Deutsche Bank Aktiengesellschaft (DBK) Earnings Call Transcript

Ladies and gentlemen, welcome to the Q3 2026 Analyst Conference Call and Live Webcast. I'm Moritz, your Chorus Call operator. [Operator Instructions] The conference is being recorded. The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Silke-Nicole Szypa, Deputy Head of Investor Relations. Please go ahead.

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.

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 in particular 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. And 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 9 months of 2026. And -- we grew revenues to EUR 25.5 billion, well on track to meet our full year ambition of around EUR 33 billion. 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 EUR 8.4 billion for the first 9 months of the year, along with a record third quarter. Posttax RoTE was 11.5%, and our cost/income ratio was 61.4% and our CET1 capital ratio was 14.0%. We continue to drive business growth while making distribution reductions in line with our 60% payout ratio. We have already completed our second share buyback of the year, bringing total buybacks in 2026 to EUR 1.5 billion. Now A few words on our progress on scaling our global House Bank on Slide 3. We made tender progress on all 3 levers of our strategy in the first 9 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 focused 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 EUR 0.25 trillion year-on-year to just under EUR 2 trillion, 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 nonperforming 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 2. 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 3 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, 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 EUR 17 billion, a record for the private bank with around 2/3 from wealth management. Year-to-date inflows have already exceeded the full year 2025 level. Client assets increased to EUR 865 million, up EUR 75 billion year-to-date and well on track toward our EUR 1 trillion target by the end of 2028. Asset Management grew assets under management to over EUR 1.2 trillion with record net flows of EUR 31 billion 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. The Investment Bank delivered strong results. FICC 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're 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 9 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 heated fiscal uncertainty across Europe in an already challenging global economic backdrop. We have seen no meaningful adverse impact to date. Pass to our 2028 targets and objectives has become clearer as we make progress against our strategic priorities. This strengthened our view that an RoTE of about 13% represents a floor. Last quarter, I highlighted trends which support further upside to our 2028 targets. German reforms and fiscal stimulus, I 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 middle stand 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 and to further integrate Europe's banking sector and boost its competitiveness. We also continued to see further upside from initiatives that are largely in our control, particular 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.

Thank you, Christian, and good morning. . We delivered another strong third quarter with net revenues of EUR 8.3 billion and a return on tangible equity of 10.6%. Profit before tax was EUR 2.6 billion, 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. CNO 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 7. We saw a 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 an increase both sequentially and year-on-year. Let me now move to NII on Slide 8. NII was solid at EUR 3.7 billion 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 EUR 14 million. As we said previously, benefits from recent grade 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 EUR 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 Begleris. 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 EUR 501 million. 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 a 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 U.S., 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 remain stable and resilient. Our medium-term expectations remain unchanged, and 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 EUR 3 billion, excluding FX effects of EUR 1 billion. The quarter-on-quarter reduction was driven by the Investment Bank, which carefully contain market and credit risks in a volatile environment. The increase in the other category includes the impact of Marel 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 costs, 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. The 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 mandate grew significantly year-on-year. Continued strong net new asset inflows of EUR 17 billion 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 EUR 1 billion in non-SBA 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 of 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 and workforce measures as well as lower costs due to favorable episodic items. We expect sequential cost increase, reflecting the phasing of our investments. Revisions for credit losses were higher year-on-year, primarily due to 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 EUR 1.2 trillion 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 front. 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 EUR 31 billion in the quarter, including EUR 17 million of long-term net flows with extractors being the primary growth driver. Our alternatives business returned to positive net flows supported by EUR 0.8 billion of net flows into our infrastructure products. For further details, please refer to DWS' disclosure on the 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 EUR 2 billion, 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 13% increase driven by higher activity across all client segments. Deposits were EUR 346 billion, up 13% year-on-year and 6% sequentially, primarily driven by growth in side deposits and corporate cash management. Loans increased 8% year-on-year and 2% sequentially to EUR 127 billion supported by continued growth in flow and structure trade, while the targeted reductions of non-SBA equity portfolios continued. Noninterest expenses remained essentially flat year-on-year as volume-related growth and targeted investments were partly offset by disciplined cost management. Provision for credit losses increased to EUR 68 million, 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 figure 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. Big 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 were a less robust environment for LBCM 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 EUR 197 million, 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 a 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 are delivering on plan quarter after quarter while investing. The CIB 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 nonbusiness 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 EUR 33 billion, assuming markets remain constructive. We continue to expect total expenses of around EUR 21.3 billion 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.

