Deutsche Bank Q3 2026 Earnings Call Transcript

Deutsche Bank (NYSE:DB) reported third-quarter financial results on Wednesday. The transcript from the company’s third-quarter earnings call has been provided below.

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Access the full call at https://event.choruscall.com/mediaframe/webcast.html?webcastid=NYh9BYRP

Summary

Deutsche Bank reported strong financial performance in Q3 2026, with net revenues of 8.3 billion euros and a return on tangible equity of 10.6%.

The company’s asset-gathering and corporate banking businesses showed robust growth, contributing to a favorable revenue mix shift towards more sustainable income streams.

Strategic initiatives continued to progress, with significant investments in technology and process simplification, including the rollout of AI-enabled tools.

The company’s CET1 capital ratio stood at 14.0%, and a share buyback program was completed, totaling 1.5 billion euros for the year.

Management expressed confidence in achieving a full-year revenue target above 33 billion euros, driven by strong performance across all business divisions.

Future guidance suggests a focus on cost discipline, with expected total expenses around 21.3 billion euros and a commitment to maintaining capital returns.

The outlook for 2027 and beyond includes potential upside from German fiscal reforms, AI-led productivity gains, and European banking sector integration.

Full Transcript

Moritz (Operator)

Ladies and gentlemen, welcome to the Q3 2026 Analyst Conference Call and live webcast. I’m Moritz, your Chorus Call operator. I would like to remind you that all participants will be in a listen-only mode and the conference is being recorded. The presentation will be followed by a question-and-answer session. You can register for questions at any time by pressing star and 1 on your telephone. For operator assistance, please press star and 0. The conference may not be recorded for publication or broadcast at this time.

It’s my pleasure to hand over to Silkeny Kol Zuppe, Deputy Head of Investor Relations. Please go ahead.

Silkeny Kol Zuppe (Deputy Head of Investor Relations)

Thank you for joining our third quarter 2026 results call as usual. Our Chief Executive Officer Christian Sewing will speak first, followed by our Chief Financial Officer Raja Akram. The presentation, as always, is available to download in the Investor Relations section of our website at db.com. Before we get started, let me just remind you that this presentation contains forward-looking statements that may not develop as we currently expect. We therefore ask you to take note of the precautionary warning at the end of our materials.

With that, let me hand over to Christian.

Christian Sewing (Chief Executive Officer)

Thank you, Silke, and good morning, everyone. Let me start with a few words on what we believe are the key takeaways. Today we are growing particularly where we want to grow. Our asset-gathering businesses performed strongly. The Corporate Bank delivered strong growth, and our Investment Bank continued to perform well. Revenue mix is improving with growing commissions and fees and record net inflows, and business mix continues to shift to a more sustainable and stable revenue base.

In Germany, a vital element of our growth strategy is starting to deliver. With that, let’s turn to where we stand on strategy execution. On slide 2 we delivered record performance and strong momentum. In the first nine months of 2026 we grew revenues to 25.5 billion euros, well on track to meet our full-year ambition of around 33 billion euros. We have now completed a large portion of this year’s investments and we continue to maintain cost discipline as planned. We have largely self-funded incremental investments with efficiency gains.

This enabled us to deliver a record profit before tax of 8.4 billion euros for the first nine months of the year, along with a record third quarter. Post-tax ROTE was 11.5% and our cost/income ratio was 61.4%. Our CET1 capital ratio was 14.0%. We continue to drive business growth while making distribution deductions in line with our 60% payout ratio. We have already completed our second share buyback of the year, bringing total buybacks in 2026 to 1.5 billion euros.

Now a few words on our progress on scaling our global house bank. On slide 3 we made tangible progress on all three levers of our strategy in the first nine months of the year. We continue to deliver focused growth. Revenues grew by 5% versus last year in line with our planned growth trajectory through to 2028. Our focus growth areas contributed nearly 80% of the increase and grew by 6%. Franchise momentum was strong across all businesses with growth rates above our IDD targets.

Furthermore, we continue to build business volumes which support future revenue growth. Assets under management rose by nearly a quarter of a trillion euros year on year to just under 2 trillion euros, supported by record inflows across our asset-gathering businesses. Loans and deposits grew year on year supported by broad-based business activity. Second, we maintained strict capital discipline. Our capital initiatives included further capital-accretive actions on non-performing exposures and progress with our securitization programs.

And third, we made further progress on our scalable operating model. We continue to simplify our processes and made targeted investments in upgrading our infrastructure. The Private Bank reached an important milestone in its technology transformation, selecting its first cloud-based platform as it is moving from 15 banking platforms to just two. And in IBCM we have started to roll out Farsight, an AI-enabled tool designed to improve efficiency and provide more granular client insights, further supporting client experience and engagement.

Across all three levers, we are driving strong performance across our businesses, investing in growth and efficiencies, and reinforcing connectivity between businesses. This allows us to deliver the bank to clients, for example by combining coverage across financing and investment solutions and product distribution. Turning to slide 4, all divisions delivered ROTE of 12% or higher, while each division increased profit before tax in every quarter of the year. Private Bank net flows reached 17 billion euros, a record for the Private Bank, with around two-thirds from Wealth Management. Year to date, inflows have already exceeded the full-year 2025 level. Client assets increased to 865 billion euros, up 75 billion euros year to date and well on track toward our 1 trillion target by the end of 2028.

Asset Management grew assets under management to over 1.2 trillion euros with record net flows of 31 billion euros in the third quarter. The Corporate Bank delivered record quarterly revenues with sustained growth in loans, deposits and client activity across every client segment. We delivered strong revenue growth in Germany, underlining the strength of our home market franchise, and the Investment Bank delivered strong results. FIC revenues were close to the record prior-year quarter despite less favorable market conditions.

