Ladies and gentlemen, thank you for standing by. I am Miavia your Chorus Call operator. Welcome and thank you for joining the fourth quarter 2014 analysts' conference call of Deutsche Bank. [Operator Instructions]. I would now like to turn the conference over to John Andrews, Head of Investor Relations. Please go ahead.

Thank you operator and good morning and thank you all for joining us this morning for the review of our fourth quarter and full year 2014 results. I am joined this morning by Anshu Jain, Co-CEO and Stefan Krause our Chief Financial Officer. Momentarily Anshu will provide some opening remarks. Then Stefan will present the results in more detail, going through the quarterly earnings presentation. At the conclusion of Stefan's remarks, we will be happy to welcome your questions. All of the earnings materials are now available on the Investor Relations section of the Deutsche Bank website. Let me further remind you to pay particular attention to the cautionary statements regarding forward-looking comments that are at the end of the investor presentation. With that said, let me please hand it over to Anshu.

Thank you John. Good morning everyone. In a moment Stefan will go through our financial results, but first I'd like to offer you my view on our performance in 2014 and where we are on the journey we began in 2012. Our 2014 results tell a clear story. We've made progress and we are pleased with that. However, we also faced a number of challenges. We're now working diligently on the next phase of our strategy. Our aim is to build on our achievements, while addressing our challenges. Let's turn first to what we achieved in 2014. Profits grew significantly year on year. Income before income taxes rose from EUR1.5 billion in 2013 to EUR3.1 billion. Net income grew from EUR681 million to EUR1.7 billion. This was driven by three main factors; strong performance in our core businesses where operating profits were close to record levels, lower provisions for credit losses and litigation expenses which were lower than in 2013. We further strengthened our capital position. We finished this year with a common equity Tier 1 capital ratio of 11.7% fully loaded, versus 9.7% at the end of 2013. That is nearly double where we were in 2012. We took decisive and timely action in 2014, raising EUR8.5 billion of common equity in June. The ECB's comprehensive assessment was a two-fold validation for Deutsche Bank. The ECB's stress test demonstrated that we have one of the largest capital buffers of any Eurozone bank in the stress scenarios, even before factoring in our capital raise. Additionally, the asset quality review resulted in no material adjustments to our capital ratio. We continued to reduce leverage exposures, including a reduction of over EUR100 billion on an FX-adjusted basis in the fourth quarter alone. Partly as a result, we improved our leverage ratio to…

So thank you very much Anshu and good morning and thanks for joining us. Let's start with the highlights of the quarter. Our Group income before income taxes was EUR253 million. The core bank IBIT was EUR943 million. The estimated, fully-loaded Core Tier 1 ratio was 11.7%, as you can see on the chart. Our leverage ratio was 3.5% on a fully loaded basis. Tangible book value per share was 3.1% higher than the third quarter of 2014. As in the third quarter, the revenues of our business grew in the fourth quarter year on year. At the same time, Deutsche Bank continues to take further risk off the balance sheet and hence reduce leverage. The quality of the Bank's revenues, as well as of the Bank's balance sheet, have further improved in the fourth quarter. And just one information that's not on this chart on page 2, the Management Board will propose to the Supervisory Board an unchanged dividend of EUR0.75, based on these results that I just explained to you. So let me address some key current themes, this quarter its capital costs as well as litigation, before I then dive deeper into Group and segment results. As you can see on page four, the Core Tier 1 capital ratio at year-end 2014 was 11.7%, up 20 basis points from the prior quarter, reflecting our EUR7.5 billion reduction in RWA. Core Tier 1 capital increased only marginally, with net income largely offset by dividend accruals and other movements including FX. On RWA we reduced our credit and market risk RWA measurably, offsetting increases for operational risk and FX, as well as the EUR13 billion methodology-related RWA increase, including EUR7 billion in the area of credit valuation adjustment RWA, as well as the EUR4 billion add-on taken in light…

Ladies and gentlemen at this time we will begin the question-and-answer session. [Operator Instructions] And your first question is from Kinner Lakhani of Citi. Please go ahead.

Three questions. Firstly on the cost base, thank you for the extra disclosures that you've given us, I think, on slide 9. My question being what part of the EUR1.9 billion should we think is not repeating in 2015? And also at the PBC level, thinking about the costs, a question that I asked a quarter ago, the underlying cost base has come down quite nicely to about EUR1.6 billion. And should we think of this as a run rate for 2015. Second question on CDS, single-stock CDS. I understand that this business is being reduced quite dramatically and I wanted to get a sense of what that could mean in terms of the leverage exposure, i.e. scope for further reduction in leverage exposure and what impact do you think that has on the broader credit franchise. Thank you.