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

Ladies and gentlemen, we will now begin the question-and-answer session. [Operator Instructions] And the first question comes from Tarik El Mejjad from Bank of America. .

Christian, you mentioned a few times this year that you are a bit and rate story. We've seen bits actually for the last 2, 3 quarters, not yet the raises. I have 2 questions that in that context, standing how we're 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 is the key highlights. As you mentioned, the FICC was also resilient. So we are tracking to deliver about EUR 23 billion if we analyze even assuming a hard seasonality in Q4. Yet you also flag again that your ability to be 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 the different divisions, particularly on NII. And the second question is on costs. To me, that's the key highlights really of this result season and been the case in Q2 and since the CMD actually started. You still guide though for EUR 21.3 billion, which implies a significant increase in Q4 costs and actually even the downside to consensus of around EUR 100 million. So are you intending to invest most of the cost savings. As I think you commented in Bloomberg this morning that tech and AI can let you raise ambitions further or there is room to beat your latest guidance and there will be a source of upgrades.

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 race because we just increase 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 9 months, we are 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 4 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 4 cylinders of this bank. And in particular, in the -- let me put it this way, the more stable business, as we always call it 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 obviously provides 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 3 quarters. We do believe actually that in particular, the other 3 businesses will compensate. And to be honest, in the investment bank, everything I can see after the first 3 to 4 weeks despite challenging markets is actually that we are quite stable year-over-year and that we can have a very satisfactory quarter 2. So the momentum in the private bank in terms of deposit gathering and growth in assets under management is continuing. Obviously, we are benefiting from that what we have collected in the first 9 months. In the Asset Management, the fourth quarter is usually a better 1 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 sort of say, all the visibility that we will be clearly above EUR 33 billion. So that is why we increased now the guidance 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 for the last 3 quarters, that is ongoing, and Raja will give you a little bit more details how we plan for fourth quarter.

Yes. Thanks, Christian, and thanks, Dark, for the question. I think Tarik, if you remember when we did the IDD, 1 of the key changes that we made and the way we look at cost is to essentially give guidance around our total noninterest expenses rather than on an adjusted basis, which means the various components of run the bank, but 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 do and obviously, investments and other items also include severance charges. So we took it into totality, what the year would look like. And so therefore, we sit here today, we think that's still reasonable. I think I mentioned in my prepared remarks, on the private bank side, we were a little bit lighter this quarter versus from the investment perspective versus what we'd 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 did 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 1 way or the other. But as I said in my first call, goal would be to undershoot that 21.3% and not overshoot that 21.3%.

Then the next question comes from Chris Hallam from Goldman Sachs.

Actually, the first question is just a bit of a follow-up to that question from Tarik. You're comfortable on that EUR 21.3 million for this year. But I guess, how do we think about it as a base case for next year? I appreciate you probably want to spend more time on this in Q4 results. But how should we balance that incremental investment, the normal sort of inflationary impacts of 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 there a natural cause 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 although you're approaching a quite interesting sort of folk 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% RoTE in '28, representing a floor. So I guess how much of the potential upside requires additional capital deployment and RWA growth versus upside it can be delivered while simultaneously increasing shareholder distribution, i.e. is the outlook you're seeing, the stronger outlook you're seeing becoming more capital intense or more capital generative.

Let me just kind of take you -- remind you of the baseline IDD plan, if you were to remember that. We had talked about EUR 1.5 billion or so of incremental investments of which we said EUR 900 million 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 EUR 2 billion of productivity saves, they were going to obviously ramp up in the other direction. So if you were to just take those 2 things, dynamics into play, you would expect that our run rate should be better next year versus what we are -- where we are today. So that's 1 perspective I would give you. You can look at our -- the way we have managed expenses through the first 3 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 a lower run rate base for the year. So that's the way I would think about it. But that's versus the IDD plan, but we are also very clear that we believe we can and we will do better than the IDD cost trajectory for -- up until 2028. And as Christian mentioned and I said in my prepared remarks, we would like to give you guys a full at a wholesome update on our new trajectory and 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, but in terms of your question, I think if you can only -- you only have to look at the way we had planned our investments, which were front loaded and our savings, which we're ramping up to give you a little bit of 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 being -- using a little bit less than -- less RWA planned, we had great performance in the FICC financing business, a great loan gathering in our corporate bank. So yes, Chris, we would eventually within the cycle between now and '28, we will, given our 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 a balance sheet, but 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 we'll finish the year that way. And in terms of the capital return cadence, I think we would like to, subject to supervisory approval have a cadence that's pretty predictable and consistent with what we have done in the first 2 buybacks this year. As you know, we have a down EUR 1.5 billion. And if all -- everything goes well, we would like to keep that cadence subject to all their normal caveats.

