Deutsche Bank Bank of America 31th Annual Financials CEO Conference

Thanks for having me here, and very pleased to be here representing Deutsche Bank. Look, I think from my perspective, yes, the macro is complicated, but the direction of travel in Germany is, from my perspective, still very encouraging. If you look at stepping back, what has actually happened in Germany, last year we actually had a 50% increase in foreign direct investments. We just did a survey of international investors, and Germany still is on top of the list from a desired location. We had a 0.3% growth in second quarter. The projections for the growth rates in this full year and next year are actually creeping upwards. What I also find encouraging is the corporate sentiment, despite what you read, is actually quite positive. We can see corporates getting engaged. They are making investment decisions.

Where you see a little bit of lack of obvious consistency is on the SME sector, so the corporate confidence has not clearly and consistently transferred to SME. That is why you perhaps see a little bit less of that. The other thing that we think about it from a Germany perspective is last year alone, the VC funding was up by almost 44%. There were 3,000 new startups. I would say all in all, while Germany is not where we thought it would be when the stimulus and the defense package came in, I think it would not be prudent to conclude that nothing is happening. Us, as the largest bank based in Germany, certainly see activity, and that can see in our working capital finance transactions and our loan growth transactions.

All in all, I would say what we need is more of the same, but at a faster pace. To say that momentum is not happening is probably not accurate either.

Yeah. I'm probably the least equipped to opine on German politics, given I've only been there less than a year. Look, I think one thing, you have to find the commonality. One thing is clear that Germany needs more reforms, more economic progress, more growth that goes down all the way, not just at the corporate sector. From my perspective, that is the most important part, is that there's alignment that there needs to be done more. I think from my personal perspective, any views that take away from a European perspective and lead towards more of an isolationist is probably not the one that we want. Clearly, the reform agenda is on the table. The defense spending and infrastructure spending we already see playing out.

While the politics is something that we have to closely watch, at this point, I think what we see is that the activity is happening, and we'll see how it plays out. Look, it's a decentralized political system, so in the end of the day, the government in the center is the one that is really important, and I think that's where we need to focus.

Sure. Look, in your introduction, you were kind enough to acknowledge the overall landscape, but I would like to say I'm super happy about the start. We had a record first half with ROTE close to 12%. From a start perspective to my own start, but not also a start to new strategy cycle, I'd say we're doing pretty well. Look, we're just starting with no any particular order. If you look at what we have done on the Private Bank side, where we had set a goal for 1 trillion EUR client assets, we have, I would say, done as well as we thought we could, perhaps even better in terms of asset gathering, and that momentum is continuing. The asset management story is pretty clear. The long-term flows are strong. Germany and Europe is a destination, and we are playing that part.

Thankfully, and finally, Corporate Bank, which we always said would have a turnaround in the second half of the year, and we started showing that in the second quarter. I think given what we're seeing, both in Germany and the loan growth and the flows, I think there, too, now we are right back where I thought we would be, and we will talk about it a little bit more. Finally, look, I don't need to say too much about our Investment Bank and especially our Fixed Income franchise. It is crown the jewel in some ways. It has actually done extremely well. IBCM, which actually had a little bit of a slower start to the year, is finally fully participating in the U.S. perspective.

Europe is where we are strongest, which has a little bit of slower growth, so I think perhaps still a little bit more work to do over there. Overall, the credit quality has remained consistently where we thought it would be. All in all, Tarek, I would say pretty pleased expenses we have managed to keep under control. Obviously you saw the capital story that we actually started accelerating our buyback. I would say as this first 6 months go, I would have not wanted a different start.

The pension reform was not fully baked into our 2028 plan because at that time the proposal was out. We didn't know what it would look like, when it would come. So yes, that is certainly a tailwind. Look, even at today, 60% of our revenue are now coming from non-IB. So we have clearly started to shift that mix. The PBT will follow shortly after, and then it's a matter of how much capital do we really need in IB versus non-IB. So I think that mix, which is organic, is already happening, and if the German fiscal reforms and the pension reforms accelerate, clearly that shift would progressively go faster.