And in IBCM we increased our EMEA market share by 160 basis points year on year. We are also pleased that our global foreign exchange business was awarded World’s Best FX Bank at the recent Euromoney Awards for the second consecutive year. So our nine months performance strengthens my confidence yet further that we are on track to deliver on our 2026 objectives. Our franchise, business performance and balance sheet have remained resilient despite heightened fiscal uncertainty across Europe in an already challenging global economic backdrop. We have seen no meaningful adverse impact to date. The path to our 2028 targets and objectives has become clearer as we make progress against our strategic priorities.

This strengthens our view that an ROTE of above 13% represents a floor. Last quarter I highlighted trends which support further upside to our 2028 targets: German reforms and fiscal stimulus, AI savings and Investment Union, and the regulatory environment. In Germany we see encouraging signs in the political and economic environment reinforced by our client conversations. Reform progress continues with growth, competitiveness and investment firmly on the political agenda.

Exports, entrepreneurial activity and foreign investment are showing signs of improvement. Corporate sentiment is improving and translating into investments while the Mittelstand remains resilient. We expect German growth to come in ahead of consensus, but faster and more decisive government action is needed to sustain this momentum. On regulation, we are encouraged by plans for a legislative package in the first quarter of 2027 to further integrate Europe’s banking sector and boost its competitiveness.

We also continue to see further upside from initiatives that are largely in our control, particularly technology and process simplification and AI-led productivity gains. And we intend to provide further detail on these opportunities with our full-year results in January. With that, let me hand over to Raja.

Raja Akram (Chief Financial Officer)

Thank you, Christian, and good morning. We delivered another strong third quarter with net revenues of 8.3 billion euros and a return on tangible equity of 10.6%. Profit before tax was 2.6 billion euros, up 8% year on year with an improved cost-income ratio of 62.4%. Importantly, all divisions contributed to the year on year profit increase. Revenues were up 4% year on year, making these 21 consecutive quarters of revenue growth. With noninterest expenses flat year on year, we delivered positive operating leverage.

C&O once again contributed positively to the revenues this quarter, mainly due to valuation and timing differences which we expect to partially reverse in the fourth quarter. Let me now turn to revenues in more detail starting on slide seven. We saw strong growth in the Private Bank, materially benefiting from higher net commission and fee income. Asset Management also made a strong contribution driven by higher management fees. As promised, the Corporate Bank delivered both year on year and sequential revenue growth with business volume growth and higher revenues across businesses. Investment Bank revenues broadly matched a record prior year quarter.

Looking at revenue composition, net interest income demonstrated a solid increase driven by volume growth and hedge rollover with trading and other income down year on year. Net commission and fee income performance showed continued strength benefiting from growth in discretionary mandates in Wealth Management as well as stronger performance in the Corporate Bank. Overall, our non-Investment Banking business represented around 65% of group revenues and increased both sequentially and year on year.

Let me now move to NII on slide 8. NII was solid at 3.7 billion euros across the key banking book segments and other funding deposit-related. NII continued to benefit from underlying volume growth and the contribution from our hedge portfolio while loan NII benefited from strong volume growth. For the full year, we continue to expect NII across key banking book segments and other funding to slightly exceed 14 billion euros. As we said previously, benefits from recent rate decisions are expected to come gradually and sequentially, becoming more pronounced in 2027 and increasing even further in 2028 and beyond reflecting our structural hedging approach.

As always, you can find details on the benefits from long-term hedge portfolio rollover on slide 23 of the appendix. Turning to slide 9, noninterest expenses declined by 3% sequentially and were flat year on year. Incremental investments included around 80 million of workforce measures mainly reflecting Private Bank operating model optimization as well as infrastructure investments, ongoing hiring in Wealth Management and IBCM, and the expansion of Corporate Bank solutions to support our capital-light growth agenda. Operating efficiencies, mainly through workforce and target operating model measures, continue to largely offset these incremental investments.

The modest increase in volume-related costs included higher fixed pay which was fully offset by lower litigation expenses and bank levies. As we continue to execute our investment plans and efficiency benefits accelerate, we expect positive jaws to become increasingly visible. With that, let me turn to provisions for credit losses on slide 10. Provision for credit losses was 501 million euros. We continue to take proactive capital-accretive actions to further derisk our CRE portfolio which is reflected in our provisions for the quarter. In addition, provisions in the Corporate Bank were impacted by an idiosyncratic event in Asia. Underlying asset quality remains strong with leading indicators showing a stable or improving picture across the majority of our portfolios.

As shown in the appendix on page 25, CRE is the primary driver of the elevated group provision run rate. The run rate reflects the proactive derisking measures and valuation updates on legacy defaulted positions. Our high-risk CRE portfolio has declined materially since 2022. In the US, where we have seen the majority of stress, the book is down 42% since 2022 and about 20% year on year reflecting repayments and our proactive derisking measures. There is no evidence of broader portfolio weakness, with the Private Bank and Corporate Bank portfolios remaining stable and resilient.

Our medium-term expectations remain unchanged: a gradual but steady decline in CRE provisions in 2027 and, in 2028, a further improvement in the group provision run rate normalizing at around 30 basis points. Turning to capital on slide 11, we ended the quarter with a CET1 ratio of 14% at the high end of our operating range. Risk-weighted assets decreased by 3 billion euros excluding FX effects of 1 billion euros. The quarter-on-quarter reduction was driven by the Investment Bank which carefully contained market and credit risks in a volatile environment. The increase in the other category includes the impact of model simplification efforts. Net income net of deductions for AT1 coupons contributed 43 basis points reflecting strong third quarter earnings, while deductions for distributions of 26 basis points represent the 60% payout ratio.