And the next question comes from Anke Reingen from RBC.

Just firstly, on the Corporate Bank, you had very strong trends in -- and you previously talked about exit to mid-high single digit, which now based on the Q3 performance looks somewhat conservative. So just thinking should we think Q4 guidance is conservative and the trend can continue to sequentially increase? Or is there anything in Q3 you would sort of like highlight as a bit of a one-off that we can't extrapolate. I think you said you -- on the fee growth, you see we 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? .

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 with mid high single digits and frankly speaking, we outperformed our own expectations. And no, 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 3 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's not -- 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, for -- 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. Can I just add 1 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.

Yes, I think your next question was about CLP in Corporate Bank. I have mentioned before that the number for CLP, the corporate bank is reflective of an idiosyncratic event in there, which we have fully reserved for now. And we, if anything, we are -- we have a recovery potential, but that remains to be seen. Interesting 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're actually very promising despite what everything else is going on in the economy, the book has been held pretty well. .

And the next question comes from Nicolas Payen from Kepler Cheuvreux.

I have 2, please. The first 1 would be on the IB. And just could you help us maybe reconcile what we see as a strong FICC financing revenue growth with only higher financing NII. Just wanted to understand how much reflects recurring income versus transaction-related revenue then to whatever extent we have a sustainable growth in financing. The second question was still on NII. And I 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 that evolve? And how much support you expect actually from volume growth going forward?

Sure, Nicolas. Look, I think on the FICC financing side, you have to think about it from a 2 perspective. 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 refinancing would take place that they have actually taken base earlier than what we expected. So that's why you see a little bit of a divergence between the volume growth versus the underlying NII growth. So that's -- that dynamic is playing out. But thankfully, it's playing out if not in line, but slightly better than what we had anticipated when we had put our plans together for 2025.

Then the next question comes from Tom Hallett from KBW.

Firstly, just -- what is your kind of data center AI-related credit exposure? And maybe what was that 1 year ago? And I guess the same question on the revenue side of things given the apparent slowdown. And then on the German macro, what are you seeing given all the rate moves and everything else that's kind of going on? And how is that reflected in your numbers? Is it positively impacting your business or negatively impacting it maybe relative to your expectations from a few months ago?

Sure. I would take the AI-related exposure or the data center exposure, however, you want to call it. It's actually not changed and quite -- since we last time we spoke, it was sub- EUR 10 billion. It is still sub-EUR 10 billion. The -- it is still primarily fergused on single-tenant long-term leases, 70% of it in the U.S., high loan-to-value low loan to value, sorry. The -- 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 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 at around 1%, slightly above 1%. We actually see the German growth in 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, 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 Investment 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 1 or the other slight change when it comes to, so to say, the years you need to pay in, whether it's 45, 43 million 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 for -- 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 journey. 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, 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.

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

Yes. So look, I think we mentioned last time around that we participated in 3 large tech IPOs that happened in the second quarter. But clearly, as you know, we're not the lead left bank. So you think about that our contribution, we are meaningfully participant, and we like that, but we are -- we don't have a dependence on the AI revenue stream to keep support 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 FICC financing book also, we had a growth, but there, the growth is also pretty well diversified, not concentrated on AI. So yes, it's helpful. We want to obviously be in that space selectively, but it is not something that is going to make or break for us.

And the next question comes from Julia Miato from Morgan Stanley.

And 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 -- 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 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 EUR 400 million. do you -- shall we instead read that it will probably be a number closer to what you printed in Q3, so more like EUR 500 million on provisions. I just need it quickly yes or no answer?