Deutsche Bank is taking a decisive step forward to become stronger and grow again. Decisions agreed by the Management Board and Supervisory Board on March 5, 2017 aim to reinforce the bank’s roots in its home market of Germany and its position as a leading European bank with global reach.
“While the revenue environment remained challenging, we have made significant progress on our key initiatives such as the planned merger of Deutsche Bank and Postbank in Germany as well as the preparation for the IPO of our asset management business. We are convinced that the benefits of our efforts will step by step become more apparent in the coming quarters and years.”
- Adjusted costs of EUR 22 billion by 2018, and EUR 21 billion by 2021, which includes the adjusted costs of Postbank
- Post-tax Return on Average Tangible Equity of approximately 10% in a normalized operating environment
- CRR/CRD 4 Common Equity Tier 1 capital ratio (fully loaded) of comfortably above 13%
- CRR/CRD 4 leverage ratio according to transitional rules (phase-in) of 4.5%
- Targeting a competitive dividend payout ratio for the financial year 2018 and thereafter
Progress against strategic goals and targets
Within the Corporate and Investment Bank (CIB) division, we continue to focus on the key initiatives announced in March 2017. The portfolio of legacy assets, which we have identified within the division, continues to roll-off as planned. We are focused on reinvigorating our client-led franchise through more effective coverage and have made progress in selectively hiring to capture key strategic opportunities. In the quarter we continued to make progress towards better front-to-back alignment of certain infrastructure functions, in particular business aligned technology functions.
Our Private and Commercial Bank (PCB) aims to become the leading advisory driven, omni-channel proposition for private and commercial clients with a superior product offering. To achieve this goal, digital investments remain the core strategic pillar to broaden our client base and to drive growth, efficiency, and new (platform) business.
In Germany, PCB has now virtually completed its target to close 188 retail branches in Germany (187 branches closed in PCC Germany as of the end of September 2017). Further investments are planned for the continuous digital transformation of our core businesses as well as for new products and services, including beyond banking propositions. In addition, a direct bank will be launched in 2018 to cater for new client segments.
We are continuing to make progress on the integration of Postbank. We have developed concepts for our Target Business, Operating and Financial models and have substantiated key integration cornerstones to realize our planned € 900 million in synergies. We aim to be the leading Private Sector Bank in Germany with two strong brands by capturing market opportunities and leveraging joint product strengths. The legal entity merger is on track for the second quarter of 2018. This will lay the basis for establishing an integrated steering and governance with one head office, management team and IT platform, single product management and harmonized regional coverage across Germany. Furthermore, we have reached an upfront in-principle agreement with the workers union on key integration items. We will commence the detailing and implementation of these models in the last quarter of 2017.
Within Wealth Management (WM), where we aim to build our business around clients’ needs to become a top 10 global wealth manager, further investments have been made in the third quarter into the digital modernization and we have hired selectively in Asia. Furthermore, we have announced our plans to integrate Sal. Oppenheim’s business activities in order to combine our Wealth Management competencies in Germany, reduce complexity and take advantage of synergies by combining service and infrastructure functions. This step will allow us to provide our WM clients with the benefits of our holistic wealth management approach by offering comprehensive services combined with the advantages of our global capital markets and investment expertise. In this context Sal Oppenheim’s successful Quantitative Investment business will be legally and operationally integrated into our Deutsche Asset Management (Deutsche AM) segment. By integrating these business activities into our Deutsche AM service and distribution platform we aim to benefit from the growth potential for this business on a global scale.
We are progressing well in the preparation of the planned partial initial public offering of Deutsche Asset Management (Deutsche AM) and our announced timeline is on track (completion within 24 months since announcement in March 2017) assuming market conditions are favorable. Our pre-IPO alignment measures are progressing well: large parts of client facing, asset management-related business activities, as well as essential infrastructure functions have already been aligned to Deutsche AM. We have made good progress formalizing service arrangements between Deutsche Bank Group parent and its future Deutsche AM subsidiary. In early October, we aligned our organizational structure more closely by bringing our Active, Passive and Alternatives capabilities into one globally integrated investment platform and created a single global Coverage Group. This is in response to clients who increasingly seek our advice across asset classes and require more multi-asset and solutions oriented investment capabilities. Completion of operational and legal separation is subject to regulatory approvals.
At the Group level, we are progressing with our program of business disposals and have completed and signed a number of transactions in 2017. In certain cases, we have re-evaluated disposal decisions due to a number of considerations such as more or less favorable market conditions, legal and financial terms, or regulatory or other approval requirements. Progress has also been made on expense management. Noninterest expenses of € 5.7 billion in the third quarter of 2017 were 14% lower compared to the third quarter of 2016. The impact of headcount reductions was partially offset by higher accruals for current year variable compensation, driven by the planned return to normal compensation programs after 2016 bonus payments were significantly limited.
Source: Interim Report as of September 30, 2017