The 16 basis points reduction in other includes an immaterial impact from recent increases in government bond yields reflecting prudent portfolio positioning and risk management. Note that the majority of our government bond portfolio in the banking book is accounted for at amortized cost and overall we remain comfortable with our sovereign bond exposure. Looking towards year-end, we expect our CET1 ratio to be within our operating range reflecting ongoing business activity and the annual update of our operational risk RWA reflecting higher 2026 revenues.

Let me now turn to divisional performance, starting with the Private Bank on slide 13. Private Bank continued to execute on its strategic objectives and delivered a strong business performance across both Personal Banking and Wealth Management. Return on tangible equity rose to 13% while the cost-income ratio improved to 65%. Revenues increased by 8% year on year driven by strong growth in both net commission and fee income which increased 13% and net interest income which rose by 9%.

Personal Banking revenues climbed 6%, supported by strong deposit gathering, particularly in Germany. Wealth Management revenues increased by 10% reflecting higher deposit and investment product revenues as discretionary mandates grew significantly year on year. Continued strong net new asset inflows of 17 billion euros, with inflows in Wealth Management mainly investment-led while Personal Banking continued to generate strong deposit flows. Deposits grew 4% year on year supported by successful campaigns amid continued competition in Germany.

Strong sequential growth in Wealth Management lending more than offset the targeted reduction of 1 billion euros in non-SVA accretive retail portfolios. 180 Wealth Management hires have joined, well on track towards a target of around 250 by 2028, while the Private Bank launched a new digital mandates platform for clients in Germany. As expected, noninterest expenses increased year on year reflecting continued investments to support future growth including costs related to workforce initiatives.

The increase was partly offset by continued efficiencies from organizational simplification, including run-rate savings from prior branch closures, workforce measures, as well as lower costs due to favorable episodic items. We expect sequential cost increase reflecting the phasing of our investments. Provisions for credit losses were higher year on year primarily due to the nonrecurrence of favorable prior-year model updates while underlying credit performance remained stable.

Turning to slide 14, Asset Management delivered a solid quarter with assets under management surpassing 1.2 trillion euros for the first time, driven by record total net flows and FX movements. Revenues increased 4% year on year, primarily driven by higher management fees up 14% year on year supported by higher average assets under management. Performance fees were lower as the prior year benefited from the fees generated through asset realizations in an infrastructure fund.

Noninterest expenses increased by 5% year on year reflecting investments in strategic growth initiatives and higher volume- and share-price-related compensation effects. Total net flows stood at a record 31 billion euros in the quarter, including 17 billion euros of long-term net flows, with Xtrackers being the primary growth driver. Our alternatives business returned to positive net flows supported by 0.8 billion euros of net flows into our infrastructure products.

For further details, please refer to DWS disclosure on their investor relations website. Let us now move to the Corporate Bank on slide 15. The Corporate Bank delivered a record quarter, generating its highest ever revenues of approximately 2 billion euros supported by an increase in commission and fee income. In the revenue mix, the underlying momentum across the Corporate Bank is clearly becoming visible. Higher loans and deposits, together with the strong client engagement across our businesses, continue to drive growth. As a result, revenues increased by 9% year on year including double-digit growth in both net interest income and net commission and fee income, a trend we expect to continue.

Corporate Treasury Services and Business Banking both delivered double-digit revenue growth supported by business volumes. Institutional Client Services revenue grew modestly, reflecting the nonrecurrence of prior-year benefits. In Germany, revenue growth was even more pronounced with a 13% increase driven by higher activity across all client segments. Deposits were 346 billion euros, up 13% year on year and 6% sequentially, primarily driven by growth in sight deposits in Corporate Cash Management.

Loans increased 8% year on year and 2% sequentially to 127 billion euros, supported by continued growth in flow and structured trade, while the targeted reductions of non-SVA accretive portfolios continued. Noninterest expenses remained essentially flat year on year as volume-related growth and targeted investments were partly offset by disciplined cost management. Provisions for credit losses increased to 68 million euros, driven mainly by an idiosyncratic event, while the quality of the underlying loan portfolio remains solid.

I’ll now turn to the Investment Bank on slide 16. Third quarter revenues broadly matched the prior year, which was driven by a record FICC performance. FICC Financing revenues were significantly higher, reflecting strong pipeline execution and continued targeted balance sheet deployment across the franchise. Within this, net interest income was slightly higher as growth in the book was partially offset by previously discussed margin compression. FIC Markets revenues were down, driven by the nonrecurrence of a very strong credit trading performance in the prior year quarter, specifically within the distressed businesses.

Performance across the remainder of the Markets businesses was higher year on year, with particular strength in our Emerging Markets business. Moving to IBCM, revenues were essentially flat compared to the prior year with continued strength in equity origination and further year on year improvement in advisory. This was offset by debt origination, where a less robust environment for LDCM more than offset a record quarter for the investment grade business.

The IBCM pipeline for the remainder of 2026 continues to point towards an improved revenue performance for the second half of the year. Noninterest expenses were 4% lower year on year reflecting reduced litigation, bank levies and certain one-off items, partially offset by targeted investments. In line with our IDD strategy, provision for credit losses was 197 million euros, significantly lower year on year. While the prior year quarter was impacted by adverse Stage 1 and 2 model changes, the current quarter is driven by Stage 3 provisions, in part reflecting the planned capital-accretive exits of legacy CRE exposures.

