On the other hand, I think to some degree shareholders have sought the greatest degree of confidence as early as possible. So we’re going to need to balance those two things but I could certainly envisage multiple requests in the year going forward.
Operator: The next question comes from Chris Hallam from Goldman Sachs. Please go ahead.
Chris Hallam: Just two from my side first on cost. Could you give us a sense of the size of the inflation headwinds you were able to offset and underlying costs in the quarter and maybe also where you’d expect to end the year given the Q4 one offs you flagged and how that sets the business up heading into 2024? And then secondly, maybe looking a bit further out to 2025, obviously, the revenue momentum is working out in your favor as you just discussed, but there’s also still a disconnect between your targets on cost to income ratio and return on tangible equity for 2025 and the latest consensus. So just what are the main moving parts over the next two years that give you confidence on reiterating those 2025 targets?
Christian Sewing: Yes. Potentially, I start on your second part and obviously James shall add. Look on the difference in the 2025 targets I think it comes from both sides. Number one, a further increasing revenue line James just outlined, the 2024 pass, our confidence in the 30 billion in 2024. And obviously, we see that momentum also going then into the next year in 2025. And in particular in 2025 as we always said before, we have another NII tailwind actually in the private bank, which is not to be underestimated. So therefore, on the revenue side, Chris, further growth to be seen clearly. On the cost side, I’m really confident, because you know that we have given the goal of 2.5 billion, 2 billion already with our IDD in 2022.
These 2 billion is actually based on our so-called key deliverables, i.e., the Germany optimization, the front to back, the technology architecture, the infrastructure efficiencies, real estate savings and so on. And there we really have a high confidence to deliver these 2 billion based on all the structural work which we have done over the last the 18 months since the IDD and we can see progress every quarter. On the remaining 500 million, obviously we are working diligently but also there good progress. We discussed with you the reduction in force program in April. We have actioned on that. We have 900 reduction delivering more than 100 million of annualized savings now from now on starting. James said it this morning rightly so. We have additional measures, which are now in execution and in flight that we further reduce our workforce.
By the way, also with regard to the overall remediation which we have seen over the last years, we can see now that we think we have seen the peak in our workforce and we will further reduce. And this, if you want to mention it reduction in force 2.0 will be from a size and number bigger than the reduction we have seen in April 1.0. So that is the next part. And in line with our goal of achieving these additional 500 million, obviously, we are doing other things like third-party spending whether it’s consulting marketing spending, which will save us a meaningful number also in 2024 versus 2023. We are obviously also with the peak in workforce which we have seen. We are obviously very selective and cautious also when it comes to new hirings.
And in this regard, we have very good side on the 2.5 billion. That with the growing revenue number, which I just outlined. We are in full confidence that we can achieve the 10% or what we always wanted to do and where we still stand by to actually exceed the 10% RoTE in 2025.
James von Moltke: So Chris just on your inflation question and perhaps a little bit more on the targets. So inflation, it depends very much on what you’re looking at. Compensation costs, elements of non-compensation for example software, there can be quite varied impacts. But I would say we’re facing across the world, probably 4% to 5% inflation on average in both comp and non-comp costs that we need to work to offset. So far, I think we’ve been quite successful, in both line items. You need to work very hard on workforce composition. As Christian outlined, we’ve got a lot of measures underway there whether it’s internalization, location strategy or just managing with discipline across the Company. And then on the non-comp, you’ve really got to focus on demand.
And that’s where I think that, passing some of the what I’ll call the inflection points that we’ve been passing whether that’s you know technology implementations, whether that’s, control investment remediation, it does give us more flexibility to manage the demand side there. And so that gives us some comfort. If I think to run rates which I think was embedded in the second part of your question. We’ve talked over the course of the year about run rates, maybe made it too complex for you, but we’re trying to manage in that 4.95 billion to let’s say, 5 billion per quarter in adjusted cost range. We’ve had some pressure this year not just in inflation which I think we’ve been successful offsetting but also some of the investments that we’ve been making.
In the fourth quarter, we may have some additional sort of unexpected costs associated with Postbank remediation that may push us up closer to or perhaps slightly above the 5 billion level in Q4 with all of that baked in including the additional Numis costs. I think we’ve talked about 4.975 billion back in July. But overall, a continued sort of evidence of I think discipline and control across the Company. That would represent a good step off also into 2024, whereas you know the goal that we have and Christian just outlined is to continue to crystallize these cost savings measures in order to manage overall flat notwithstanding inflation and investments.
Operator: The next question comes from Anke Reingen from RBC. Please go ahead.
Anke Reingen: I have two questions. First is on the backlog following the Postbank IT migration. Can you talk a bit about the implications on costs? I think you just mentioned it and revenues near-term, and is there also risk as in, it could potentially delay, the target of cost savings? And if you can please talk about, I mean, if you can, about what we might expect in terms of potential actions by, BaFin could it be like fines operational risks or similar? And then secondly on the NII or the headwinds to your revenues in the Corporate Bank, the higher funding costs. Should we expect you increase the deposit collection further in Q4 and expect further headwinds? And is this related to, TLTRO maturities? I mean, I guess it offsets the benefit of the higher rates, so how much more of a headwind should we see there?
James von Moltke: I’ll try to be brief. Look, we don’t see a revenue impact of the Postbank integration or operational backlog issues and we wouldn’t necessarily expect one going forward. Obviously, we want to work hard to put these issues behind us and sort of pivot to a very different customer experience and that’s the focus of the management team there. You’ve seen, a cost of provisioning cost impact in Q3 that could also extend into Q4, but ultimately, we would expect to get that back as really we get back on track in terms of the collections activity where there’s been some diversion of the operational staff. So call it zero or close to zero in those two lines when all is said done. On expenses, it’s probably been in the high-single-digits in Q3, in terms of the remediation costs and if you kind of look to that in Q4, somewhere between 30 million to 35 million of incremental spend on the remediation, but we would expect that to tail off relatively quickly in 2024 as we put the operational issues behind us.
And frankly invest in automation and improved capabilities going forward, so we feel it’ll be a temporary impact. As it relates to sort of crystallizing the long-term benefits of the unity project, no change there, we’re at work in app decommissioning and the various elements of the project that, particularly on the technology side, we’re going to drive, the benefits, too early to make any comments on fines, frankly. We’re working very closely with the BaFin, collaboratively with them and the monitor, and I think our interests are very well aligned that we want to put the backlog behind us and cease any disruption to our clients. On the liquidity and funding costs, it’s interesting. I mentioned earlier that it’s this excess of liabilities over assets in the corporate bank that can sometimes be a drag.
The interesting sort of corollary there is we haven’t yet seen a benefit in the NIM of loan growth. And so for the Corporate Bank in particular and then at the group level, we would benefit from putting the deposits to use. We’re looking forward and believe that we should start to get some momentum in terms of loan growth going forward, and hence that imbalance can begin to help us. As it relates to TLTRO, you’ve seen that you’ve prefunded some of the maturities, the December maturities, and so TLTRO is becoming a less and less impactful, sort of part of our overall balance sheet and funding profile. Yes, there’s a little bit of a drag going into 24% coming in that, but that, at this point is in sort of low very low double digits per quarter in the coming several quarters.
