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Banks
www.fitchratings.com 14 August 2017
Germany
Deutsche Bank AG Full Rating Report
Key Rating Drivers
Strategic Reorientation Drives Ratings: Deutsche Bank AG’s (DB) Long-Term Issuer Default
Rating (IDR) and Viability Rating (VR) reflect our expectation that the strategic reorientation
towards a more balanced universal banking business model should, if executed successfully,
make earnings and capital less vulnerable to capital market volatility and market sentiment. But
reversing franchise damage experienced in 2016 and executing the new strategy will be
challenging, and the Negative Outlook reflects a high potential for delay or failure.
Weak Earnings: The bank’s earnings are likely to remain a weakness in comparison with most
global peers over the next one to two years. Any improvement depends on DB’s ability to
regain lost clients and market shares, in particular in the Corporate and Investment Bank (CIB).
We expect costs to remain high as additional restructuring expenses offset efficiency gains.
Further conduct provisions may be added, but we expect these to be less significant than in
2016 given progress with resolving major cases.
Rights Issue Boosts Capitalisation: The EUR8 billion capital raising completed in 2Q17 has
increased DB’s regulatory capital ratios and relieved the pressure from weak internal capital
generation. Management has committed to maintaining the common equity Tier 1 (CET1) ratio
above 13% and increasing the leverage ratio to 4.5%, broadly in line with European peers.
Retail Presence Maintained: Management has shelved plans to sell DB’s retail subsidiary
Deutsche Postbank AG (Postbank) and is planning to integrate it fully into its other domestic
retail and commercial banking business, which is likely to involve a merger of the legal entities.
The lack of a leading domestic franchise and failure to utilise Postbank’s deposits for more
lucrative lending is a weakness for the bank’s earnings compared with peers based in other
countries, and a successful repositioning will be challenging.
Diversified Funding Despite Setbacks: DB’s funding profile remains well-diversified and the
bank retains a large and high quality liquidity reserve. The bank experienced a notable
widening of spreads on unsecured market-based funding in 2016 and some institutional deposit
outflows, from which it subsequently recovered.
DCR and Structured Debt Uplift: Statutory subordination of plain vanilla senior bonds to other
senior liabilities in Germany applied retroactively since 1 January 2017 means the bank already
has sufficient loss absorbing liabilities to meet Total Loss Absorbing Capital (TLAC)
requirements when they are first due in 2019. Fitch believes the resulting buffer of junior debt is
sufficient to afford protection to derivative counterparties, depositors and preferred senior
debtholder in resolution.
Rating Sensitivities
Loss of Franchise: Ratings could be downgraded if we believe that the franchise weakening
in 2016 has not been reversed. This would be signalled, for example, by lower revenue or loss
of market share in DB’s core businesses.
Execution Risks: Notable setbacks to the execution of the new strategic plan could also lead
to a downgrade of DB’s ratings. These may include failure to fully integrate Postbank,
significant delays, unforeseen costs or failure to retain capitalisation on target for example due
to large litigation or conduct costs.
Upside Beyond Outlook Horizon: Successful transformation of the business model and
achievement of higher, more balanced and stable earnings could bring positive rating
momentum in the longer term. We do not envisage such a scenario within the next two years.
Ratings
Deutsche Bank AG
Long-Term IDR A-
Short-Term IDR F1 Viability Rating a- Derivative Counterparty Rating A(dcr)
Deutsche Bank Securities, Inc. Long-Term IDR A- Short-Term IDR F1
Deutsche Bank Trust Company Americas
Long-Term IDR A- Sovereign Long-Term IDR F1
Deutsche Bank Trust Corporation Long-Term IDR A- Short-Term IDR F1
Deutsche Postbank AG
Long-Term IDR A- Short-Term IDR F1
Sovereign Risk – Germany
Long-Term IDR AAA
Outlooks
Long-Term IDRs Negative Sovereign Long-Term IDR Stable
Financial Data
Deutsche Bank AG
30 Jun 17
31 Dec 16
Total assets (USDbn) 1,790.2 1,676.5 Total assets (EURbn) 1,568.7 1,590.5 Total equity (EURbn) 66.5 60.2 Operating profit/RWAs (%)
1.3 0.1
ROE (%) 3.4 -2.2 FCC ratio (%) 15.3 13.2 CET 1 ratio, FL (%)
14.1
a 11.8
CRD IV leverage, FL (%)
3.8a 3.5
NPL ratio (%) 1.7 1.8 NPL coverage 59.2 61.0 Loans/total deposits
69.3 75.2
LCR 144.0 128.0
a Pro-forma including capital increase
Related Research
Fitch Affirms Deutsche Bank at 'A-', Outlook Negative (March 2017)
Deutsche Bank AG - Ratings Navigator (April 2017)
European GTUBs Quarterly Update (April 2017)
Analysts
Bridget Gandy +44 20 3530 1095 [email protected] Ioana Sima +44 20 3530 1736 [email protected]
Banks
Deutsche Bank AG
August 2017 2
Operating Environment
DB is headquartered in Germany (AAA/Stable) and most of its corporate and retail operations
are based there, benefitting from the country’s stable economic environment. The bank
operates globally through its capital markets business, which has sizeable operations in the US
(AAA/Stable), and in the United Kingdom (AA/Negative), though business booked in its London
branch and local staff numbers are set to decrease following the UK’s decision to leave the
European Union. The bulk of DB’s business is undertaken in sophisticated and well-regulated
markets. The operating environment has a low importance for DB’s rating.
Company Profile
Reliant on Fixed-Income Franchise; Retail Presence Maintained
DB is Germany’s largest privately owned bank by total assets and one of the largest and most
complex banks worldwide, with businesses spanning across Europe, America and Asia Pacific.
The bank has a strong franchise in investment banking globally, especially in fixed income, a
modest presence in the highly fragmented German retail market, a leading position in corporate
and transaction banking, good domestic market share in asset management and a growing
wealth management business. The high weight of capital markets and in particular sales and
trading businesses, which we view as a more volatile source of earnings, negatively influences
our assessment its business model.
Management expects that the combination of DB’s sales and trading, corporate finance and
transaction banking businesses into one Corporate and Investment Bank (CIB) unit from end-
1H17 will facilitate a more integrated approach to client management and cross-selling
opportunities. DB’s franchise in CIB is geared towards fixed-income, credit and foreign
currency sales and trading, where the bank maintains top-three league table positions in EMEA
and APAC (Source: Coalition League Tables FY16). It also maintains a healthy franchise in
debt capital markets, ranking eighth in debt capital markets globally and sixth in EMEA in
7M17, according to Dealogic. DB is an active participant in the leveraged finance markets,
including trading leveraged loans and high-yield bonds. It has a meaningful presence in US
commercial real estate, including Commercial Mortgage-Backed Securities (CMBS) origination,
distribution and advisory.
Transaction banking including trade finance, cash management and securities services,
benefits from DB’s corporate customer base. DB ranked fifth in transaction banking worldwide
and within the top three in EMEA according to Coalition league tables published in April 2017,
and the division remains of key importance to the bank's strategy and an area of growth.
DB’s combined retail and wealth management presence through Postbank, Private and
Commercial Clients (PCC) and wealth management (WM), together managed as the segment
Private and Commercial Bank (PCB), serves over 20 million customers and accounted for 26%
of adjusted profit before tax in 1H17. Despite a strong national branch network and brand
recognition, Postbank’s market penetration and pricing power are limited. PCC typically targets
affluent customers to compete in a highly fragmented retail market where savings banks,
Landesbanken and cooperatives together capture leading market shares in deposits and loans.
The lack of a leading domestic franchise and failure to utilise Postbank’s strong deposit base
for more lucrative lending opportunities thus far, is a comparative weakness for the bank’s
earnings in relation to peers based in other countries.
DB’s asset management business is considered an attractive growth business. It currently
enjoys good market shares in Germany and to a lesser extent wider Europe. It is a leading
provider of retail funds in Germany and the second-largest ETF provider in Europe. Invested
assets mainly relate to Germany with the remainder well diversified across the rest of the world.
