Deutsche Bank reports core capital ratio of 11.9%

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The FINANCIAL — John Cryan, CEO, said: “Our results for the year 2016 were heavily impacted by decisive management action taken to improve and modernise the bank, as well as by market turbulence for Deutsche Bank. We proved our resilience in a particularly tough year. We finished 2016 with pleasingly strong capital and liquidity ratios and we are optimistic after a promising start to this year.”

Capital ratio was strongest for twelve quarters

Core capital ratio (Common Equity Tier 1, fully loaded) was 11.9% at year-end, up from 11.1% at the end of the third quarter 2016, the strongest for twelve quarters

Common Equity Tier 1 capital (fully loaded) was EUR 42.7 billion, down 3% during the year

Estimated available Total Loss Absorbing Capacity (TLAC) was EUR 116 billion

Risk Weighted Assets (RWA) were reduced by EUR 39 billion to EUR 358 billion during 2016, due primarily to disposals and de-risking of Non-Core Operations Unit (NCOU) and within businesses

Liquidity reserves were EUR 218 billion at year-end, after EUR 200 billion at the end of the third quarter 2016

Revenues came in lower for the year

Revenues in the fourth quarter were EUR 7.1 billion, up 6% year-on-year

Full-year revenues were EUR 30.0 billion, down 10%, reflecting a challenging market environment, persistent low interest rates, Deutsche Bank-specific pressures and strategy execution

Full-year costs decreased

Adjusted costs in the fourth quarter were EUR 6.2 billion, down 9% year-on-year

Full-year adjusted costs were EUR 24.7 billion, down 6%

Noninterest expenses in the fourth quarter were EUR 9.0 billion, stable year-on-year, and included EUR 2.6 billion of charges related to litigation and an impairment on the sale of Abbey Life

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Full-year noninterest expenses were EUR 29.4 billion, down 24%, primarily due to lower litigation charges and impairments

Full-year compensation and benefits decreased by 11%, or EUR 1.4 billion, versus 2015

Results reflect costs related to strategy execution

Fourth-quarter net loss was EUR 1.9 billion, versus a net loss of EUR 2.1 billion in the fourth quarter 2015

Full-year net loss was EUR 1.4 billion, versus a net loss of EUR 6.8 billion in 2015

Fourth-quarter pre-tax loss was EUR 2.4 billion, including charges of EUR 2.9 billion related to impairments of goodwill and other intangible assets related to the sale of Abbey Life (EUR 1.0 billion), litigation (EUR 1.6 billion), restructuring and severance (EUR 0.1 billion) and de-risking costs of NCOU (EUR 0.1 billion), as well as gains on disposals of EUR 0.8 billion

Full-year pre-tax loss was EUR 0.8 billion, including charges of EUR 5.8 billion related to the above-mentioned items and gains on disposals of EUR 1.0 billion

Achievements in 2016

De-risking of non-core assets materially complete: NCOU is now closed on schedule

Since creation in 2012, RWA reduction of ~EUR 120 billion, with contribution to core capital ratio of ~200 basis points, before litigation charges

Disposals included stake in Hua Xia Bank, Abbey Life and Private Client Services in the US

Progress in resolution of outstanding litigation matters including settlement with the US Department of Justice (DoJ)

Progress on digitization and technology:

Digital Factory in Frankfurt and Data Hub in Dublin opened

Launch of multi-banking aggregation app

Client downloads of mobile banking apps exceeded 2.7 million by year-end

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Reduction of key operating systems and of end-of-life components by ~15%

Ongoing strength in client franchise:

Helped raise EUR 380 billion of debt and equity finance for clients and advised on announced M&A transactions with a value of EUR 320 billion

Leading role in seven out of top ten corporate finance transactions in 2016 as measured by fees (source: Dealogic)

Maintained position as top-5 provider in fixed income sales & trading (source: Coalition ) whilst making further progress on our 2018 de-risking strategy

Transformation of private customer network in Europe on track

Further expanded ETF offering in Deutsche Asset Management

Investing in control environment (Compliance and Anti-Financial Crime) with more than 350 new hires in 2016 and a further 600+ new hires planned in 2017. This is an increase of ~60% over two years

Formation of Intermediate Holding Company, DB USA Corp


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