Deutsche Bank AG (DB) Q3 2020 Earnings Call Transcript

Deutsche Bank AG (NYSE:DB)
Q3 2020 Earnings Call
Oct 28, 2020, 7:00 a.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Ladies and gentlemen, thank you for standing by. I am Emma, your Chorus Call operator. Welcome, and thank you for joining the Deutsche Bank Q3 2020 Analyst Call. [Operator Instructions] I would now like to turn the conference over to James Rivett, Head of Investor Relations. Please go ahead.

James Rivett — Head of Investor Relations

Thank you all for joining us. As usual, on our call, our CEO, Christian Sewing, will speak first; followed by our Chief Financial Officer, James von Moltke. The presentation, as always, is available for download in the Investor Relations section of our website, db.com. But before we get started, let me remind you that the presentation contains forward-looking statements which may not develop as we currently expect. We therefore ask you to take notice of the precautionary warning at the end of our materials. With that, let me hand over to Christian.

Christian Sewing — Chief Executive Officer

Thank you, James, and welcome from me. It is now five quarters since we launched our strategic transformation. And for the fifth quarter in a row, we have delivered on, or ahead of, our financial targets and transformation agenda, and this positions us well to deliver against our long-term targets. We were profitable in the third quarter and in the first nine months of the year, with results ahead of our internal plan. The results are clearly a reflection of our refocused strategy. And yes, the results are in part driven by higher revenues in the Investment Bank, where market conditions remained supportive. But we see our revenue growth in the Investment Bank as much more than just market driven. The performance also reflects the refocus of this division around businesses where we have market-leading positions. In Q3, we have outperformed peers in several of our key areas within fixed income and increased market share. Despite the revenue headwinds we are facing in the Corporate and Private Bank, the results are in line with our original plans. Asset Management is performing in line with our expectations as well. We also continue to reduce costs with the 11th quarter in a row of year-on-year declines.

The combination of higher revenues and lower cost is driving higher Core Bank profitability, which more than offset the combined impacts of: transformation costs to implement our strategy; the burden of winding down the Capital Release Unit, which continues in line with our plan; and elevated provisions for credit losses given the COVID-19 pandemic. And finally, we continue to manage our balance sheet conservatively. Capital was broadly stable in the quarter, while liquidity further increased. This provides a solid position in the current environment to maintain our financial strength and to support our clients. Let us go through these themes in more detail, starting with our progress against our strategic transformation on Slide 2. In July 2019, we identified the transformation-related effects that we would take over the next 14 quarters. After just five quarters, we have put over 80% of these costs behind us. In the third quarter, we continued to implement our strategic transformation. Some examples include: in the Private Bank Germany, we announced the reduction of a further 100 Deutsche Bank-branded branches. Since 2016, we will have removed approximately 30% of our entire German branch network, including Postbank. This announcement reflects the changes in customer behavior that we are seeing, including a near doubling of online securities transactions, of which 30% are now coming through our mobile app.

To support our…