CIB59%
PCB26%
AM15%
Note: Ex. DVA, goodwill impairment, litigation, restructuring , and Consolidation& Adjustments segmentSource: DB, Fitch
Pre-Tax Profit Split(1H17)
CIB68%
PCB25%
DeAM3%
C&A4%
Source: DB, Fitch
RWA Split(End-1H17)
0 10 20 30 40 50
Targobank
Santander
ING-Diba
CBK
PoBa + DB
GFG
SFG
Source: Banks' data, Fitch's estimate
German Retail BanksNumber of retail clientsin Germany (m)
Related Criteria
Global Bank Rating Criteria (November 2016)
Global Non-Bank Financial Institutions Rating Criteria (March 2017)
Banks
Deutsche Bank AG
August 2017 3
DB’s organisational structure is complex as a result of the breadth of its operations which
results in a large number of subsidiaries, in line with other global trading and universal bank
(GTUB) peers. DB has a meaningful presence in the US, where it generated EUR6.6 billion in
revenue in 2016 through 10,500 employees (full time equivalent). It operates through its New
York branch (USD158 billion of assets at end-2016) and subsidiaries held via an intermediate
holding company, Deutsche Bank USA Corporation, which was created in 2016. Its main US
operating subsidiary is its broker-dealer, DB Securities Inc, and it has a bank insured by the
Federal Deposit Insurance Corporation, Deutsche Bank Trust Company Americas.
In the UK, where the group had more than 8,500 employees (full time equivalent) and
generated EUR5 billion of revenue in 2016, it operates mainly through Deutsche Bank AG
London branch. We understand that the UK presence could be reduced significantly in
preparation for Brexit and depending on the conditions agreed between the UK and EU.
Management and Strategy
Strategic Rethink is Creditor Friendly but Execution Risks Remain
Revenue weakness in 2016 and unfavourable conditions for achieving a sale of Postbank
meant that the bank had to turn to shareholders for fresh capital and rethink some of the
“Strategy 2020” targets in early 2017. Fitch views the decisions to retain a retail presence and
increase the focus on corporate customers positively. But execution risks relating to restoring
DB’s reputation with its stakeholders, including its workforce and prime customer base, turning
around a barely profitable mass retail operation and resolving legacy misconduct cases remain
substantial, in our view.
Management decided to shelve plans to sell Postbank, opting instead for a medium-term plan
to integrate it into its existing private and commercial clients business. Low return on tangible
equity (RoTE) from Postbank had been a key reason for previous plans to sell. But
expectations of a return to a “normalised” interest rate environment, potential cost synergies
from integrating IT platforms, simplifying product offering, increasing digitalisation, as well as
the regulatory rein-back on leverage requirements for European banks swayed the decision.
At the same time, DB’s management is planning to increase the importance of the bank’s
corporate client-led franchises, by continuing to run-down legacy exposures and recycling
released capital into corporates-focused origination, advisory, transaction banking and
financing businesses.
Progress with other targets set out in the “Strategy 2020” appears on track. These include the
disposal of smaller non-strategic businesses, exiting its onshore presence from earmarked
countries, reducing the domestic branch network and simplifying the complexity of DB’s IT
systems. However we expect it will take many years until the impact of such measures, in
particular of strengthened risk culture and more robust IT systems, is tested and translates into
financial performance.
Management Turnover Consistent with Strategy
Nearly all of the current management board members, including the chief executive officer,
have been appointed during the past two years, reflecting the previous management team’s
difficulties in meeting financial objectives. We view further top management changes
announced in 2Q17 as consistent with the strategy and succession planning. Changes include
creating two deputy CEO positions by promoting internally the previous chief financial officer
and the head of PWCC, replacing the CFO with a strong external hire and appointing co-
business heads for the two new main divisions – CIB and PCB.
DB’s Financial Targets
Post-tax RoTE of about 10% in a normalised operating environment
Adjusted costs of EUR 22 billion by 2018 and EUR21 billion by 2021
CET1 ratio comfortably above 13%
Leverage ratio 4.5%
DB’s Business Targets
Origination and advisory: regain market leadership position in Europe, strong franchises in US and APAC
Transaction banking: improve profitability and cross sell
Financing: leading credit financing and solutions
Fixed income and FX trading: top five globally, top three in Europe and selected businesses
Equities sales and trading: regain prime brokerage market share
Banks
Deutsche Bank AG
August 2017 4
Risk Appetite
Sound Underwriting Standards
DB is exposed to complex financial instruments, mainly because of its sales and trading
operations. The bank’s moderate risk appetite in domestic retail banking comprises mortgage
loans typically extended at low loan-to-value ratios, and a low share of short-term
uncollateralised consumer finance loans. We do not expect DB’s targeted growth in corporates-
driven businesses to result in weaker underwriting standards. But we expect the importance of
credit risk to increase, and large exposures will need to be closely monitored.
Weaknesses in Risk Controls Being Addressed
Our assessment of the bank’s risk controls factors in weaknesses uncovered in past years,
which the bank is addressing. It is investing in digitalisation, streamlining systems and
processes and exiting some countries (such as from Russia where controls weaknesses have
been the root of lengthy and expensive regulatory investigations). Management is also seeking
to improve the risk culture within the organisation. In the US, the establishment of an
intermediate holding company subject to tight regulatory supervision and stress tests should
over time also contribute to improved risk controls.
Conduct Costs Significant Burden
Conduct and litigation costs have been a high burden to earnings in recent years. They have
translated into higher capital requirements for operational risk. The bank has reached costly
settlements in 2016 and early 2017, notably with the US Department of Justice (DoJ)
investigation into DB’s past residential mortgage backed security dealings, which resulted in a fine
of USD3.1 billion, and the obligation to engage in USD4.1 billion worth of consumer relief actions.
It has also settled with the UK Financial Conduct Authority, the New York Department of Financial
Services and the Federal Reserve over anti money laundering deficiencies related to equity
trades booked in Moscow and London, resulting in USD629 million fines.
The bank booked litigation costs of EUR7.6 billion (including loan processing fees but likely
excluding any impact of consumer relief) between 2015 and 1H17. At end-1H17 DB had
EUR2.5bn reserves against future penalties arising from civil litigation cases and regulatory
enforcement on balance sheet. Its numerous outstanding investigations and court cases,
including the DoJ’s investigation into London/Moscow trades, could result in further fines, the
amount of which is difficult to predict.
Material Traded and Non-Traded Market Risk
Traded market risk, which uses 11% of DB’s 1H17 economic capital, arises through market-
making in debt and equity securities, derivatives and foreign-exchange products. The bank
uses a variety of measures to monitor traded market risk, including value-at-risk (VaR),
stressed VaR, incremental risk charge and comprehensive risk measures using historical data
and Monte Carlo simulation. Economic capital and VaR utilisation under the bank’s internal
stress-testing scenarios are subject to board-approved limits.
Average VaR utilisation declined to EUR31.8 million in 1H17. However, the undiversified sum
of asset class maximum VaRs incurred in 2016, scaled up by a factor of five (Fitch Stressed
VaR) as a percentage of the latest Fitch Core Capital (FCC) of 4% remains one of the higher of
the European GTUBs, reflecting the relatively high allocation of capital to sales and trading.
Trading unit revenues were positive in 87% of the trading days in 2016 and in 97% of trading
days in 1H17. In 2016 the bank had one back-testing exception when the buy-and-hold loss
exceeded the value-at-risk during the market volatility seen in February 2016. Back testing
exceptions occurred in 2015 following removal of the euro-Swiss franc floor and in the non-core
unit, which have been run-down to target.
Interest Rate Risk (EURbn) -200bp +200bp
Economic Value -0.4 -0.3 Net Interest Income 0.6 2.1
Note: Impact on banking book across all currencies; decline floored at zero. Source: DB’s 2016 annual report
Banks
Deutsche Bank AG
August 2017 5
Non-traded market risk represents a substantial 22% of DB’s economic capital usage before
diversification at end-1H17. Within this, interest rate risk in the banking book is related to
mismatches in the maturities and repricing of assets and liabilities; the majority of this risk is
managed by DB through maturity transformation and internal risk transfers to the trading book,
while Postbank and PWCC manage interest rate risk separately. The remaining net interest
rate risk position in the banking book is a manageable 4% (end-2016) of economic capital
usage before diversification.
