Stefan Stalmann: I wanted to ask about the private bank, please. You had another very good Flow quarter. I think your annualized growth in Wealth Management and Private Banking is running at around 8% annualized from net new money. And I’m really hard-pressed to come up with any competitor getting close to that kind of growth. Can you maybe talk a little bit more about what you’re doing there? What geographies are driving this, whether they are particular products or any other unique selling points that are explaining this. And a related question, one investor alerted me to a story honest with Media platform this morning, which suggested that FINMA is looking at your wealth management business in Switzerland. Is there anything to flag there? Or is there just nothing
Christian Sewing: Thank you for your questions. Let me start, and James will amend. Look, on the FINMA side, we gave a clear statement that there is no restriction. And secondly, obviously, I hope you respect that we are not going more into details when it comes to regulatory discussions. But we have said everything in writing. So for us, we can onboard clients. Number two, with regard to Wealth Management and the Private Bank, yes, it has been actually since Claudio has been with us — it has been always our focus actually to go more into the investment businesses. By the way, not only in Wealth Management, but also in the Private Bank. We see that as a clear growth area and in particular, as a clear long-term growth areas.
I think I said it before on these calls. If you think about what is one of the real sticky items also here in Germany going forward, it is what happens with the pensions of our retail clients. And the focus Claudio is giving to the investment businesses, where, obviously, we have an expertise which not a lot of other banks, in particular, in the home market have, is something which is now helping us a lot. It also helps us, by the way, that we got all the rating upgrades that we have a completely different reputation in the market. And the investments Claudio did in Wealth Management outside Germany, in parts of European countries, in particular, in Asia. You know that we invested heavily in the Middle East are now all paying off. And therefore, yes, we are happy with the growth, but it’s part of the 2- to 3-year story and strategy, which Claudio built.
Now as we see the success in particular in Wealth Management, as I said, we want to bring it more and more into the more Private Bank and Retail Bank business because there is actually the need for the clients. And therefore, I expect actually that we do see these kind of growth rates also going forward, which is again supporting that what I said in the first question from Kian, one should not underestimate the continuous growth in revenues actually in those business from the continuous accumulation of assets under management, in particular, in this business. So a clear focus of Deutsche Bank.
James von Moltke: One thing just to add, I think the revenue profile is supportive, as you say, both fee and commission income and the interest income long term in Private Bank. I think the second thing is, as we talked about, the credit loss provisioning right now is more elevated than we would expect it to be sort of on a continuous basis. The last thing to also highlight is this quarter, I think, now shows the trajectory that we’re on from a cost perspective with a significant year-on-year cost reduction that we expect to build on in terms of trajectory. So starting to see the restructuring, the technology investments, the distribution platform reductions come through, all of which should significantly enhance the pretax profit margin of PB over time.
Operator: The next question comes from Tom Hallett from KBW.
Thomas Hallett: So the first one, just curious around the fee progression of the Private Bank. If I look at market levels, they’re up sort of 8% on year-on-year. You’ve had a lot of inflows and yet your revenues in the first quarter haven’t really moved much. So if I kind of look at your guidance for the division, it would seem you’re expecting quite a bit of a pickup over the next 9 months. So I suppose what is driving that relative to the first quarter? And then secondly, just looking at the financing revenues where you could have really a powerful slide in there in the pack. I mean, look, it’s been a major source of growth for you, but also your peers, I’m just curious about what’s driving that kind of growth differential kind of versus pre-COVID levels and how sustainable that is?
Because I suppose if I look at the leverage consumption of the IB, it’s gone up considerably over the last 4 years. So maybe if you could provide a sense of kind of the margins of that business or the capital intensity, that would also be great.