Before we move to the outlook on slide 17, let me recap what I have observed about the franchise. As I come to the end of my first year, I’m impressed with the resiliency of the FICC franchise. We have a complementary and well-diversified business mix. As we saw this quarter, FICC Financing did very well in an environment which was not as conducive for FICC Markets. The Corporate Bank flywheel effect is now underway. We’re gaining momentum even before we see full potential of German growth.

The net new asset funnels in both Wealth Management and Asset Management are working better than expected. We’ve seen each quarter bringing record inflows and this is before we see any tailwinds from pension reform or the expected shift towards more investment-led behavior in Germany. On expenses, we’re delivering on plan quarter after quarter while investing. The PCL headline number reflects decisive actions to derisk and free up capital. And in respect of the CET1 ratio, our operating range reflects the totality of our expectations covering business and non-business-related factors.

So before we take your questions, let me summarize how these points shape our full-year 2026 outlook. We are on track to deliver revenues above 33 billion euros, assuming markets remain constructive. We continue to expect total expenses of around 21.3 billion euros reflecting continued investment discipline, operating efficiencies and any one-off items. Excluding the impact of targeted proactive derisking actions and the idiosyncratic event, we expect loan loss provisions to be broadly in line with our guidance, slightly lower in 2026 compared to the prior year.

We remain committed to delivering consistent capital returns and continue to make CET1 capital deductions in line with our 60% payout ratio target. And as Christian said, we will provide an update on progress of our strategy when we report our full-year 2026 results. Thank you.

Christian Sewing (Chief Executive Officer)

Thank you, Raja. Operator, we are now ready to take questions.

Moritz (Operator)

Ladies and gentlemen, we will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on their telephone. You will hear a tone to confirm that you have entered the queue. If you wish to remove yourself from the question queue, you may press star and two. Questioners on the phone are requested to disable the loudspeaker mode and turn off the volume from the webcast while asking a question. Anyone who has a question may press star and one at this time.

One moment for the first question, please. And the first question comes from Tarek El Mejad from Bank of America. Please go ahead.

Tarek El Mejad (Analyst)

Hi, good morning everyone. Great. Christian, you mentioned a few times this year that you are a beat-and-raise story. We’ve seen beats actually for the last two, three quarters, not yet the raises. So I have two questions in that context, understanding how we are actually coming at the end of this ’26 transition year. So first on the revenues, I mean revenue growth was solid in the quarter with Corporate Bank and Private Bank as the key highlight. As you mentioned, the FIC was also resilient.

So you are tracking to deliver above 33 billion if we annualize, even assuming a harsh seasonality in Q4. Yet you also flag again that your ability to beat the 33. So how much visibility you have for the rest of the year and why didn’t you feel comfortable upgrading the guidance already in Q3? Maybe you can run us through your outlook for different divisions, particularly on NII. And the second question is on costs. To me that’s the key highlight really of this results season and it’s been the case in Q2 and since CMD actually started. You still guide, though, for 21.3 billion, which implies a significant increase in Q4 costs and actually even a downside to consensus of around 100 million. So are you intending to reinvest most of the cost savings, as I think you commented on Bloomberg this morning, that tech and AI can let you raise ambitions further, or is there room to beat your latest guidance and will that be a source of upgrades?

Thank you very much.

Christian Sewing (Chief Executive Officer)

Good morning. Tarek, thank you for your question and let me start with the revenue side and Raja will take over on the cost commenting. Look, first of all, you said it right, beat and raise. And by the way, it’s not only beat, it’s also raise because we just increased the revenue guidance. So you see that we are also raising. So we are not only beating, but we are obviously, based on the foundation which we have achieved over the first nine months, very confident that from the around 33 we can clearly go beyond the 33 and above the 33.

And what gives us the confidence? It’s actually all four businesses. And I think this is the nice story which we outlined in the IDD and where we are really tracking quarter by quarter in each and every business, that we are actually firing on all four cylinders of this bank, and in particular in the, let me put it this way, the more stable businesses, as we always call them, the Private Bank, Asset Management and Corporate Bank. Obviously all the inflows we see, be it in deposits, be it in assets under management, but also the lending growth which we can see in the Corporate Bank, provide us with a very good trajectory and with a very good view already for Q4 but also actually for 2027 where revenues are going. And despite the fact that Q4 is always, so to say, a special quarter and from an Investment Bank point of view is always a quarter which tends to be a bit softer than the first three quarters, we do believe actually that in particular the other three businesses will compensate.

And to be honest, in the Investment Bank, everything I can see after the first three to four weeks, despite challenging markets, is actually that we are quite stable year over year and that we can have a very satisfactory quarter too. So the momentum in the Private Bank in terms of deposit gathering and growth and assets under management is continuing. Obviously we are benefiting from what we have collected already in the first nine months. In Asset Management, the fourth quarter is usually a better one because also of the performance fees. The Corporate Bank: we have seen this really nice turnaround already in Q2, now the record quarter in Q3. I can’t see any reason why this is not sustainable for Q4.

And then I think a pretty stable Investment Bank performance, which gives us all the visibility that we will be clearly above 33 billion. So that is why we increased. Now, on the cost side I would hand over to Raja, but let me be clear: full focus on cost discipline. I think we have shown it and demonstrated it for the last three quarters. That is ongoing, and Raja will give you a little bit more detail on how we plan for the fourth quarter.

Raja Akram (Chief Financial Officer)

Yeah, thanks Christian, and thanks Tarek for the question. I think, Tarek, if you remember when we did the IDD, one of the key changes that we made in the way we look at cost is to essentially give guidance around our total non-interest expenses rather than on an adjusted basis, which means the various components of run-the-bank, investments, operating efficiencies, any one-offs, they’re all considered in that guidance. And obviously things can come at different times.