Foreign exchange risk is largely transferred to Global Markets or mitigated through match
funding. Structural foreign exchange exposure arises from local capital (including retained
earnings) with different currencies. The exposure to core currencies US dollar and sterling
remains unhedged so that fluctuations in risk-weighted assets (RWA) broadly offset those in
CET1 capital, while exposures in non-core currencies are fully hedged.
Other non-traded market risks relate to credit spread risk in the banking book, equity risk from
strategic and non-strategic investments, market risk related to asset management products as
well as risks not related to client business such as pension and equity compensation risks.
Financial Profile
Asset Quality Strong Loan Quality in German Retail and Corporate Lending
DB’s strong asset quality benefits from its focus on investment-grade corporate exposures and
German retail loans, which together accounted for about 71% of its EUR403 billion gross loans
at end-1H17. Exposure to more volatile sectors such as shipping, metals and mining, oil and
gas, leveraged finance and commercial real estate have driven loan impairment charges in
recent years and could pose a risk in future, but their impact is mitigated by a well-diversified
and mostly high quality loan-book.
DB’s impaired loans/gross loans ratio continued to improve to 1.66% at end-1H17 and the
volume of impaired loans fell to a low EUR6.7 billion, 10% below end-2016. Structurally the
decline was supported by write-offs and disposals in the non-core unit and by write-offs related
to portfolio sales in Spain. The deterioration of the shipping loan book seen in 2016 seemed to
stabilise in 1H17, though the sector continues to face challenges. Reserve coverage decreased
slightly to 59% of impaired loans at end-1H17.
The retail loan book benefits from well performing German mortgages and SME loans, which
together accounted for 80% of gross retail loans at 1H17. Loans outside Germany are
extended mainly in Italy, Spain, Belgium, Portugal, Poland and India, and have weaker asset
quality (3.75% are more than 90 days past due) in particular in the EUR14.7 billion SME and
small business loan book. The quality of the Spanish and Italian portfolios improved due to NPL
sales in 1H17.
Despite its small size (EUR5 billion), the shipping portfolio accounted for the bulk of loan
impairment charges (LIC) in 2016 (EUR346 million). Lower LICs associated to the CIB
(EUR113 million, 63% yoy decline) suggested some stabilisation in 1H17, although additional
losses are possible later in the year if the market does not recover sustainably and collateral
values weaken again. Impaired loan coverage of 43% in the shipping segment at end-2016
was below some German peers. The sectors most affected by weak market dynamics and
supply overhang, the container and bulker segment, accounted for nearly half of Deutsche
Bank’s portfolio while non-recourse financing to German “KG” structures accounted for just
below 10%.
Although the bank reversed some provisions to oil, gas, metals and mining in 1H17, these
sectors continue to pose a risk due to high share of non-investment grade borrowers and
vulnerability to macro developments. About 25% of loan exposure to the oil and gas industry
Sound Loan Quality (%) 1H17 2016
NPLs/gross loans 1.66 1.80 NPL reserves/NPLs 59.15 61.04 LICs/av. gross loans 0.10 0.32 Net charge-offs/avg. gross loans
0.34 0.41
Gross loans growth -2.61 -4.46
Source: DB, Fitch
37%
37%
2%10%5%
9%
45%
15%
12%
7%
7%
6%4% 4%
Households OtherFIs ManufacturingCRE Fund mgtTrade Public sector
Source: DB, Fitch
Loan Quality by SectorOuter ring: End-2016 gross loansInner ring: End-1H17 impaired loans
Source: DB, Fitch
Impaired Loans by Region(End-1H17)
Western Europe
49%
Germany36%
North America
7%
APAC4%
Eastern Europe
3%
Other1%
Banks
Deutsche Bank AG
August 2017 6
(EUR8 billion at end-2016) was to non-investment-grade exploration and production and
services and equipment segments. The bank is targeting reduction of its EUR6 billion metals,
mining and steel portfolio, which is largely non-investment grade and to emerging market
counterparties.
DB is also significantly active in leveraged finance markets and has in the past incurred
valuation losses. Deal inflows are sensitive to lower M&A activity and competition from financial
institutions not subject to regulatory leverage restrictions. Fewer, less granular deals can
expose the bank’s asset quality to idiosyncratic industry shocks.
DB’s EUR37 billion credit exposure to commercial real estate (CRE) included a small residual
non-core share (3%) at end-2016. Exposure is typically more concentrated in the US where the
bank is a leader in CMBS. Postbank’s CRE exposure is predominantly to German real estate
and includes a small amount of junior tranches. CRE loans are generally secured by first
mortgages and are subject to LTV limits of less than 75%.
Sizeable Non-Loan Exposures
The bank’s non-loan corporate credit exposures are sizeable, reflective of its business model.
Corporate exposures include irrevocable lending commitments and contingent liabilities
(together EUR210 billion) of which 70% extended to investment grade counterparties; EUR35
billion OTC derivative counterparties, net of collateral and netting agreements, of which 83% to
investment grade counterparties and EUR53 billion debt securities, 99% investment-grade
(according to the bank’s internal classification system) at end 1H17.
Level 3 fair-valued assets totalled EUR22.4 billion at end-1H17 (15% lower compared to end-
2016) and include derivative instruments, trading securities (illiquid emerging market corporate
bonds and highly structured corporate bonds, notes issued by securitisation entities) and other
illiquid instruments such as leveraged loans and residential and commercial mortgage loans.
The bank’s sensitivity analysis reveals a possible fair value loss of EUR0.93 billion if the bank
were using more conservative but reasonable alternative valuation inputs for these assets.
Earnings and Profitability
Earnings to Remain Weak
DB’s earnings are likely to remain weak compared to most other large global banking groups
over the next one to two years. We believe that the downside within this horizon has reduced
as a consequence of progress with resolving major conduct cases in 2016. Our expectation of
meagre earnings assumes operating cost reductions will to a large extent be offset by further
restructuring and litigation costs and that the revenue will not decline further from its 2016 level
of around EUR29 billion (excluding completed disposals). Failure to contain the revenue
decline could lead to a rating downgrade if we believe that it signals franchise weakness and
will derail the bank from reaching longer term profitability goals.
-1
3
7
11
15
1H17 1H16
(EURbn)
Th
ou
san
ds
Equity S&T FIC S&T (1H17)
Debt S&T (1H16) Financing (1H17)
Loan products (1H16) Origination, advisory
GTB PCC
PoBa WM
DeAm NCOU, C&A, other
Note: As reported, ex.HuaXia, Abbey LifeSource: DB, Fitch
Net Revenue Split
0 2 4 6 8 10
1H17
2016
1H17
2016
1H17
2016
CIB
PC
BD
eA
M
Note: Based on pre-tax profit excl. DVA and impairment of goodwill; 1H17 annualisedSource: DB, Fitch
Operating Profit/RWA
(%)
-30
-20
-10
0
10
20
2014 2015 2016 1H17
Other non-core Restructuring
Impairment Litigation
"Underlying" RoTE Pre-tax RoTE
Note: Excluding CVA/DVA/FVA; 1H17 annualised and including impact of residual non-coreSource: DB, Fitch
Pre-Tax RoTE Breakdown
(%)
Banks
Deutsche Bank AG
August 2017 7
In the longer term, the bank expects that the implementation of its revised strategy and a more
supportive interest rate environment should enable it to achieve a long term return on tangible
equity of 10%. Among the new segments only Deutsche Asset Management’s returns met the
group’s overall 10% target in 1H17, helped by a balance-sheet light business model. Further
profitability improvement is needed from the CIB division (3.9% RoTE in 1H17) especially
concerning the capital intensive sales and trading businesses and the reintegrated non-core
businesses. In PCB (6.5% RoTE in 1H17), a high cost base and the low-risk/low-return
German retail banking business models of Postbank and PCC also cause it to fall short of
profitability targets.
The profitability ambition is lower than previous targets. Fitch believes that lower earnings can
be sufficient at its rating level given management’s commitment to maintain a higher capital
buffer and our expectation that the reshaped business model will improve earnings stability.
