.
08:27And I want to step back
08:28a little bit more
08:29because you're coming
08:29into this role now
08:30and thinking about strategy.
08:32At Deutsche Bank,
08:32you spent a long time
08:33at Morgan Stanley
08:34during that period of time.
08:35It was one of the best
08:36performing banks
08:36within the United States.
08:38What can you bring
08:38from the Morgan Stanley playbook
08:40here to Deutsche Bank
08:41and to Frankfurt?
08:42I'm very happy
08:43with what I found here.
08:44I mean, obviously,
08:45I'm super proud
08:46of my time
08:47at Morgan Stanley
08:48and how the organization
08:49reinvented itself.
08:50But when I look
08:51at the business mix
08:52that we have,
08:53including a leading
08:55retail franchise
08:56that gives us
08:56access to liquidity,
08:58being the largest bank
08:59in the largest economy
09:00in Europe,
09:01which actually wants
09:02to grow even further,
09:04having a capital markets business
09:05and having an investment
09:07banking business
09:07that we can grow,
09:08I think I can take
09:10the lessons
09:10of a diverse business model
09:11and apply it here
09:12with the tools that I have.
09:13And I think that's
09:14what's really exciting to me,
09:15that we have the business model
09:17that people are aspiring
09:19to build.
09:20So now it's a matter
09:21of just connectivity
09:22of these four pieces,
09:24which is something
09:24that Morgan Stanley did
09:25really well
09:26as an integrated firm.
09:27And I think that's my goal.
09:29And I think, frankly speaking,
09:30the work started before me,
09:31so I can't really
09:31take credit for that.
09:33What I'm hoping for
09:34is that the asset
09:34gathering businesses,
09:36wealth management
09:37and asset management,
09:38play the real balancing role
09:40for our institutional businesses.
09:42And I think that's going to
09:42what makes Deutsche Bank great.
09:44And so if we were to think
09:44about the sort of chapter
09:45in which you sort of oversee,
09:47obviously picking up
09:47from James von Moltke,
09:48who I think, you know,
09:49whose focus was really
09:50turning Deutsche Bank around,
09:52getting it on a really
09:52solid foundation,
09:54what would you sort of
09:54entitle this chapter?
09:55What would you hope it to be?
09:56Look, it's very clear
09:58in our investor day,
09:58we laid out,
09:59we want to be
09:59the global house bank.
10:01And if we are
10:02the global house bank,
10:03the next step,
10:03natural next step
10:04is to be the European champion.
10:06What that means for me
10:07is a bank
10:08that can deliver
10:10better returns
10:11no matter what
10:12the economic conditions.
10:13In good times,
10:14in constructive environments,
10:15we outperform.
10:16And we have the balance
10:18that we want,
10:19which is a balance
10:20of businesses
10:20that are partly
10:21asset management
10:22and wealth management,
10:23supported by a very
10:24strong retail franchise,
10:25and then having
10:26a fixed income
10:27and investment banking business
10:28that outperforms
10:29when things are constructive.
10:30So if you were to ask me
10:31what I would like
10:32the bank to be known for,
10:33clearly we have a role
10:35to play in the world economy
10:37and the German economy,
10:38and I'd like to leave
10:39this bank
10:40as the European champion.
10:41The European champion.
10:42Is now,
10:43we've had conversations
10:44between Unicredit,
10:45which you've been watching
10:45very closely,
10:46and Commerz Bank.
10:47Like, it seems originally
10:49it was a non-starter,
10:50now there's a conversation
10:51about price,
10:52potentially meaning
10:53that they would move forward
10:54with that.
10:54Does that threaten
10:55the sort of Deutsche Bank's position?
10:57How would it adapt strategy
10:58if you do actually get
10:59that acquisition
10:59here in Germany?
11:00So I won't comment on,
11:02you know,
11:02our competitors'
11:05prospective transactions.
11:06We have obviously
11:07closely monitored
11:07the landscape.
11:08As you know,
11:09our strategy,
11:10as we laid out
11:10at the Investor Day,
11:11was an organic one.
11:12I really believe
11:14that we have
11:15the business mix
11:16to do everything
11:17on our own,
11:17and we don't really
11:18necessarily need
11:19to engage
11:20or indulge
11:21necessarily
11:21in organic transaction.
11:24Clearly,
11:24frankly speaking,
11:25we are the leading bank
11:26in Germany
11:27by far most
11:29of the businesses.
11:30Two competitors
11:31coming together
11:32in an environment
11:33coming to Germany,
11:34in fact,
11:34is great,
11:34because that means
11:35Germany is a good place
11:36to be,
11:37and we are already here,
11:38we are already leading.
11:39So I do think
11:40that in some ways
11:41it opens up
11:42an opportunity
11:42for us
11:43to gain more market share,
11:46to extend our lead,
11:48and frankly speaking,
11:50not bothered watching it,
11:52but focus on ourselves.
Comments