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00:00Look, I think the quarter overall for Deutsche Bank is a fantastic one from every aspect.
00:06Not only is it a record second quarter, but it's also a record first half for us.
00:10But what's extremely pleasing is you mentioned the significant beat on investment banking,
00:15but actually we had record flows from asset management, almost 9% growth from our private
00:20bank. Corporate bank is continuing to show signs of progress, which we assumed.
00:26You know, continuing to invest across the franchise, capital position strong.
00:29We announced another buyback today. So I think all in all, I would say in this political and
00:34geopolitical environment, I think these are stellar results.
00:37Ned, I want to get into some of the different sort of sections there, but thinking about kind
00:41of now going into the third quarter, have you seen those trends remain kind of intact,
00:45particularly on the trading side? Is this something that we're going to see again in the third quarter?
00:49Yeah, again, July started pretty constructively on the trading side. It's kind of continued the
00:53momentum from June. So as I look at the book, both on the market side and on the investment
00:58banking side, I think the pipelines look pretty full. So it gives me a lot of optimism that the
01:03second half of the year could potentially be as strong as the first half.
01:06And also thinking about this share buyback that you've announced now, 500 million euros,
01:10which is in line with a lot of what the analysts were looking for. What is also notable about is
01:14this the first time you do it from the in-year net profit, right? What does that tell us about
01:19kind
01:19of the potential forward looking forward in terms of the buyback policy over at Deutsche Bank? Does
01:24that give you more kind of leeway to do actually more in the coming years?
01:27Yeah, look, the buyback is exactly in line with the communication we did at the investor day,
01:32that we would like to shift to an in-year buyback. And I think from my perspective,
01:37it exhibits two things. One is the earnings power of the company. And two, the confidence that we have
01:43that we can actually execute these buybacks as we generate those earnings, because we have a good look
01:47towards the future. So it's actually going from 50% of our net income to 60% and doing it
01:55earlier.
01:56So I think from my perspective, it's great for the shareholder because they get more and they get
02:00it earlier. And as we said in our investor day, once our ratio is sustainably about 14%,
02:06we will do excess share buybacks, considered excess share buybacks. And the cadence that we have just
02:13means that once we get to that point, investors can expect to get that earlier than they normally
02:19would. And thinking also about obviously the FIC number, which is something that always garners a
02:23lot of attention. You know, some of your competitors here in Europe were pretty muted this quarter.
02:26That is not the story that you are telling today. There's also this question also from the
02:31banks of the United States. We saw equity trading, we saw commodity trading, still no FOMO over there.
02:36This is not something that you are looking at potentially expanding to again?
02:39Well, first of all, I think extremely proud of our FIC results. I think we probably took share this
02:44quarter from in the market given 18%, 19% growth year over year. I think we were one of the
02:49highest
02:50growth rate banks in that arena. And it came across both on the rate side and the credit side. So,
02:57you know, it was kind of broad based. And what we saw in FIC is, you know, volatility with momentum
03:02is good for markets. I think people want to do business in that environment. And that's exactly what we saw.
03:07On the credit side, it was a bit more reducing credit. It was a little bit emerging markets macro,
03:12some distressed product. But we've been investing in that business since 2019.
03:15So we're learning. Look, I'll repeat my answer. I don't want to do a strategy by envy. But on the
03:21equity side, you know, we are not in the market side of equities. But we still have a pretty good
03:26equity origination business. And that's one of the big stories as well,
03:29was obviously the SpaceX IPO and a number of the other sort of big deals over in the United States.
03:34Looking into the back half of this year, the beginning of next year, we're expecting some
03:38very large IPOs, Anthropic, potentially open AI as well. Are those deals that you could potentially
03:44be a part of? What does the pipeline look like? So just looking backwards, we were involved in
03:48three of the largest deals in the first half of the year as probably one of the only European banks
03:52that actually participated. Without going into specific names, I think we are set pretty well to
03:59participate in future deal activity. And remember, the deal activity in US has been exceptionally
04:04strong in the first six months. Europe has been kind of muted. As Europe picks up, we're actually
04:09going to be an outsized beneficiary of that trajectory. And so what is your expectation in
04:13terms of deals in Europe? Because, you know, we've talked about the revival of the market for quite some
04:17time. Is that something that you see as imminent? We saw a little bit sideways in the first half.
04:22It clearly didn't see the same level of wallet share growth that we saw in the US. But thankfully,
04:26we are present in the US. We have competitive skills there. I think Europe seems to be picking
04:32up. Now, whether it will be of the same magnitude that we saw in the US, that remains to be
04:36seen.
04:36But as I look at the second half pipeline, it's across US and Europe. And so you're painting a very
04:42sort of positive picture. How does that bear on your revenue targets? You say that you can, obviously,
04:47the goal is for 33 billion euros this year. Is that something that you are likely to beat,
04:52given just the conditions that you're describing? Look, first half is usually traditionally always
04:56stronger. You know, and this, the second half quarter also has been great. I would say, you
05:01know, we are, while we're not updating the number, the number was approximately 33 billion. As I sit
05:06here today, I think we will be comfortably getting to that number. And if things go well, potentially a
05:12little bit better. And something else that would have to go well in order for that to happen is
05:15things within the German economy developing in a positive way. You have a couple of countervailing sort of
05:20trends, I think, in Germany, where you have a lot of concern around, obviously, the geopolitics,
05:24the price of energy, particularly going into the winter, if you don't have some kind of resolution
05:28on the Strait of Hormuz. On the other side, you've got the German stimulus, and you also have now
05:32some difficult reforms coming through in Germany. Square that balance of risk for Deutsche Bank and the
05:37impact that it's having. I think, as you see, we performed super well in the first two quarters,
05:43despite the German fiscal not fully in velocity. Now, I think, as I look ahead, we can see clear
05:50signs of activity, both on the defense and infrastructure side. We had 3% growth in loans
05:55in our German corporate book, which is great. As I think, look ahead, I think the better days are ahead.