Cost Reductions Remain in Focus
Reaching the new profitability targets assumes the bank will achieve a leaner “adjusted” cost
base (which DB defines as excluding litigation, restructuring and severance, impairments of
goodwill and intangibles and policyholder claims and benefits) of approximately EUR22 billion
by 2018 and EUR 21 billion by 2021. In 2016, “adjusted” costs declined to EUR24.7 billion, but
benefited from unsustainably lower variable compensation costs.
The EUR2.7 billion cost reduction targeted in 2017-21 should result from planned and
completed business disposals (EUR1.5 billion), infrastructure streamlining (EUR1.7 billion) and
further cost cuts in the core businesses, including from staff cuts (EUR1.6 billion), which will in
part be offset by investments in front office, compliance and controls. While not unrealistic, we
believe the target is subject to substantial risk of delays and overruns, especially with respect to
timing of staff reductions and amount and timing of IT savings net of required investments.
Management has indicated that progress with IT and systems simplification is on track and that
the bank had achieved about one third of its 2018 targeted actions by July 2017.
On top of adjusted costs, the integration of Postbank and continued effort to close branches
and reduce headcount will add substantial restructuring costs, which are set to rise to around
EUR2 billion by end-2021, most of which frontloaded over the next two years. Restructuring
and severance costs amounted to EUR0.7 billion in 2016 and a low EUR 0.1billion in 1H17.
Revenue Growth Uncertain; Franchise Resilience Is Key
Sustainable revenue improvement is contingent on DB’s ability to regain lost clients and market
share. This is particularly true for the CIB division where revenue generation was affected by
outflows following concerns over DB’s creditworthiness in late 2016 and by strategic business
exits.
-0.5
0.5
1.5
2.5
3.5
4.5
5.5
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
2Q
2014 2015 2016 2017
(EURbn)
Equity sales and trading Fixed income sales and trading Financing
Debt underwriting Equity underwriting Advisory
Other
Note: Financing is reported separately from sales and trading businesses as of end-2Q17; prior quarters' restatements are not reflected in the chartSource: DB, Fitch
Revenue From Capital Markets Businesses
Banks
Deutsche Bank AG
August 2017 8
Revenue development in 1H17 was weighed down by low volatility and client engagement,
which particularly affected the CIB in 2Q17, interest margin pressure in retail and transaction
banking and in a yoy comparison by the impact of business reductions. In FIC, performance of
sales and trading was weighed down by low volatility in the second quarter. Foreign exchange
trading also performed poorly compared to 1H16 when Brexit-related volatility boosted
volumes.
Management has indicated that revenue lost from negative sentiment in 2016 was “a good
EUR1 billion” for the bank as a whole. Although some clients returned in 1H17, the associated
revenue has not recovered to the same extent. Equity sales and trading revenue, for instance,
declined 18% yoy in 1H17, due to lower and less lucrative prime finance balances and higher
funding costs.
We view underlying revenue in transaction banking and PCB as more stable, but pressure from
low interest rates and business reductions are taking a toll. Revenue stands to benefit from a
moderately higher and steepened euro yield curve. This would improve the earnings potential
from DB’s large deposit base, especially in its corporate transaction banking business and
Postbank. However Fitch does not expect the ECB to increase the policy rate in 2H17 or 2018,
and the benefit to DB’s earnings, if any, would fall beyond the ratings outlook horizon.
Capitalisation and Leverage
Rights Issue Improves Capitalisation
Fitch’s assessment of DB’s capitalisation is based on the expectation that its CET1 ratio will
remain in excess of 13%, as guided by DB’s management. The bank completed a EUR8 billion
rights issue in April. This increased its pro-forma fully loaded CET1 ratio as at end-1H17 to a
solid 14.1% from 11.8% at end-2016. From this level, we expect some downward pressure to
reflect RWA growth from increasing business activity and risk density. At the same time, zero
interim profit retention assumed for regulatory capital calculation will prevent internal capital
generation until the dividend pay-out from the 2017 result is decided.
The announced intention to sell a minority stake in the asset management division through an
initial public offering and selected business disposals add flexibility to generate EUR2 billion
CET1 capital, or 56bp of end-1H17 fully loaded RWAs, which can help mitigate pressure from
low earnings. These measures are set to take place over the next couple of years, but the IPO
of the asset management division is unlikely to take place in 2017, according to management.
At end-1H17 RWAs of EUR355 billion were broadly stable compared with year-end balancing
the impact of a weaker dollar against RWA growth from model updates and the incorporation of
operational risk loss data associated with the last conduct settlements into DB’s operational risk
advanced measurement approach model.
The bank still benefits from low risk density compared to peers, but in the longer term, credit
RWA floors and market risk RWA reforms could have a substantial impact on risk weighted
capitalisation. The bank had quantified the potential impact of increasing risk-weights due to
changing regulation at around EUR100 billion RWA by 2020 in 4Q15. The actual impact may
differ from this initial estimate subject to softer agreements being reached and because the
bank’s balance sheet is likely to be different at the time of implementation compared to what
was assumed at the time. For instance the retention of Postbank may expose it to higher
impact from mortgage floors while the run-down of legacy derivatives could potentially ease the
impact on counterparty credit risk RWA.
DB’s phased-in CET1 ratio is well in excess the CET1 regulatory requirements applicable in
2017, which stand at 9.52%, combining CET1 Pillar 1, Pillar 2 add-on resulting from the ECB's
Supervisory Review and Evaluation Process (SREP) and buffer requirements. DB has not
disclosed the Pillar 2 Guidance add-on the ECB expects it to maintain in addition to the
combined CET1 requirement.
Capitalisation (%) 1H17 2016
FCC/RWA 15.2 13.2 CET1 ratio (fully-loaded)
14.1 11.8
CET1 ratio (phased-in)
14.9 13.4
CRDIV leverage 3.8 4.3 TCE/TA 3.5 3
Note: Regulatory capital ratios are pro-forma including the capital increase Source: Bank, Fitch
RWA-Based Requirements
(%) 2017 F/La
CET1 (pillar 1) 4.50 4.50 AT1 1.50 1.50 Tier 2 2.00 2.00 P2R 2.75 2.75 CET1 buffers 2.27 4.52
o/w CCB 1.25 2.50
o/w CcyB 0.02 0.02
o/w GSIB 1.00 2.00
Total CET1 requirement 9.52 11.77 Total capital requirement 13.02 15.27 a Requirements as of 2017 excluding
transitional arrangements Source: Bank, Fitch
0.79
1.97 2.02
0.23 0.51
0.79
0.76 0.85
0.860.72
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
2012 2013 2014 2015 2016
ADIs Interest expense on AT1
Source: DB, Fitch
AT1 Coupon Payment Capacity
(EURbn)
Banks
Deutsche Bank AG
August 2017 9
Leverage Ratio Weaker than Peers
The decision to retain and integrate the low-risk-density Postbank assets means that DB’s
leverage ratio will continue to be a relative weakness. DB targets a fully-loaded CRD IV
leverage ratio of 4.5% in the medium term, which is broadly in line with European peers, but at
end-1H17 the pro-forma ratio stood at 3.8%, which is fairly low.
We expect the leverage ratio to be steered primarily through the denominator and to a lesser
extent through Tier 1 capital accretion or issuance. Restrictive rules for calculating Available
Distributable Items (ADIs) from which coupons on additional Tier 1 (AT1) securities can be paid
make this instrument unattractive for DB as long as uncertainty over internal capital generation
persists. ADIs are calculated annually under German GAAP for the parent bank and reference
primarily cumulative retained earnings.
Full Pay-out Assumed in Regulatory Capital
The bank is not including interim profits in regulatory capital, applying an assumed 100%
common equity dividend pay-out ratio. This is required by the ECB because the bank has paid
common share dividends from the positive German GAAP result for 2016. The pay-out was
imposed by a court despite the bank having posted an IFRS loss, and despite management’s
prior intentions to not pay out any dividends.
For 2017, management’s guidance is that dividends of at least EUR 0.11 per share will be paid
out. However, it indicated that the requirement to pay out the notional dividends may no longer
apply. The bank aims to return to paying a “competitive” dividend in 2018, which we expect will
be subject to an improvement in earnings.
