Compete to win
Building on our foundation as a leading European Corporate Bank based in Europe's largest economy, we have transformed our business model. We operate where our clients want us to be and where we are competitive. As a result, we aim to become less complex and more profitable, improve shareholder returns and drive sustainable growth.
“Looking back on the first year of our transformation, we are on track with, or even ahead of the objectives that we set ourselves. Our new strategy is paying off: in the fifth quarter of our transformation, we not only demonstrated continued cost discipline, but also our ability to gain market share. Client feedback and momentum as well as internal employee feedback confirm that we have found our path and execution is well underway. The results in the third quarter and in the first nine months 2020 are ahead of our internal plans.”
Christian Sewing, CEO
Latest transformation news on Deutsche Bank:
Deutsche Bank is …
- … a leading European Corporate Bank based in Europe’s largest economy
- … with strong investment banking, private banking, wealth and asset management capabilities
- … aligned with the strengths of the German economy around trade and investment
- … at the centre of our corporate, institutional and private clients’ needs
- … the risk manager and trusted advisor to our clients
We have taken five decisive actions …
... and have a clear plan for each of our divisions.
Our transformation is on track
We have completed or initiated the exit and wind-down of non-strategic businesses and assets:
- Cash Equities positions have been exited and the associated systems have been shut down
- Global Prime Finance and Electronic Equities businesses in the process of being transferred to BNP Paribas
- Fixed Income and other assets are being reduced
Our Capital Release Unit (CRU) is a key facilitator for exiting non-strategic businesses and assets. As of Q3 2020, we have made further significant progress in deleveraging the CRU:
- We have reduced risk-weighted assets to 39 billion euros
- Leverage exposure declined from 102 billion euros in the prior quarter to 90 billion euros at the end of Q3 2020
Our Capital Release Unit reduced risk-weighted assets faster than expected while consuming fewer capital resources than anticipated.
Creating four client-centric divisions which cooperate more closely
We have created four client-centric businesses, competing to win – a Corporate Bank, an Investment Bank, a Private Bank and Asset Management – and have implemented new leadership teams across all businesses. Our results in the third quarter of 2020 demonstrated that our core businesses are stable and resilient, well-positioned to support our clients during challenging times like the COVID-19 crisis:
- Excluding specific items, we managed to grow Core Bank revenues by 7 percent in the third quarter compared to the previous year
- The adjusted pre-tax profit (1) of the Core Bank grew by 87 percent to 1.2 billion euros compared to Q3 2019
In the first nine months of the year we helped clients raise debt financing worth almost 1.5 trillion euros, already an increase of 21 percent over the whole of the previous year.
Revenues were stable or higher, year-on-year, in three out of four businesses of our Core Bank in the third quarter 2020.
In the third quarter of 2020, we reduced adjusted costs excluding transformation charges (2) to 4.7 billion euros. This marks a reduction of 8 percent compared to the previous year. This puts us well on track to meet our 2020 target of 19.5 billion euros
This means that we have seen the eleventh consecutive quarter of annual cost reductions (3). This has also been supported by a headcount reduction of almost 3,000 full-time equivalents since Q3 2019.
Reduced costs for 11 consecutive quarters.
Investing in technology and growth
We are committed to investing in technology and will spend about 13 billion euros until 2022. This will go towards bolstering our cloud strategy as well as upgrading important legacy infrastructure and platforms that are vital for our day-to-day operations. In addition, we will use these funds to improve our offering for clients by developing innovative products and services for them. This will also be enhanced by our recently announced global strategic partnership with Google Cloud. The partnership aims to redefine how we develop and offer financial services and radically improve our infrastructure efficiency.
Having a robust control environment will also become even more important in the future. That is why we are spending 4 billion euros on our controls by 2022.
IT strategy has been launched and is being executed with a new leadership team. We announced a strategic partnership with Google Cloud to drive a fundamental transformation of banking.
Managing and liberating capital
We are implementing our strategy on the basis of a strong and robust balance sheet. We aim to maintain a CET1 ratio of at least 12.5% throughout our transformation. We ended the quarter with a CET1 Ratio of 13.3 percent. The solid capital and liquidity position gives us scope to continue to deploy resources to support clients in these challenging conditions.
Our capital ratio (CET1) stood at 13.3 percent (285 basis points above regulatory requirements) at the end of the third quarter 2020 – despite regulatory changes, the impact of the COVID-19 pandemic and our growth in business.
We reaffirm our financial targets
|KPI||2022 target||2020 target||Progress as per end Q3 2020|
|Post-tax Return on Tangible Equity (RoTE) (6)||8%|
|CET1 ratio||at least 12.5%||at least 12.5%||13.3%|
|Adjusted costs (4)||€ 17bn||€19.5bn (5)||Adjusted costs in first nine months stood at € 14.9bn (5)|
|Leverage ratio (fully loaded)||~5%||~4.5%||4.4%|
|Risk-weighted Assets (RWA) in Capital Release Unit (CRU)||€ 34bn||€ 38bn||€ 39bn|