Operating efficiencies we generally tend to have a pretty good view on. Investments we make according to our plan based on the opportunity that we see. And obviously investments and other items also include severance charges. So we took into totality what the year would look like, and so therefore as we sit here today, we think that’s still reasonable. I think I mentioned in my prepared remarks, on the Private Bank side we will still be lighter this quarter from the investment perspective versus what we expect in the fourth quarter. We think we have a few more actions we can execute in the fourth quarter that would actually be a benefit to us in 2027 and 2028 and give us further upside. So, look, I think the plan would be: if we do end up doing better and we are able to make the investments that we want to make at a lower cost, I don’t think there’s that much more for us to pull into this quarter.

If we end up being better, then we end up being better, and I’m not going to try to squeeze in artificially more investments into the quarter. But I think where we sit today in October, we think we have a reasonable plan towards the 21.3 for the full year, but obviously within a small margin that could move one way or the other. But as I said in my first call, our goal would be to undershoot that 21.3 and not overshoot that 21.3.

Tarek El Mejad (Analyst)

Perfect, thank you very much.

Moritz (Operator)

Then the next question comes from Chris Hallam from Goldman Sachs. Please go ahead.

Chris Hallam (Analyst)

Yeah, morning everyone. Actually the first question is just a bit of a follow-up to that question from Tarek. You know you’re comfortable on that 21.3 for this year, but I guess how do we think about as a base case for next year? I appreciate you probably want to spend more time on this at Q4 results, but how should we balance that incremental investment, the normal sort of inflationary impacts or volume-related growth against the accelerating efficiency benefits that you should be seeing?

So in other words, if we try and pull all that together, is the natural course or the natural sort of outlook for OPEX next year that it goes down, that it goes sideways, or that it continues to grow in line with the business? And then second, again as you head into next year, it feels as though you’re approaching quite an interesting sort of fork in the road in terms of capital allocation. You’ve got improving and strong capital generation that potentially creates scope for distributions above the 60% payout ratio. But at the same time I think you’re seeing attractive opportunities to deploy capital into growth, and you’ve become more confident in that 13% ROT in ’28 representing a floor.

So I guess how much of the potential upside requires additional capital deployment and RWA growth versus upside that can be delivered while simultaneously increasing shareholder distributions? That is, is the outlook you’re seeing becoming more capital intensive or more capital generative? Thank you.

Raja Akram (Chief Financial Officer)

Yeah, thanks for the question. Let me just remind you of the baseline IDD plan. If you were to remember, we had talked about a billion and a half or so of incremental investments, of which we said 900 were going to be in 2026, which was really the big investment year, and they were going to taper off in the outer years. But the 2 billion of productivity saves were going to obviously ramp up in the other direction. So if you were to just take those two dynamics into play, you would expect that our run rate should be better next year versus where we are today.

So that’s one perspective I would give you. You can look at the way we have managed expenses through the first three quarters, which means that we have pretty much offset the investments with operating efficiencies, and we don’t see that trend slowing down in the future, which means that we actually have established a pretty good and lower run-rate basis for the year. So that’s the way I would think about it. That’s versus the IDD plan, but we have also been very clear that we believe we can and we will do better than the IDD cost trajectory up until 2028.

And as Christian mentioned, and as I said in my prepared remarks, we would like to give you a full and wholesome update on our new trajectory — a new and improved trajectory — in January so we can lay out the sequencing, where we see the opportunity coming from, and the operating rhythm going forward. But yes, in terms of your question, I think you only have to look at the way we had planned our investments, which were front-loaded, and our savings, which were ramping up, to give you a little bit of a sense of what we expect for ’27 and ’28.

And sorry, on your second question about distributions. Look, we are fully committed to operating within our operating range. I think within our operating range we have tremendous opportunity to deploy for our businesses. As you can see this quarter, despite using a little bit less RWA than planned, we had great performance in the FIC financing business, great loan gathering in our Corporate Bank. So yes, Chris, eventually within the cycle between now and ’28, given strong earnings capacity and capital generation, we will be at a point where we will have to make those decisions.

And I think my perspective would be, for now, what we have is pretty self-sufficient. But again, we are seeing tremendous opportunities in our Corporate Bank as well as our Private Bank to deploy balance sheet. At the same time, that’s something that we are considering as part of our full plan progress update in January to lay out our capital path going forward as well as our expense path going forward. So you can expect that we will update you all in January.

But for the moment, for the rest of the year, we believe we are comfortably within our operating range and will finish the year that way. And in terms of the capital return cadence, subject to supervisory approval, we would like to have a cadence that’s pretty predictable and consistent with what we have done in the first two buybacks this year. As you know, we have already done a billion and a half, and if everything goes well, we would like to keep that cadence, subject to all the normal caveats.

Chris Hallam (Analyst)

Okay, thanks very much.

Moritz (Operator)

Then the next question comes from Anke Reingen from RBC. Please go ahead.

Anke Reingen (Analyst)

Yeah, thank you very much for taking my questions. Just firstly on the corporate bank, obviously very strong trends in Q3 and you previously talked about exits from a tight single digit which now based on the Q3 performance looks somewhat conservative. So just thinking is, should we think Q4 guidance is conservative and the trend can continue sequentially increase or is there anything in Q3 you would sort of like highlight as a, as a bit of a one-off that we can’t extrapolate?

I think you said on the fee growth you feel really encouraged about double digit. I think you talked about this a lot at the investor day, but maybe if you can just underpin a bit about what drives this double digit fee growth. And then just secondly, sorry, on the loan losses, when you say underlying there should be down, how should we think about it on a reported basis? Loan losses in 2026. Thank you very much.