Funding and Liquidity
Diversified Funding Profile
We view DB’s funding profile as well diversified. At end-1H17, total external funding (excluding
derivatives and settlement balances, margin and prime brokerage balances and other non-
funding liabilities) amounted to EUR1.033 trillion, around half of which consists of deposits from
retail, wealth management and transaction banking clients. Sources of wholesale funding
include unsecured, secured funding and short trading positions, and funding from fiduciary
deposits, prime brokerage cash balances. The group’s loan book was funded by 75% of
customer deposits (mainly retail and transaction banking) at end-1H17.
DB’s wholesale funding plan of EUR25 billion for 2017 includes EUR13 billion senior non-
preferred unsecured senior debt and a relatively high amount of senior structured (EUR10
billion) debt, which is preferred in Germany in insolvency and resolution. The bank had
completed 53% of its funding plan by end-1H17.
Although deposit-rich, Postbank does not make material funding contributions to the wider
group, given regulatory constraints. The merger of Postbank with DB’s private and commercial
clients business could lead to improved fungibility of funding and liquidity within the group.
Postbank’s total deposits were EUR119 billion at end-2016, 86% of which funded loans on
Postbank’s balance sheet.
Market Sensitive Outflows and Funding Cost Increase in 2016
The negative market perception of DB since the announcement of the initial settlement offer by
the US Department of Justice led to outflows across both stable and less stable funding
sources. We understand that negative publicity played a role in the EUR19.6 billion decline in
retail deposits, reflecting a loss of wealth management balances, and EUR20 billion reductions
in prime brokerage payables at end-2016 though at the peak the reductions were likely larger.
Excluding derivatives and settlement balances, margin and prime brokerage balances and other non-funding liabilitiesSource: DB
Funding Mix
Retail deposits
30%
Transaction bk deposits
22%Capital markets,
equity20%
Secured funding and
shorts17%
Other customers
6%
Unsecured wholesale
5%
0
5
10
15
20
25
30
2017 2018 2019 2020
Capital instruments
CB
Senior structured
Senior non-preferred
Source: DB, Fitch
(EURbn)
Wholesale Debt Maturity
DB’s DCR, long-term deposit rating,
senior market-linked notes and
senior preferred debt are rated one
notch above its Long-Term IDR
The uplift reflects the benefit
conferred by the bank's large buffer
of qualifying junior debt and non-
referred senior debt
Banks
Deutsche Bank AG
August 2017 10
The bank’s wholesale funding costs increased substantially in 2016, due to a combination of
market concern about its creditworthiness and a change in the insolvency hierarchy in
Germany, which rendered its plain vanilla senior debt subordinated to other senior liabilities.
The bank paid an average spread of 95bp above Euribor for an average tenor of 6.5 years on
its wholesale funding raised in 1H17, which remains high compared to historical levels (in 2015
the bank raised EUR39 billion at an average spread of 57bp and a tenor of 6.3 years).
Well Positioned to Meet TLAC Requirements
The new German statutory resolution regime in force since January 2017 subordinates banks’
outstanding vanilla senior unsecured debt to deposits, derivatives and structured liabilities. The
new regime’s retroactive application limits DB’s need to issue unsecured debt to meet TLAC
requirements. The eligible volume of vanilla senior debt (EUR54.1 billion) with a maturity of
over one year, together with subordinated debt and capital amounted to 34% of the bank’s
RWAs and 8.4% of leverage exposure at end-1H17, well in excess of the FSB’s requirement of
18% of RWAs/6.75% of leverage exposure plus CET1 buffers by 2022.
Ample Liquidity
DB’s available liquidity is ample as reflected by its large EUR285 billion reserve consisting 80%
of cash and cash equivalents and a liquidity coverage ratio of 144% at end-1H17 (128% at end-
2016). A high 81% of the liquidity reserve is held by the parent bank and its branches. This
mitigates the risk that liquidity held at subsidiaries such as Postbank, or at the US IHC, cannot
be repatriated in case of stress.
The bank calculates a stressed net liquidity position representing the surplus of liquidity
reserves and other business inflows over liquidity needs in a severe market and idiosyncratic
stress situation. This surplus was estimated at EUR47.5 billion at end-1H17 across all
currencies. At end-2016 the bank maintained a surplus of EUR69 billion over US dollar
stressed liquidity needs and EUR10 billion over sterling stressed needs. Outflows related the
DoJ settlement led to a decline of the stressed net liquidity position to EUR18 billion at end-
9M16, which prompted the bank to take corrective actions.
Support
DB’s Support Rating (SR) of ‘5’ and Support Rating Floor (SRF) of ‘No Floor’ reflect our view
that senior creditors can no longer rely on receiving full extraordinary support from the
sovereign in the event that DB becomes non-viable.
Debt Ratings
DB is a regular issuer of senior debt in various forms. Fitch rates non-preferred senior debt in
line with DB’s IDRs. Preferred senior debt and market linked notes are rated one notch higher,
reflecting our expectation that they would be protected from default in a resolution scenario by
large buffers of junior and non-preferred senior debt.
Subordinated debt and other hybrid capital instruments issued by DB and its subsidiaries are
all notched down from DB's VR in accordance with our assessment of each instrument's
respective non-performance and relative loss severity risk profiles.
Legacy Tier 1 securities are rated four notches below the VR, reflecting higher-than-average
loss severity (two notches), as well as high risk of non-performance (an additional two notches)
given partial discretionary coupon omission.
CRR/CRD IV AT1 instruments are rated five notches below the VR. The issues are notched
down twice for loss severity, reflecting poor recoveries as the instruments can be converted to
equity or written down well ahead of resolution. In addition, they are notched down three times
for high non-performance risk, reflecting fully discretionary coupon omission.
+132%
-58%
-6%
0
50
100
150
200
250
Cash andequivalents
Highly liquidsecurities
Other CB-eligible
securities
1H17 End-2016 End-2015
Source: DB, Fitch
(EURbn)
Liquidity Reserves
Banks
Deutsche Bank AG
August 2017 11
Peer Analysis – Financials
Deutsche Bank
(a-) Barclays
(a) BNP Paribas
(a+) Credit Suisse Group
(a-) HSBC Holdings
(aa-) Societe Generale
(a) UBS Group
(a)
Jun17 Dec 16 Jun 17 Dec 16 Jun 17 Dec 16 June 17 Dec 16 Jun 17 Dec 16 Jun 17 Dec 16 Jun 17 Dec 16
Asset quality Impaired loans/gross loans 1.7 1.8 1.5 1.6 5.1 5.7 0.8 0.9 1.7 2.1 5.3 5.7 0.3 0.4 NPL reserve coverage ratio 59.2 61.0 76.3 71.2 64.0 64.7 40.9 37.9 47.1 43.1 61.7 62.7 67.0 52.1 LICs/avg. gross loans 0.1 0.3 0.5 0.6 0.3 0.5 0.1 0.1 0.2 0.4 0.1 0.4 0.0 0.0 Net charge-offs/gross loans 0.3 0.4 n.a. 0.4 n.a. n.a. 0.1 0.1 0.4 0.3 n.a. n.a. n.a. n.a. Growth of gross loans -2.6 -4.5 -0.7 -1.7 0.2 4.9 -0.8 1.1 6.7 -6.9 -1.4 4.1 0.6 -1.8
Earnings & profitability OpRoRWA 1.3 0.1 1.3 0.8 1.8 1.6 1.0 -1.0 2.4 1.7 1.7 1.7 2.6 1.7 NII/earning assets 1.0 1.1 1.0 1.0 1.3 1.3 1.1 1.2 1.3 1.3 1.0 0.8 0.8 0.8 Cost-income ratio 83.8 95.5 71.1 76.0 68.4 68.0 87.2 114.2 62.9 68.9 73.1 69.0 78.9 86.1 LICs/pre-imp OpProfit 8.3 77.7 33.5 45.5 17.8 23.7 9.8 -10.6 6.1 18.7 10.1 25.8 1.9 1.0 Net RoE 3.4 -2.2 -2.1 4.7 9.1 8.3 4.2 -6.1 9.9 2.0 7.2 7.5 9.4 6.1
Capitalisation & leverage FCC/RWA 15.3 13.2 14.7 14.2 12.2 12.2 13.9 12.9 15.9 14.9 12.8 12.9 15.9 17.5 CET1 ratio (fully loaded) 14.1 11.9 13.1 12.4 11.8 11.6 14.2 13.5 14.7 13.6 11.9 11.8 14.8 16.8 Leverage ratio (fully loaded) 3.8 3.5 16.6 15.6 13.1 12.9 19.6 18.0 17.4 16.1 n.a. 14.8 18.0 19.7 Tang. equity/tang. assets 3.5 3.0 4.3 4.5 3.8 4.0 4.7 4.3 5.9 5.8 3.5 3.5 4.3 4.3 Unreserved imp. loans/FCC 5.1 6.2 3.0 3.6 17.5 18.9 3.7 4.4 6.1 8.1 19.2 19.9 0.8 1.5 Internal capital generation 3.2 -3.8 -4.6 2.4 9.4 4.9 4.1 -6.4 6.5 -5.0 7.6 4.4 9.6 6.2
Funding & liquidity Loans/customer deposits 69 75 90 94 93 97 77 78 71 68 105 105 76 72 Client dep/funding excl derivs 62 61 55 58 54 57 53 52 68 72 44 44 61 64 Liquidity coverage ratio 144 128 149 131 116 123 165 202 139 136 n.a. 142 131 132
Structural indicators (USDbn) Total assets 1,790.2 1,676.6 1,473.5 1,492.3 2,445.5 2,189.3 817.1 805.5 2,492.4 2,375.0 1,540.9 1,457.0 929.1 918.7 Total equity 75.9 63.4 73.0 76.2 110.2 102.0 45.7 41.6 169.2 159.5 63.3 59.1 54.7 53.5 Fitch core capital 61.7 49.4 62.4 64.0 89.4 82.1 37.7 34.4 138.9 128.0 49.5 46.6 39.5 38.8 Net income (m) 1,188 -1,429 -820 3,479 5,158 8,554 937 -2,660 8,048 3,446 2,393 4,573 2,597 3,329
Source: Banks, Fitch
Banks
Deutsche Bank AG
August 2017 12
Peer Analysis – Navigator Scores
Operating environment Company profile Management Risk appetite Asset quality Earnings & profitability Capitalisation &