So Kinner thank you for your questions. From the cost base I would say that about EUR500 million is not repeating; the EUR300 million in CRD4 for example on the expense, it's a timing issue as we had higher deferred compensation, coupled with the higher base salaries in 2014 which obviously that would start -- be reducing in 2015. We obviously currently don't expect a QR type or some of the large investigations to recur. So my best guess -- it's difficult to say, but my best guess would be about EUR500 million is what is not going to repeat. In PBC -- and I think that's valid for all the divisions at the moment -- obviously, as you know, we still have to carry on some of the CtA and CtB which all is related to the investment in our platforms. That will continue in 2015, yes? So don't expect it, but obviously, as you can track OpEx, obviously our run-rate costs are coming down and should come down. And once these investments in CtA monies go away, then obviously we expect that this then to also be realized in reported cost. The PBC costs, by the way, also included the loan-processing fees that, as we told you, were quite substantial in 2014, which we also don't expect to repeat in the year 2015. I hope that helps. Anshu?

Yes, Kinner, your question on CDS. We promised you when we did the capital raise that within CB&S we would be re-allocating resources away from lower RoA and RoE businesses towards businesses which gave us higher return. CDS unfortunately has suffered quite significantly from the new capital, and particularly derivative add-on rules. And certainly some of the balance sheet reduction that you've seen as achieved is due to our exit from that business. You can look forward to more. We intend to cut our CB&S balance sheet further. In terms of revenues foregone, not meaningful. More importantly, we feel we can remain a very strong credit continuum liquidity provider to our clients without offering significant CDS capabilities.

The next question is from the line of Kian Abouhoossein of JPMorgan. Please go ahead.

Yes, hi. A few questions. First of all on fixed income. I'm just wondering -- your performance was very strong on a quarter-on-quarter basis. I'm just wondering what has been different or what you haven't seen that maybe the US players saw in the fourth quarter, and clearly the highlighted credit issues or credit trading issues in particular. And in that context, how the first quarter has evolved in the industry, considering the yield curve changes that we have seen and how that impacts in you. And in that context, clearly lower interest rates, how is the fixed income environment in this quarter, these yield curves that you're seeing and these much lower interest rates, in terms of trading ability. And the second question relates to coming back to PBC. When I look at PBC, I get the impression -- I can't put my finger on it -- there's very little progress made in the restructuring actually because overall I don't see a material improvement in the results. And I'm just wondering -- staff numbers don't really move much. I'm just wondering, what is it that there's an inability to make a good return in PBC, because we have some of the peers or new entries as well, which are illustrating you can make money in German retail.

Kian, let me take your first question. I think when we talk about our relative outperformance in fixed income, let's bear in mind we had a weak fourth quarter. So we are being benefited a bit from that, but you're right in saying when you take a look at full year 2014, based on the last numbers I've seen, we're up roughly low single digits, about 7%, mid-single digits, while some of our bigger peers have contracted year over year. I would say median peer performance is negative 5%, negative 6%. Deutsche is up 7%. It's always hard for me to tell you precisely what's caused it. I would say -- I would venture a guess, and this is art not science, two things. There's been a perceptible change since summer, which is when we did the capital raise. We made it clear that this was a core business for us. And we've seen some of our peers, particularly European peers, retreat. I cannot prove it, but it definitely feels like we're picking up some market share due to that. Secondly, of course, we've seen a return of volatility and volumes post the summer. So in some ways the macro uncertainty that we are seeing has always played well for Deutsche Bank with our broad business model; it has again. On Q1, we actually talked about it and we felt we should probably provide you a trading update. If you don't mind, I'm going to read it, just to make sure I don't get this at all wrong and get beaten up by my CFO. So here goes; in terms of the trading environment just about one month into the quarter, we see the typical seasonal uptick in activity of a first quarter, but combined with fundamentally better market conditions, as improved volatility and client activity in areas like foreign exchange, rates and equity are driving stronger results in all our core trading businesses compared to last year. Obviously it's still early in the quarter, in a world with tremendous economic and geo-political uncertainty. So I will caution you not to extrapolate one month's performance into broader predictions. Let me just close by saying, we expect higher volatility to persist through the year, so certainly, as always, it's very hard to predict how these trends will continue.

And in that perspective, I just may ask, inverted yield curve, is that an issue from a trading perspective and also the QE-driven lower rates, both on the short and the long end, is that -- could that limit the ability to -- in terms of revenues? Or is that not really an issue?