Raja Akram (Chief Financial Officer)

Sure. Let me take the question on corporate bank. Look, we were very convinced, as you know, we had been telegraphing it quite a bit in advance that we expect that the second half of the year we will end up at mid to high single digits. And frankly speaking, we outperformed our own expectations and there are no one-timers in this 9%. It is actually solid underlying operating performance. And we believe based on where we are today that we should be able to carry the same revenue momentum into the fourth quarter.

So we don’t necessarily see a dip down in the revenues in the next quarter. I think we should be able to match what I said is already a record performing quarter for the corporate bank. The reason I have that much conviction in that is because one, it is coming from all three things. We have NII that is up both because of strong deposit gathering and loans. And then we have increased our fee year over year by 13% on the back of record trade finance and lending core and structured trade products. So that gives us a lot of confidence that this trajectory for us is now there to continue.

And just to remind you, and I’m sure it doesn’t need to be said, this is before we see the full German fiscal stimulus play out. This is before we start seeing the full impact of the hedge resets that are being done. And obviously as I mentioned, based on our hedging strategy, it comes gradually and sequentially and then over time exponentially. So that gives us a lot of confidence that we have now put the corporate bank squarely on a clear growth path.

So I would stop there, Anke, on that.

Christian Sewing (Chief Executive Officer)

Can I just add one further because Raja rightly said it’s before the German stimulus is really kicking in, though we are now finally seeing the first impacts and it goes down into the economy, which is good. And secondly, obviously we also see that we have an opportunity here in the market with what is happening in Germany and we see actually in Q3 the first real positive developments and therefore I would actually expect that this is going to be even more emphasized in the following quarters.

Raja Akram (Chief Financial Officer)

Yeah, I think your next question was about CLP in corporate bank. I have mentioned before that the number for CLP in the corporate bank is reflective of an idiosyncratic event in there which we have fully reserved for now. And if anything we have a recovery potential but that remains to be seen. Interestingly enough, our underlying usage of the corporate bank CLP was actually better than what we had planned. So I think as we see the trends for the corporate bank they are actually very promising despite what everything else is going on in the economy.

The book has been held pretty well.

Anke Reingen (Analyst)

Thank you.

Moritz (Operator)

And the next question comes from Nicolas Paien from Kepler Cheuvreux. Please go ahead.

Nicolas Paien (Analyst)

Yes, good morning. Thanks for taking my question. I have two please. The first one would be on the IB and just could you help us maybe reconcile what we see as a strong FIC financing revenue growth with only a slightly higher financing NII, just wanted to understand how much reflects recurring income versus transaction-related revenues and to whatever extent we have a sustainable growth in FIC financing. The second question will be still on NII and just wanted to see how we should think about the trajectory in 2027 beyond the hedge contribution in particular in relation to deposit pricing and loan margin. How does it evolve and how much support you expect actually from volume growth going forward? Thank you very much.

Raja Akram (Chief Financial Officer)

Sure, Nicolas. Look, I think on the FIC financing side you have to think about it from two perspectives. We have a great volume growth because our pipelines are very strong, which is partially offset by the previously discussed spreads compression. We had talked about it at the investor day, we had talked about at the beginning of the year that there’s certainly spread compression versus prior year. But that said it is still accretive to us because the volumes are more than offsetting the spread compression and in fact what we had modeled from a spread compression perspective and the timing of when these refinancings would take place, they have actually taken place earlier than what we expect. So that’s why you see a little bit of a divergence between the volume growth versus the underlying NII growth. So that dynamic is playing out. But thankfully it’s playing out, if not in line, then slightly better than what we had anticipated when we had put our plans together for 2025.

Moritz (Operator)

And the next question comes from Tom Hallard from KBW. Please go ahead.

Tom Hallard (Analyst)

Hi, thank you for taking my questions. Firstly, just what is your kind of data center AI-related credit exposure and maybe what was that one year ago? And I guess the same question on the revenue side of things, given the apparent slowdown. And then on the German macro, you know, what are you seeing given all the rate moves and everything else that’s kind of going on and how is that reflecting your numbers, you know, is it positively impacting your business or negatively impacting it maybe relative to your expectations from a few months ago?

Thank you.

Raja Akram (Chief Financial Officer)

Sure. I will take the AI-related exposure, or the data center exposure, however you want to call it. It’s actually not changed since we last time we spoke; it was sub 10 billion. It is still sub 10 billion. It is still primarily focused on single-tenant long-term leases. Seventy percent of it is in the U.S. High loan-to-value, low loan-to-volume. Sorry. So nothing has changed there. We obviously have a hedge program that goes with our overall exposure.

So I would say in the end of the day it’s not dramatically different. We have continued to participate selectively in all these deals and not much honestly to add on that front, Tom, on

Christian Sewing (Chief Executive Officer)

the German macro, I would say that we see, as I tried to say before, encouraging signs actually when it comes to the broader economy. Look, the government has revised the growth rate to 1.3%. We as Deutsche Bank see it around 1, slightly above 1%. We actually see the German growth in 2027 based on the fiscal stimulus, but also based on the private investments which are now coming in, at around 1.5 or slightly higher in 2027. And if the government is continuing with its reforms and restructuring, to be honest, I think we can see even bigger growth in 2028.

That is clearly an upside also for us. Why? Because we can already see it in the corporate bank that the stimulus is actually developing and translating into real business. And secondly, you know, the real game changer in particular for the private bank and for the asset management is the pension reform. From everything I see and I hear — you have also seen and heard all the comments from last week’s German Invest Summit in Berlin but also from our Made for Germany initiative — the government is absolutely determined to go ahead with the pension reform.