06:01Now, the question is what the pace is going to be. But the political will, it was always there.
06:07Now, with these reforms, I think hopefully the process of deploying that infrastructure spend
06:13and the defense spend will become a little bit easier. And along with that, with the pension
06:17proposal, which to me is a pretty big game changer for the Germans themselves, but also for banks like
06:22Deutsche Bank, I think I have optimism that we have another round of opportunity for Deutsche Bank that
06:29potentially was not present in the first half of the year. Yeah. And it also in the first half of
06:33the
06:33year was marked by a number of different raids that were done by the Frankfurt prosecutor on your
06:37headquarters here on panoply of different issues, three different sort of issues. How distracting is
06:42that? And is there a way of kind of just sort of doing a hard reset here, getting it all
06:45sort of
06:46cleared out and moving forward? Okay, what I will do is, you know, obviously, we can confirm,
06:51we put a statement out there. We did have a visit last week. This was a matter that related to
06:57almost 16 years ago for an entity that we acquired. And it wasn't even controlled by Deutsche Bank at
07:04that time. We are cooperating with the prosecutor, as we always do. It's too premature to say what
07:10they're looking for and what the real target is. But the management team is fully focused on what we
07:16need to deliver. And obviously, as these things come up, we cooperate and we share information and
07:22then we see what the outcome is. Yeah. And obviously, the sort of battles are waged in the quarters in
07:26terms of the comps with other competitors. But the war is over a very long period of time.
07:30And something that obviously was taking our attention, I'm sure yours is that it now seems
07:34that the takeover of Commerzbank by Unicredit is not a question of if, but a question of when.
07:40How is that going to bear on Deutsche Bank strategy when you have Commerzbank who's extremely well
07:45enmeshed within the sort of German economy, Unicredit with a huge amount, you know, a huge amount of heft
07:50behind it? How does that change the competitive landscape now that this seems that this is going to be
07:54a deal that is inevitable? We have a market leading position in Germany and across
07:59across businesses, whether investment banking or private bank, asset management, even corporate
08:04banking, our relationships with multinationals. So our strategy was always an organic one.
08:09If anything, I think this gives us an opportunity to think about how we want to approach the German
08:15corporate clients and, you know, potentially offer them solutions that may or may not have been
08:19available before. So I think from our perspective, this is actually a development that potentially is
08:24good for Europe in the context of cross-border mergers. But it doesn't really have an impact
08:29or bearing on the way we think about our opportunity set. We're pretty focused on what we need to
08:34deliver. And I think we have a great opportunity at hand with our 20,000 plus corporate customer
08:39clients already, plus 18 million retail customers. So, you know, wish them the best of luck if that's
08:46the way they're going. But we are not focused on other people's acquisitions.
08:49Does it put any pressure on you in terms of thinking about a distribution strategy for
08:54shareholders? Because now you're going to have a sort of more comparable, you know,
08:57bigger player within Germany?
09:01I think our focus is the distribution. Last year, we did a billion. This year,
09:06we've already announced a billion and a half. As our earnings powers continue to go up and up,
09:11you know, we will continue to deal with that. And obviously, we set the 13%
09:15plus as a target in IDD. The plus is important there, because with the tailwinds that we have
09:21between the SIU, the German fiscal, the pension reform, and frankly speaking, the regulatory capital
09:28rules proposal that's coming from the European Commission, I think we have an opportunity to
09:32actually do much better than what we thought in 2020.
09:34And I just want to step back to sort of looking at the kind of broader picture in the macro
09:38environment
09:38here. Obviously, there's been a lot of sort of difficult negative stories in terms of geopolitics
09:42within the energy markets as well. But obviously, there's this very positive sort of AI train.
09:46Where is the risk there with AI? Because there seems to be a potential, if this is the big
09:51positive story of an unwind there, yet unproven kind of ripping across market, where do you see
09:56kind of the risk if you scan the horizon? I think you have to look at it both
10:00on a risk and opportunities perspective. From an opportunity perspective, clearly,
10:04there's an opportunity inside the house for us to leverage AI across what we do,
10:08whether it's revenues or productivity. Obviously, we are supporting our clients as they raise funds
10:14and as they invest in AI. So there's obviously that. The other one is, you know, what is the risk
10:20of this thing being a little bit higher than what we assume it to be? Our risk appetite basically
10:26dictates that we deal with really high quality sponsors, with companies with diversified business
10:31models. So I think from my perspective, as long as we stay within our risk appetite and our risk
10:36tolerance, and participate in diverse companies who are actually trying to build this thing,
10:41I'm less concerned. But look, the opportunity from AI is real. And I think we'll have to see how it
10:47plays out. But net net, I think there's more positives here than negatives. And just a final
10:51question on the private credit with something we talked about, you said nothing to see here last.
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