So the inverted curve is much more of a banking book, NIM, margin issue; it's not so much a trading book issue. We don't really care what happens to the term structure as long as things move and there are volumes. The concern in our European fixed income certainly would be protracted QE could product very low volumes and very low activity which would be a concern. But, frankly, European rates have not been a huge source of revenue for us now for a while, so that would not worry me greatly as long as we continue to see volumes and volatility. I expect the flow side of our business, which has always been important, will remain quite robust; but again, very hard to call it.

Okay, Kian, let me answer your PBC question. First of all, we do make money in PBC. And second, I think we do have a profitable German franchise in PBC. And I think the numbers show the true side; it's not an issue of not making money in Germany, as you allude to some of our competitors. The issue on the cost side, it's obviously we -- PBC is delivering on its OpEx initiatives. We still have investments into the platform and into the integration process with Postbank that are ongoing. And that's why, in PBC, it's similar to any of our other businesses, it's not this clear view through where the ongoing run rate costs will be, but we'll some more of that in 2015. And obviously we then hope, as these programs largely will be completed in 2015, that you then can see the benefits of the joint platform that we're building between Postbank and the Blubank and that we then can realize some of these benefits out of the integration of PBC. So just more an issue of timing. Second, obviously, in the cost line we had these fees, these loan-processing fees that we had to incur. We also had a positive one-off in the cost due to the sale and leaseback I was referring. But overall we just have a burdened cost base in PBC right now, but we understand the challenge. And I think the team around Rainer is doing a good job in addressing these issues.

And, just from my side, I understand you're making returns; I just mean lower returns. But what I -- the IT integration, once that is finalized, what do you think the cost-benefit or the cost savings could be, once you have fully finalized and integrated the IT infrastructure --

Yes.

That you were alluding to?

Yes. Kian, we never disclosed anything specific to the IT component. We said the whole integration will provide about EUR1 billion in synergies, of which we had told you EUR300 million is revenues and EUR700 million are cost synergies. And so far, at least insofar as we can see -- and obviously the projects are not concluded yet -- PBC is on track to be even slightly above that number, as far as we can see right now.

And the next question is from the line of Jernej Omahen of Goldman Sachs. Please go ahead.

Hi. Good morning gentlemen from my side as well. I've got three questions. The first one is on page 14 where you show us the return on equity for the Group in the year and you talk about the 2.7%. And I was just wondering if you could outline what will change for Deutsche Bank to get from a below 3% return on equity to the targeted return of 12%, which I believe is still your stated target at least. And then on page 6 of the presentation, I have two very brief questions. The first one, Stefan, you alluded to seasonality in risk-weighted assets. And that -- can you just elaborate actually what that means and what seasonality is going to increase your risk-weighted in the first quarter; what those factors are. And secondly, on the trading book review and the potential negative impact that could have on capital, can I ask you the following. If the proposal for the trading book reviews were implemented as they stand today, what would the impact on risk-weighted assets for Deutsche Bank Group be? And finally a very brief question. So there is a narrative in this presentation and in this set of results that select things, particularly on the revenue front, are getting better. And I understand the logic behind it, particularly in the investment bank. I would just like to tally the outlook for revenues for 2015; Anshu I listened to a presentation you gave last week where I think you referred to the Eurozone QE as overall positive, but resulting in substantial net interest margin destruction for most Eurozone banks. And can I ask you just to comment on that and what is the magnitude of this headwind for 2015. Thanks a lot.

Okay. Jernej, let me start on your RoE for the Group question. As we have said, for 2015 it will be on adjusted basis, so without legal costs and CtA and the investments on our adjusted definition. And that's a couple of billion of improved results. If I can refer to the numbers I gave you in terms of the performance of the core bank, you see that obviously the underlying performance of the bank is quite good. We had this performance at the EUR8 billion level in -- as I disclosed in the one chart. So it's mainly a result of tapering of expenses and that also will then make us move in 2016 to these results. It's not such a substantial step up in terms of the core performance of the bank that we need to get to these ratios. So I hope that answers your question there. Second, the seasonality in RWA, yes, I understand that this is a little bit cold in the sense that what we mean with that, that obviously as activity will resume in the first quarter -- normally we have quite a bit of activity -- we expect RWA obviously to increase, just related to client activity. And then, second, at the beginning of the year we also always have some additional regulatory phase-in rules that come additional, on top that we will implement at the beginning. So it's only a statement of caution that we will not run with below EUR400 billion in RWA, yes, in the first quarter; that you should expect that to be higher. Take it as such. The trading book RWA, I can't -- to give an estimate, because I would say, as you know, these things are all under review and under discussion, yes? So therefore please understand it's very difficult to make an -- to take a view at this point in time. And I pass on to Anshu.