leverage Funding & liquidity
aaa
aa+
CS
DB
U
BS
HS
BC
aa
BA
RC
BN
P
SG
HS
BC
aa-
HS
BC
B
NP
BN
P
HS
BC
UB
S
HS
BC
CS
HS
BC
UB
S
BN
P
HS
BC
HS
BC
UB
S
UB
S
a+
UB
S
BA
RC
SG
BA
RC
BN
P
DB
SG
UB
S
BA
RC
DB
SG
UB
S
BA
RC
BN
P
SG
BA
RC
BN
P
CS
DB
SG
a
BA
RC
CS
DB
SG
CS
DB
CS
CS
CS
DB
a-
BA
RC
DB
bbb+
BN
P
SG
bbb
bbb-
Source: Fitch
Banks
Deutsche Bank AG
August 2017 13
Deutsche Bank AG
Income Statement30 Jun 2017 31 Dec 2016 31 Dec 2015 31 Dec 2014 31 Dec 2013
6 Months - Interim Year End Year End Year End Year End
EURm EURm EURm EURm EURm
Reviewed -
Unqualified
Audited -
Unqualified
Audited -
Unqualified
Audited -
Unqualified
Audited -
Unqualified
1. Interest Income on Loans n.a. 12,311.0 12,219.0 11,820.0 11,941.0
2. Other Interest Income 11,768.0 13,120.0 13,448.0 13,084.0 13,579.0
3. Dividend Income n.a. 205.0 300.0 97.0 81.0
4. Gross Interest and Dividend Income 11,768.0 25,636.0 25,967.0 25,001.0 25,601.0
5. Interest Expense on Customer Deposits n.a. 2,583.0 2,764.0 3,210.0 3,360.0
6. Other Interest Expense 5,593.0 8,346.0 7,322.0 7,519.0 7,407.0
7. Total Interest Expense 5,593.0 10,929.0 10,086.0 10,729.0 10,767.0
8. Net Interest Income 6,175.0 14,707.0 15,881.0 14,272.0 14,834.0
9. Net Gains (Losses) on Trading and Derivatives 2,514.0 177.0 2,964.0 3,058.0 2,435.0
10. Net Gains (Losses) on Other Securities 197.0 653.0 203.0 242.0 394.0
11. Net Gains (Losses) on Assets at FV through Income Statement (560.0) 854.0 (32.0) (108.0) 155.0
12. Net Insurance Income n.a. (285.0) (148.0) (148.0) (270.0)
13. Net Fees and Commissions 5,773.0 11,744.0 12,765.0 12,409.0 12,308.0
14. Other Operating Income 272.0 1,288.0 1,449.0 1,425.0 1,248.0
15. Total Non-Interest Operating Income 8,196.0 14,431.0 17,201.0 16,878.0 16,270.0
16. Personnel Expenses 6,068.0 11,874.0 13,293.0 12,512.0 12,329.0
17. Other Operating Expenses 5,974.0 15,938.0 19,342.0 14,787.0 15,526.0
18. Total Non-Interest Expenses 12,042.0 27,812.0 32,635.0 27,299.0 27,855.0
19. Equity-accounted Profit/ Loss - Operating 103.0 455.0 164.0 619.0 369.0
20. Pre-Impairment Operating Profit 2,432.0 1,781.0 611.0 4,470.0 3,618.0
21. Loan Impairment Charge 211.0 1,347.0 882.0 1,129.0 2,060.0
22. Securities and Other Credit Impairment Charges 1.0 36.0 74.0 5.0 5.0
23. Operating Profit 2,220.0 398.0 (345.0) 3,336.0 1,553.0
24. Equity-accounted Profit/ Loss - Non-operating n.a. n.a. n.a. n.a. n.a.
25. Non-recurring Income n.a. n.a. n.a. 18.0 4.0
26. Non-recurring Expense 6.0 1,256.0 5,800.0 111.0 79.0
27. Change in Fair Value of Own Debt (513.0) 48.0 48.0 (127.0) (22.0)
28. Other Non-operating Income and Expenses n.a. n.a. n.a. n.a. n.a.
29. Pre-tax Profit 1,701.0 (810.0) (6,097.0) 3,116.0 1,456.0
30. Tax expense 660.0 546.0 675.0 1,425.0 775.0
31. Profit/Loss from Discontinued Operations n.a. n.a. n.a. n.a. n.a.
32. Net Income 1,041.0 (1,356.0) (6,772.0) 1,691.0 681.0
33. Change in Value of AFS Investments (104.0) (573.0) (405.0) 1,825.0 (249.0)
34. Revaluation of Fixed Assets n.a. n.a. n.a. n.a. n.a.
35. Currency Translation Differences (1,679.0) 201.0 2,160.0 2,958.0 (949.0)
36. Remaining OCI Gains/(losses) 59.0 (993.0) 739.0 (372.0) (627.0)
37. Fitch Comprehensive Income (683.0) (2,721.0) (4,278.0) 6,102.0 (1,144.0)
38. Memo: Profit Allocation to Non-controlling Interests 23.0 46.0 21.0 28.0 n.a.
39. Memo: Net Income after Allocation to Non-controlling Interests 1,018.0 (1,402.0) (6,793.0) 1,663.0 681.0
40. Memo: Common Dividends Relating to the Period n.a. 400.0 n.a. n.a. n.a.
41. Memo: Preferred Dividends Related to the Period n.a. 504.0 n.a. n.a. n.a.
Banks
Deutsche Bank AG
August 2017 14
Deutsche Bank AG
Balance Sheet30 Jun 2017 31 Dec 2016 31 Dec 2015 31 Dec 2014 31 Dec 2013
6 Months -
Interim Year End Year End Year End Year End
EURm EURm EURm EURm EURm
AssetsA. Loans
1. Residential Mortgage Loans n.a. 150,776.0 154,689.0 153,140.0 148,076.0
2. Other Mortgage Loans 154,325.0 27,369.0 22,879.0 35,764.0 34,259.0
3. Other Consumer/ Retail Loans 35,555.0 37,093.0 45,317.0 44,839.0 45,440.0
4. Corporate & Commercial Loans 212,771.0 29,290.0 28,131.0 25,619.0 21,406.0
5. Other Loans n.a. 168,927.0 181,761.0 151,521.0 132,905.0
6. Less: Reserves for Impaired Loans 3,953.0 4,546.0 5,028.0 5,212.0 5,589.0
7. Net Loans 398,698.0 408,909.0 427,749.0 405,671.0 376,497.0
8. Gross Loans 402,651.0 413,455.0 432,777.0 410,883.0 382,086.0
9. Memo: Impaired Loans included above 6,683.0 7,447.0 8,151.0 9,348.0 10,143.0
10. Memo: Loans at Fair Value included above n.a. n.a. n.a. n.a. n.a.
B. Other Earning Assets
1. Loans and Advances to Banks 9,109.0 11,606.0 12,842.0 9,090.0 77,984.0
2. Reverse Repos and Cash Collateral 87,279.0 83,772.0 107,086.0 104,103.0 164,997.0
3. Trading Securities and at FV through Income 225,065.0 211,227.0 254,215.0 252,493.0 277,903.0
4. Derivatives 396,340.0 485,150.0 515,594.0 629,958.0 504,590.0
5. Available for Sale Securities 53,907.0 56,228.0 73,583.0 64,297.0 48,326.0
6. Held to Maturity Securities 3,189.0 3,206.0 0.0 n.a. 0.0
7. Equity Investments in Associates 948.0 1,027.0 1,013.0 4,143.0 3,581.0
8. Other Securities n.a. n.a. n.a. n.a. n.a.
9. Total Securities 766,728.0 840,610.0 951,491.0 1,054,994.0 999,397.0
