I mean, these are all things which are then self fulfilling, so to say, you will remember my speeches that each rating upgrade also means that obviously clients are coming back, are doing different and more trades with us. We are changing the ISTAS [ph], all that is coming through. And therefore, we can see that, yes, January was good and nice and better than we expected. But I can see from the basis and foundation that in my view, this is a quite consistent trend. And I also expect. By the way, we said that 78% of the 2023 revenue year were recurring revenues, which is a pretty good picture. And therefore, I also expect, with all the investments we have done in the sort of say more stable business that we have a solid and strong start into January.
On the fee income in the O&A. Yes, we expect a recovery in 2024. It is always very hard to say when exactly, but we have planned our investments last year in terms of the Numis acquisition, but also in terms of the hiring on the O&A side, with regard to a long-term development of the bank. We wanted to invest into our capital-light business and fortunately, we can now see the results of that. So also here, we can see a recovery in terms of mandates, a recovery in terms of market activities. And therefore, we do believe that we will see, compared to 2023, a nice uptick in the revenues. And the first results we have already seen also in January. But again, I know it’s just the first 30 days of the year, but also they are very promising and that what we wanted to achieve is coming through.
On the cost side, look, James just said it and he will give you more details, but, A, we have a full focus to Q4, showing you already in Q1 that we hit a €5 billion run rate in Q1. This has daily management, daily monitoring, weekly in the management board. And I’m very confident that we will achieve that number of around €5.0 billion in Q1. Now, why am I overall so confident on that? Because of that, what James said. I mean, if you take the €21.7 billion cost and we need to come to €20 billion, we will expect non-operating costs to decrease by around €700 million. We will again expect approximately a reduction of bank levies in the amount of €350 million to €400 million in 2024 versus 2023. That would bring us roughly to €20.5 billion.
And now we are looking at that, what we are constantly managing with the front office, with the back offices, under Rebecca’s leadership. And that means we expect that we have another €400 million net reduction from all what is still coming of our operational efficiency program. You know, the €2.5 billion of gross reductions, we have delivered savings, or expected savings of €1.3 billion, of which €900 million have been realized up to now. And the remainder comes from €600 million in Germany. In the optimization, Claudio is doing, in particular, on the business side, with all the rationalization, on the branch side, with all the investments which have been done into unity, and now we are getting the fruits out of this. We have on technology and infrastructure, another €700 million, which we will reduce application decommissioning and so on.
And then you know that we are, for our core processes, we have invested a lot of money and we will do this also going forward in the front to back process redesign, where we think we will get another €300 million out. Now, against that, there is obviously some inflation, some business growth, but that makes us highly, highly confident that we can get the next €400 million to €500 million of operational efficiency net out. And that brings us to the €20 billion. The good thing is that is the long-term plan for 2024 and 2025. But if you see the bottom up plan for the first quarter, we will achieve the 5.0 on a rounded basis this quarter.
James von Moltke: So – and Kian, I entirely endorse what Christian just went through, and it’s just to put a couple of numbers behind it as well. In FIC, I would draw your attention to Page 47 of the analyst deck, where we tried to give you a little bit more color on how the FIC franchise performs on a daily basis. And relative to its VaR, and so it gives you a good kind of comparison as to what so far the quarter might look like compared to last year’s first quarter. I think the second thing to add the – in the corporate finance wallet, if you look at some of the external sort of providers of data on that marketplace, I think those providers would say that the will – that the wallet will grow sort of 15% to 20% this year, as Christian just outlined, that obviously still needs to happen, but we think the conditions are there.
And as Christian just outlined through Numis and the other hires we’ve invested to participate in that. And then lastly on expenses, to give you a sense of what we would think is a significant – is a range of outcomes, 1% rather than 4% is that we have the discipline, and for us missing by 1% or €50 million would be a disappointment. And that gives you a sense of how we’re managing the place.
Kian Abouhossein: Very clear. Thank you.
Operator: Our next question is from Adam Terelak from Mediobanca. Please go ahead.
Adam Terelak: Good morning. Thank you for the questions. One on revenues and one on costs. On the revenue side, you’ve given a lot of detail on NII and NII trajectory. You’ve given us €32 billion for 2025, hinted to €30 billion still for this year. But could you put a little bit more meat on the bones, please? That would be by division and expectations by division, but also on the non-NII growth in terms of what you see in terms of fee momentum and beyond the – our NII piece, but also on loan growth as well, which clearly is baked into your NII assumptions. So some more color around revenue and revenue expectations on why we should be as bullish as you guys are with the great. And secondly, on cost and cost trajectory, you’re talking to €5 billion for Q1.
Clearly the run rate for next year is going to be below that if you’re going to get to €20 billion. So what does that adjusted cost look like through this year? Do we actually end up kind of below €5 billion by the end of the year? And so the adjusted cost print could be in kind of the €20 billion range for 2024. Obviously, the reported number might be higher, but I’m thinking about adjusted cost only at this stage. Thank you.
James von Moltke: So I’ll – I can start. Christian, you may want to add. So on revenues, Adam, first of all, I – we provided the additional disclosure on net interest revenues or net interest income to try to sort of put that to one side. Hopefully, that’s helpful disclosure and indicates the relatively high degree of confidence we have on delivery against that, whether that’s by hedging out the remaining sort of curve or also indicating how conservative we think we’re being on, for example, beta assumptions and growth in volumes. But set that to one side and then that allows you to focus on the non-interest revenues. There to give you a sense, we think all of the businesses are poised to grow their revenues on non-interest side pretty considerably.
When you just think of all the sources of non-interest revenues we have, I mean, start with a Corporate Bank, custody transactions, payments, the merchant acquiring business, the documentary custody business. We earn fees and across that business in lots of different ways that do cohere with the overall sort of performance and level of activity in the marketplace. In Asset Management and Private Bank, obviously the assets under management are the key driver and therefore our inflows are encouraging to us. It means our step off into 2024 is higher than the average considerably in both businesses that we ran at in 2023. And we also think in general investor behavior particularly in the international private bank wealth management business has been relatively muted.