There might be the one or the other slight change when it comes to, so to say, the years you need to pay in, whether it’s 45, 43, but the capital markets component in particular in Pillar 1 will remain. That will be part of the reform and that is a game changer on the investment side. We have seen, I think because of the discussion, already a pretty good momentum in our business. But that will even be much better when this reform is decided. And again I do believe that this will go to parliament at the end of Q4, will be then decided, and then we have a quite different environment in Germany.

So overall I have to say, also looking at the results of the Invest Summit last week, that there is not only a renewed interest but, in particular with what is happening in this world, that there is, so to say, even more interest in Germany and in the stability and therefore compared to the end of Q2, I’m net more positive on Germany and again we can see it and start to see it in our numbers.

Tom Hallard (Analyst)

That’s great, thank you. Just a quick follow-up to maybe the first question. Could you give us a sense of the revenue contribution of, you know, the AI kind of data center stuff, you know, is it a meaningful contributor to your earnings? You know, is it just, you know, just help us give us a sense on that.

Raja Akram (Chief Financial Officer)

Yeah. So look, I think we mentioned last time around that we participated in three large tech IPOs that happened in the second quarter. But clearly, as you know, we’re not the lead-left bank. So you can think about that our contribution — we are meaningfully participant and we like that. But we don’t have a dependence on the AI revenue stream to keep supporting our IBCM businesses. So when I give the guidance that IBCM is going to be higher, second half will be better than the first half.

The AI is a component of that. But we don’t have a massive dependency or sole dependency. In our FIC financing book also we had growth, but there the growth is also pretty well diversified, not concentrated. So yes, it’s helpful. We want to obviously be in that space selectively but it is not something that is a make or break for us.

Tom Hallard (Analyst)

Great, thank you.

Moritz (Operator)

The next question comes from Julia Aurora Miotto from Morgan Stanley. Please go ahead.

Julia Aurora Miotto (Analyst)

Hi, good morning. Thank you for taking my questions. A question on deposits in Germany. If I look at your numbers in the private bank and in the corporate bank, deposits are up quarter on quarter. But I don’t know how much of that comes from Germany and there is a big debate on new entrants, more price competition, new players increasing the rates. So can you give us a sense of how your deposit growth looks like for Germany specifically and if you see any pressure at all towards these new players that are paying more?

Then a second question on pensions. So Christian, I hear your optimism and I understand that on the basis of volumes, but on the basis of profitability we have seen really fierce competition on margins, especially from platforms that essentially are offering no fees. So how do you think about the business opportunity in terms of revenues and bottom line from these pension reforms? Because it doesn’t seem as material as we could have thought a few months ago.

And then, sorry, just a quick follow-up on cost of risk. So for Q4 consensus is closer to 400 million. Shall we instead read that it will probably be a number closer to what you printed in Q3, so more like 500 million on provisions? I just need a quick yes or no answer.

Raja Akram (Chief Financial Officer)

Thank you very much, Julia.

Christian Sewing (Chief Executive Officer)

Let me start with the deposit question and also the investment, and then Roger can add and also go for the provision question. Look, despite the, despite the competition we have in Germany and, to be honest, Julia, we have seen that for the last 37 years since I’ve been in banking that competition is highest in Germany and therefore, you know, I’m not that worried about each and everybody who is entering the market because trust and long-term relationships is the key item, how you actually overcome it.

And that’s what we see the biggest in the Private Bank. The biggest driver of our deposit intake is actually Germany, and it’s the Personal Bank in Germany. We went with a campaign and, honestly, we are not providing rates which are in line with new people and new entrants, new market entrants, but in our view, fair and for ourselves I would say absolutely. Also, you know, attractive conditions, and we saw a record Q3 quarter in terms of deposit intake in the Personal Bank, and that is usually actually with existing clients.

And where we have new clients, we also see actually that with our additional products which we are offering and with the relationship approach we have, we can turn these new deposits into long-term business. And I think that’s the secret of the success. It’s not about, you know, gaining the next deposit for four weeks and then we are losing it. We don’t want to have these hoppers, and actually we can see that with the number of new clients which then stay with Deutsche Bank and where we are doing, out of deposits, also other investment business, that this is really the success and therefore trust creates credibility. Of course, also all our investments in the technology that, you know, we are enabling our clients to approach us in a digital way, that it’s easy actually to get in contact with us.

These three things make the difference, and that’s what we have seen for the last nine months. And, to be honest, I don’t actually see that this is a lot changing. I’m not saying that this is not a competitive market, but with what we have with the client foundation we have and the offerings which we are putting out, we have fared very well. And therefore the largest driver of deposit intake is coming from Germany. On the investment side, to be honest, I can’t see actually any erosions on the margin side. But when we are talking about the Private Bank and what Claudio has done, I think in a superb way, is actually operating leverage. What he is doing month by month, quarter by quarter, is bringing the costs down in the Personal Bank, but also, by the way, process-wise in Wealth Management and in the overall Private Bank. And obviously this helps us also to actually compensate for any margin pressure which would be there.

But therefore also the new business we are getting in terms of, or related to, the pension reform when it comes to assets under management, it’s actually highly profitable because we also have our costs under control and actually bring it down quarter by quarter in the Personal Bank.

Raja Akram (Chief Financial Officer)

Yeah, thanks, Christian. Julia, the only thing I would add on deposits is that on Private Bank, as I said, we are predominantly coming from Germany. Obviously the Corporate Bank deposit intake is very global for us. Given the nature of our businesses, we have a great mechanism to get actually the operating deposits. And that’s what’s also driving our Cash Management business’s progress. But there is also Germany is actually a big factor for even our Corporate Bank deposits because that’s where the majority of our clients sit.