10. Memo: Government Securities included Above 3,189.0 47,303.0 58,158.0 49,187.0 33,343.0
11. Memo: Total Securities Pledged n.a. 65,126.0 55,458.0 57,216.0 71,296.0
12. Investments in Property n.a. n.a. n.a. n.a. n.a.
13. Insurance Assets n.a. n.a. n.a. n.a. n.a.
14. Other Earning Assets 466.0 563.0 3,491.0 180.0 6,670.0
15. Total Earning Assets 1,175,001.0 1,261,688.0 1,395,573.0 1,469,935.0 1,460,548.0
C. Non-Earning Assets
1. Cash and Due From Banks 227,514.0 181,364.0 96,940.0 74,482.0 17,155.0
2. Memo: Mandatory Reserves included above n.a. n.a. n.a. n.a. n.a.
3. Foreclosed Real Estate n.a. n.a. n.a. n.a. n.a.
4. Fixed Assets 2,746.0 2,804.0 2,846.0 2,909.0 4,419.0
5. Goodwill n.a. 4,103.0 4,890.0 9,726.0 9,074.0
6. Other Intangibles 8,834.0 4,879.0 5,188.0 5,225.0 4,858.0
7. Current Tax Assets 1,248.0 1,559.0 1,285.0 1,819.0 2,322.0
8. Deferred Tax Assets 7,983.0 8,666.0 7,762.0 6,865.0 7,071.0
9. Discontinued Operations n.a. n.a. n.a. n.a. n.a.
10. Other Assets 145,408.0 125,483.0 114,646.0 137,742.0 105,953.0
11. Total Assets 1,568,734.0 1,590,546.0 1,629,130.0 1,708,703.0 1,611,400.0
Liabilities and Equity
D. Interest-Bearing Liabilities
1. Customer Deposits - Current 350,805.0 329,776.0 345,568.0 304,905.0 290,284.0
2. Customer Deposits - Savings 89,287.0 90,129.0 97,210.0 103,679.0 109,679.0
3. Customer Deposits - Term 141,386.0 130,299.0 124,196.0 124,347.0 127,787.0
4. Total Customer Deposits 581,478.0 550,204.0 566,974.0 532,931.0 527,750.0
5. Deposits from Banks n.a. n.a. n.a. n.a. n.a.
6. Repos and Cash Collateral 80,012.0 79,735.0 44,710.0 34,279.0 89,327.0
7. Commercial Paper and Short-term Borrowings 20,232.0 17,295.0 28,010.0 65,260.0 61,873.0
8. Total Money Market and Short-term Funding 681,722.0 647,234.0 639,694.0 632,470.0 678,950.0
9. Senior Unsecured Debt (original maturity > 1 year) 114,570.0 122,006.0 125,218.0 96,983.0 101,199.0
10. Subordinated Borrowing 6,577.0 6,788.0 6,413.0 5,047.0 7,579.0
11. Covered Bonds n.a. n.a. n.a. n.a. n.a.
12. Other Long-term Funding 43,924.0 43,523.0 28,385.0 20,344.0 22,047.0
13. Total LT Funding (original maturity > 1 year) 165,071.0 172,317.0 160,016.0 122,374.0 130,825.0
14. Derivatives 371,682.0 463,858.0 494,076.0 610,202.0 483,428.0
15. Trading Liabilities 79,588.0 67,716.0 74,041.0 66,444.0 80,333.0
16. Total Funding 1,298,063.0 1,351,125.0 1,367,827.0 1,431,490.0 1,373,536.0
E. Non-Interest Bearing Liabilities
1. Fair Value Portion of Debt n.a. n.a. 71.0 134.0 151.0
2. Credit impairment reserves n.a. n.a. n.a. n.a. n.a.
3. Reserves for Pensions and Other 5,425.0 10,973.0 9,207.0 6,677.0 4,524.0
4. Current Tax Liabilities 1,081.0 1,329.0 1,699.0 1,608.0 1,600.0
5. Deferred Tax Liabilities 450.0 486.0 746.0 1,175.0 1,101.0
6. Other Deferred Liabilities n.a. n.a. n.a. n.a. n.a.
7. Discontinued Operations n.a. n.a. n.a. n.a. n.a.
8. Insurance Liabilities n.a. n.a. n.a. n.a. n.a.
9. Other Liabilities 186,811.0 155,441.0 174,936.0 183,823.0 163,596.0
10. Total Liabilities 1,491,830.0 1,519,354.0 1,554,486.0 1,624,907.0 1,544,508.0
F. Hybrid Capital
1. Pref. Shares and Hybrid Capital accounted for as Debt 5,694.0 6,373.0 7,020.0 10,573.0 11,926.0
2. Pref. Shares and Hybrid Capital accounted for as Equity 4,674.0 4,669.0 4,675.0 4,619.0 n.a.
G. Equity
1. Common Equity 64,470.0 56,284.0 58,936.0 66,428.0 57,177.0
2. Non-controlling Interest 278.0 316.0 270.0 253.0 247.0
3. Securities Revaluation Reserves 882.0 989.0 1,450.0 1,693.0 356.0
4. Foreign Exchange Revaluation Reserves 780.0 2,418.0 2,196.0 151.0 (2,713.0)
5. Fixed Asset Revaluations and Other Accumulated OCI 126.0 143.0 97.0 79.0 (101.0)
6. Total Equity 66,536.0 60,150.0 62,949.0 68,604.0 54,966.0
7. Total Liabilities and Equity 1,568,734.0 1,590,546.0 1,629,130.0 1,708,703.0 1,611,400.0
8. Memo: Fitch Core Capital 54,043.0 46,874.0 48,063.1 49,389.8 37,050.1
Banks
Deutsche Bank AG
August 2017 15
Deutsche Bank AG
Summary Analytics30 Jun 2017 31 Dec 2016 31 Dec 2015 31 Dec 2014 31 Dec 2013
6 Months - Interim Year End Year End Year End Year End
A. Interest Ratios
1. Interest Income on Loans/ Average Gross Loans n.a. 2.88 2.85 3.00 3.04
2. Interest Expense on Customer Deposits/ Average Customer Deposits n.a. 0.46 0.49 0.60 0.61
3. Interest Income/ Average Earning Assets 1.94 1.84 1.71 1.71 1.54
4. Interest Expense/ Average Interest-bearing Liabilities 0.85 0.77 0.70 0.77 0.68
5. Net Interest Income/ Average Earning Assets 1.02 1.05 1.05 0.98 0.89
6. Net Int. Inc Less Loan Impairment Charges/ Av. Earning Assets 0.98 0.96 0.99 0.90 0.77
7. Net Interest Inc Less Preferred Stock Dividend/ Average Earning Assets 1.02 1.02 1.05 0.98 0.89
B. Other Operating Profitability Ratios
1. Non-Interest Income/ Gross Revenues 57.03 49.53 52.00 54.18 52.31
2. Non-Interest Expense/ Gross Revenues 83.79 95.45 98.65 87.64 89.55
3. Non-Interest Expense/ Average Assets 1.54 1.65 1.87 1.64 1.49
4. Pre-impairment Op. Profit/ Average Equity 7.87 2.88 0.90 7.18 6.47
5. Pre-impairment Op. Profit/ Average Total Assets 0.31 0.11 0.04 0.27 0.19
6. Loans and securities impairment charges/ Pre-impairment Op. Profit 8.72 77.65 156.46 25.37 57.08
7. Operating Profit/ Average Equity 7.19 0.64 (0.51) 5.36 2.78