James von Moltke: So Tom, I just — the way you think about fee and commission income in the Private Bank is it’s sort of a client business volume measure. So as Christian referred to it as sticky. So as we build balances we build activity. You’ve seen a year-on-year growth rate of 2%, but now at a level in the first quarter that significantly exceeds any quarter last year, especially the second, third and fourth. And so we think that, that’s going to continue to build on itself and create sort of more and more year-on-year differential. There is some amount that obviously depends on clients’ investment activity, trading activity, if you like, in any given quarter, but the, call it, the stable revenue base that we’re seeing in Private Bank and fee and commission income growth is very encouraging, and I think it’s set to continue.
I think in terms of your question about resources in the FIC business, we’re — we’ve been very focused on that sort of consistently over the years. We tend to look at it in terms of revenue production related to RWA. As you can see, market risk RWA relatively modest for us, so it is principally credit risk RWA, both in the balance sheet and derivative businesses. But we think we’ve got some of the best in the business at understanding and optimizing that. And the same is true of leverage exposure where we manage to the constraints of our balance sheet but work to optimize how we deploy that leverage exposure to support clients as well as the revenue profile. Sometimes, by the way, the business you do is leverage exposure intensive, but not RWA-intensive and sometimes the opposite.
And hence, the optimization efforts that we go to there are considerable and sophisticated. So I would stop there. I don’t know if you want to add that thing.
Thomas Hallett: Yes. I mean just a follow-up just for myself on the private bank. Is it fair for us to assume that kind of an increased 1.5% year-on-year. Is that something similar we should be expecting for the rest of the year? Or are you more confident on that for the rest of the year?
Christian Sewing: I think if you look at the prior quarter comparisons year-on-year for both CB and PB, what you’d expect is a relatively significant acceleration of the year-on-year growth in those fee and commission lines in the coming quarters.
Operator: [Operator Instructions]. And the next question comes from Andrew Coombs from Citi.
Andrew Coombs: I’ll also echo the previous remarks, thanks for the additional disclosure on IB revenues as well. Two questions from me. Firstly, on costs, you drew out the FDIC charge in Q4. You haven’t drawn out anything in Q1, but I know a number of the U.S. banks did take a top up. So could you just say, is there anything costs for FDIC this quarter as well that you’d like to specify? And then the second question, just on the Corporate and Other division now that’s been restated to include the legacy portfolios, I think you’ve got a loss this quarter, but includes quite a sizable benefit on timing differences or valuation and timing differences. So what should we think of it or what do you think would be usual quarterly run rate for that division going forward?
James von Moltke: Thanks, Andrew. So €8 million is the number this quarter on FDIC by some — a quirk of accounting, we can’t characterize as bank levies, so we don’t call it out separately. But it also means if I look at the net going into this quarter’s run rate, actually, there were — there’s probably more things pushing it up than pushing it down, of which FDIC was one. There’s always some degree of volatility. VNT was a feature this year, certainly, year-on-year in the quarter, it was relatively more neutral. But reflected really changes in the interest rate curve. By the way, some of which we would expect to get back in the balance of the year through pull to par. Always hard to say, therefore, what the pretax profit impact is going to be.
We talk in the guidance about what the shareholder expense is that we expect, what the incremental — what the sort of, call it, run rate or annual treasury funding costs are. So for modeling purposes, I would go with sort of a quarterly version of that annual guidance and accept that there is some volatility in valuation and timing. Incidentally, we’ve been working over the years to reduce and minimize that volatility to the extent we can. So lots of work has gone into hedge accounting programs and other things to both manage the risks — the balance sheet risks that we have, but do so in a way that is as accounting neutral as we can, and we’ve made some good progress in that regard.
Operator: So it seems there are no further questions at this time. So I would hand back to Ioana Patriniche for any closing remarks.
Ioana Patriniche: Thank you, and thank you for joining us and for your questions. As ever, for any follow-up, please come through to the Investor Relations team, and we look forward to speaking to you at our second quarter call.
Operator: Ladies and gentlemen, the conference has now concluded, and you may disconnect. Thank you for joining, and have a pleasant day. Goodbye.