To your question about CLP, where we sit today: No, Julia, I don’t think that you should expect a number that is close to the third quarter. I would say, if I was to estimate at this point, the second half probably in total may look like what the first half looked like. And that is with the decision if we were to do any more additional de-risking of the CLP book for CRE. So no, I don’t think we should be expecting a 500 million euro quarter in the fourth quarter.

The way I think about it right now is a good proxy would be just, in total, the second half similar to what the first half was like. But that also depends a little bit on whether we decide to do more de-risking or not. And if we don’t, then obviously it will be a little bit different number. Thanks.

Moritz (Operator)

Then the next question comes from Kian Abuhosin from JP Morgan. Please go ahead.

Kian Abuhosin (Analyst at JP Morgan)

Yes, thanks for taking my question. Just coming back on CRE and the provisioning line, you clearly indicated there could be further reduction on CRE into 2027. So trying to understand how we should think about provisioning in 2027 actually rather than the fourth quarter, and what is triggering this accelerated de-risking at this point, as this seems to be a bit of a change. The second question is related to RoTE. You’re targeting RoTE of 13 plus. That actually in our coverage is the lowest RoTE of any bank either achieved this year or achieved by 2028. And I’m really wondering what the trigger is or what you see as the long-term RoTE possibility, considering the environment is actually quite good. And what should be the delta, where the delta coming from? I mean, your Investment Bank performs well but makes a RoTE of 12 roughly.

You’re capping the size when other competitors are growing. I’m just trying to understand how do we get that 13 to 15, or should we even think about beyond from your perspective, and what will be the deltas there? Thanks.

Moritz (Operator)

Thank you.

Christian Sewing (Chief Executive Officer)

And it’s Christian. Let me start with the second question. Ok. We have always said, let me be clear, that we are on a journey, also in the IDD in 25. So please don’t assume that the larger 13, which we are more than confident to achieve, that this is the end game. Not at all. I agree with you. We are not yet there where we should be and therefore we have a clear plan. Secondly, I think Roger pointed out very clearly that we will give you an update in January.

Now let’s be patient for the next three months. As I told you, you know, beat and raise. I love that. We just gave you a little bit of an upside on the revenue side. Roger has told you for the last three quarters, I think, that he sees actually upside on the cost side. If you all move that together, you can obviously expect a different number in January. But we need to work that out bottom up and we want to provide you with a solid plan. Now where does it come from? Number one, costs. I think, I mean, we have shown over the last three quarters a total cost discipline, upside to that, and with all that, what we are doing on AI, workforce, other items, we are managing. To be honest, we see upside on the cost side, number one. Number two, and I don’t want to go into Roger’s answer already, but also when you ask about loan loss provision, the way we are allocating capital, the way we are trying to optimize our capital, has also something to do with that.

We are in a position to de-risk now where it is appropriate, where it is capital accretive. That will help. And number three, while I think we have ambitious revenue goals, but so far we have met them or even overachieved them, to be honest, where the world is and where the world really wants to have a global alternative from Europe, we can be that. And I can see opportunities in the German market because things are changing here, and I can see actually opportunities outside Germany because of our global nature, and therefore I even think that there is a chance to outperform there.

But if you ask me what are the key items where we will outperform, it’s costs and capital.

Raja Akram (Chief Financial Officer)

Yeah, thanks, Christian. Just to maybe put more of a CFO-ish answer to this question, you rightfully pointed out about where our returns are for the Investment Bank, but those are returns today without the full power of the investments on the IBCM playing out. So you have to think about that. We have an opportunity there on the fee and the advisory-based business to take that RoTE up. Not necessarily from a FIC perspective, but from the IBCM perspective.

The Private Bank is generating now RoTE of 12%, 13%, but that’s with a very heavy investment in fixing its cost infrastructure, and we can already see that that is paying dividends. So I expect the Private Bank RoTE to be closer to what we had promised at the IDD level. The two main observations that I had when I came into this job were: one, we can and we should and we must run this bank structurally on a lower cost base. So we’re playing for all the marbles in 2028 and we will get this cost base down to beat our original aspirations for 2028. Secondly, about CRE and CLP, from my perspective it’s pretty obvious we need to do de-risking faster and free up capital. I mean, why wait for things to—why hope for things to either get better or deteriorate when we know we can actually exit out and put this capital to work today?

So it is a little bit of a change in the way we are operating it, but it is quite intentional and we are not taking dramatic actions. But if 100 million here lets me get a billion of CRE off my books in this environment—where, frankly speaking, we just made this decision before the environment became tricky—and I am really glad that we did two quarters of quite a bit big changes. So between CRE getting to 30 basis points, which I’ll come to your question, and a better cost ambition, and even if I was to change not the revenue cable, which by the way we are meeting, we think that we can do much better than the 13 plus that we laid out. And I’m actually looking forward to laying all of that out for you all in January. Look, the CRE trajectory from here is not—I’m not going to promise or share a dramatic change in one quarter, but we are very confident that we will get to the 30 basis points in 2028 because of the actions that we’re doing.

And the 2027 headline reported number will be lower than the 2026 number. And we will take that big step next year and we will make the final step. We have put some additional disclosure in the deck. As you can see, we are almost there for everything already. Our Corporate Bank is running better than expected. Private Bank, same thing. Investment Bank broadly outside of CRE there. So we just need to work this out. And because we’ve taken 20% of the CRE high-risk portfolio down in just one year, I feel relatively comfortable that our promise of 30 basis points is now backed by actions and not just by hope.

Moritz (Operator)

Thank you. Then the next question comes from Stefan Sta