8. Operating Profit/ Average Total Assets 0.28 0.02 (0.02) 0.20 0.08
9. Operating Profit / Risk Weighted Assets 1.26 0.11 (0.09) 0.84 0.52
C. Other Profitability Ratios
1. Net Income/ Average Total Equity 3.37 (2.19) (9.96) 2.72 1.22
2. Net Income/ Average Total Assets 0.13 (0.08) (0.39) 0.10 0.04
3. Fitch Comprehensive Income/ Average Total Equity (2.21) (4.40) (6.29) 9.80 (2.04)
4. Fitch Comprehensive Income/ Average Total Assets (0.09) (0.16) (0.25) 0.37 (0.06)
5. Taxes/ Pre-tax Profit 38.80 (67.41) (11.07) 45.73 53.23
6. Net Income/ Risk Weighted Assets 0.59 (0.38) (1.70) 0.43 0.23
D. Capitalization
1. FCC/FCC-Adjusted Risk Weighted Assets 15.26 13.16 12.09 12.45 12.33
2. Tangible Common Equity/ Tangible Assets 3.47 3.00 3.07 3.02 2.43
3. Tier 1 Regulatory Capital Ratio 15.00 15.60 14.70 16.10 16.90
4. Total Regulatory Capital Ratio 16.80 17.40 16.20 17.20 18.50
5. Common Equity Tier 1 Capital Ratio 12.60 13.40 13.20 15.20 12.80
6. Equity/ Total Assets 4.24 3.78 3.86 4.01 3.41
7. Cash Dividends Paid & Declared/ Net Income n.a. (66.67) n.a. n.a. n.a.
8. Internal Capital Generation 3.16 (3.76) (10.76) 2.46 1.24
E. Loan Quality
1. Growth of Total Assets (1.37) (2.37) (4.66) 6.04 (20.32)
2. Growth of Gross Loans (2.61) (4.46) 5.33 7.54 (4.97)
3. Impaired Loans/ Gross Loans 1.66 1.80 1.88 2.28 2.65
4. Reserves for Impaired Loans/ Gross Loans 0.98 1.10 1.16 1.27 1.46
5. Reserves for Impaired Loans/ Impaired Loans 59.15 61.04 61.69 55.76 55.10
6. Impaired loans less Reserves for Impaired Loans/ Fitch Core Capital 5.05 6.19 6.50 8.37 12.29
7. Impaired Loans less Reserves for Impaired Loans/ Equity 4.10 4.82 4.96 6.03 8.29
8. Loan Impairment Charges/ Average Gross Loans 0.10 0.32 0.21 0.29 0.52
9. Net Charge-offs/ Average Gross Loans 0.34 0.41 0.26 0.38 0.27
10. Impaired Loans + Foreclosed Assets/ Gross Loans + Foreclosed Assets 1.66 1.80 1.88 2.28 2.65
F. Funding and Liquidity
1. Loans/ Customer Deposits 69.25 75.15 76.33 77.10 72.40
2. Interbank Assets/ Interbank Liabilities n.a. n.a. n.a. n.a. n.a.
3. Customer Deposits/ Total Funding (excluding derivatives) 62.07 61.25 64.03 63.71 58.51
4. Liquidity Coverage Ratio 144.00 128.00 119.00 119.00 n.a.
5. Net Stable Funding Ratio n.a. n.a. n.a. n.a. n.a.
Banks
Deutsche Bank AG
August 2017 16
Reference Data30 Jun 2017 31 Dec 2016 31 Dec 2015 31 Dec 2014 31 Dec 2013
6 Months -
Interim Year End Year End Year End Year End
EURm EURm EURm EURm EURm
A. Off-Balance Sheet Items
1. Managed Securitized Assets Reported Off-Balance Sheet n.a. n.a. n.a. n.a. n.a.
2. Other off-balance sheet exposure to securitizations n.a. n.a. n.a. n.a. n.a.
3. Guarantees n.a. n.a. n.a. n.a. n.a.
4. Acceptances and documentary credits reported off-balance sheet n.a. n.a. n.a. n.a. n.a.
5. Committed Credit Lines 160,945.0 166,063.0 174,549.0 154,446.0 126,660.0
7. Other Off-Balance Sheet items n.a. n.a. n.a. n.a. 65,630.0
8. Total Assets under Management n.a. n.a. n.a. n.a. n.a.
B. Average Balance Sheet
Average Loans 409,911.0 427,072.8 428,163.0 394,648.4 392,772.2
Average Earning Assets 1,222,205.0 1,395,712.4 1,517,324.2 1,460,696.8 1,667,379.4
Average Assets 1,574,678.7 1,690,497.2 1,741,369.6 1,666,255.2 1,872,843.0
Average Managed Securitized Assets (OBS) n.a. n.a. n.a. n.a. n.a.
Average Interest-Bearing Liabilities 1,319,815.3 1,411,825.0 1,445,993.6 1,389,078.8 1,585,235.0
Average Common equity 59,175.7 58,220.4 63,796.8 62,787.4 57,236.4
Average Equity 62,287.7 61,831.6 68,017.2 62,234.8 55,956.8
Average Customer Deposits 562,374.0 556,514.4 563,257.0 531,541.6 554,259.8
C. Risk Weighted Assets
1. Risk Weighted Assets 354,193.0 356,235.0 397,382.0 396,648.0 300,369.0
2. Fitch Core Capital Adjustments for Insurance and Securitisation Risk Weighted Assets n.a. n.a. n.a. n.a. n.a.
3. Fitch Core Capital Adjusted Risk Weighted Assets 354,193.0 356,235.0 397,382.0 396,648.0 300,369.0
4. Other Fitch Adjustments to Risk Weighted Assets n.a. n.a. n.a. n.a. n.a.
5. Fitch Adjusted Risk Weighted Assets 354,193.0 356,235.0 397,382.0 396,648.0 300,369.0
D. Equity Reconciliation
1. Equity 66,536.0 60,150.0 62,949.0 68,604.0 54,966.0
2. Add: Pref. Shares and Hybrid Capital accounted for as Equity 4,674.0 4,669.0 4,675.0 4,619.0 n.a.
3. Add: Other Adjustments n.a. n.a. n.a. n.a. n.a.
4. Published Equity 71,210.0 64,819.0 67,624.0 73,223.0 54,966.0
E. Fitch Core Capital Reconciliation
1. Total Equity as reported (including non-controlling interests) 66,536.0 60,150.0 62,949.0 68,604.0 54,966.0
2. Fair value effect incl in own debt/borrowings at fv on the B/S- CC only 73.0 (440.0) (407.0) (544.0) 151.0
3. Non-loss-absorbing non-controlling interests 0.0 0.0 0.0 0.0 0.0
4. Goodwill 0.0 4,103.0 4,890.0 9,518.0 9,074.0
5. Other intangibles 8,834.0 4,879.0 5,188.0 5,433.0 4,858.0
6. Deferred tax assets deduction 3,732.0 3,854.0 3,310.0 2,620.0 2,300.0
7. Net asset value of insurance subsidiaries 0.0 0.0 1,090.9 1,099.2 889.9
8. First loss tranches of off-balance sheet securitizations 0.0 0.0 0.0 0.0 945.0
9. Fitch Core Capital 54,043.0 46,874.0 48,063.1 49,389.8 37,050.1
Banks
Deutsche Bank AG
August 2017 17
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