Yes, Jernej. I think the presentation you're talking about was my Davos comments on a panel. That's right; I think QE is so far proving two sets of impacts for financial institutions in Europe. It's taken overnight rates even further down. And now it's taking ten-year rates down even further. Now, this destruction of net interest margin we've been living with for the better part of 2014, and indeed it started in 2013. So I don't expect it to get much worse than what you've seen already. We're already at very, very low levels. What it does is it locks in structurally low NIM for a long period of time and that's going to continue to impact us, certainly in PBC, but also GTB where are net receivers of deposits, and to an extent in our wealth management business as well. Hard to quantify for you incrementally what that impact would be. Equally, on the other side, certainly thus far we've seen significant volatility in the euro. And we suspect we will continue to see higher volatility overall. That continues; I think you may see something. You may see a progression which hurts NIM to an extent, but benefits sales and trading revenues, but very hard to call. It means predicting where term rate volatility in Europe will wind up, which is hazardous at best.

Thanks a lot; that's very helpful. So, Stefan, can I just follow up on one comment you made before on litigation. You said that you won't hazard another forecast on what the litigation is going to be, but do you think that your forecast that litigation will be higher this year compared to 2013 is wrong in terms of quantum or just in terms of timing, as you suggested?

Yes. What obviously made me put that forecast in place, our view was that there will be a faster resolution on some of the litigation issues and some of the fines and settlements that were going on. Obviously we just have delay; we don't have any further information, so what I will tell you that we don't expect any of this litigation to be lower. So it's just deferral into 2015, which obviously will make the number already much higher in 2015 from our projections. But as I'm not and we are not in control of timing of litigation and settlements, it's very difficult to say how much of the litigation will now accrue in 2015, yes? But obviously much of what I had forecasted in terms of the topics that we expect to be settled, we obviously will now expect for 2015, but there could be further delays again.

And the next question is from the line of Alevizos Alevizakos of KBW. Please go ahead.

Hi, good morning. A couple of quick questions actually. One is regarding the market rumors. So I was expecting you would be able to comment on what's the -- what's your plan basically regarding Postbank? That's one. And the reason I'm asking is because even the Postbank's CEO was commenting the other day that he would prefer the stock to go back to the stock exchange rather than be sold to a different bank. And then secondly, with the recent Santander capital increase -- and apparently it came on them receiving a letter from the ECB -- do you believe that, for Deutsche Bank which is, in my eyes at least, the most systemically important bank in the Eurozone, do you believe that the 10% Core Tier 1 would be sufficient? Or do you now target a higher ratio for the future? Thanks very much.

So, first of all, we told you in the [indiscernible] that we will not comment on our strategic -- particularly not done yet. We have made no decision and therefore, at the right time, in the right moment we will discuss the further developed strategy of the Bank. And on the capital increase, our view is currently we achieved quite good capital ratios. Don't forget that the ECB guidance is on a phased-in, not on a fully-loaded basis. Our current phased-in capital is 15.7%, so much, much above any of these requirements you hear. So you will understand that we are not precisely concerned about this topic at the moment.

Okay. And if I may follow with another quick question. Anshu, you already commented on the fact that there's going to be more caps in the fixed income division and the CDS was a good example. And actually it was great because it reduced the leverage exposure. However, I haven't heard a comment yet on revenues, or may I have missed it? What do you think is going to be the revenue impact going forward of all of this?

We've commented on this already. We believe we can cut our balance sheet quite significantly without losing substantial market share and without a huge revenue impact and we've demonstrated that to you in the fourth quarter. So our quarter-on-quarter and year-over-year performance is rather good despite cutting EUR100 billion nearly of leverage in the fourth quarter, all of which came or a predominant part of which came in the CB&S unit. And this stems from the fact that we still have a large derivative add-on number which we are working on. Frankly, these are legacy derivative positions which can be shed with minimal impact on either revenues, market share or client experience. So we still think we have room to grow in creating greater efficiency within fixed income particularly.

And your next question is from the line of Daniele Brupbacher of UBS. Please go ahead.

Hi, good morning. Thank you. Just on, Stefan, the NCOU unit and the risk-weighted assets there, if I just look at the stated numbers, they obviously went up year over year to almost EUR60 billion. And I was just wondering whether you could share your thoughts around this development going forward. When do we finally see a reduction and what is sort of the metrics you're looking at? And just a bit of an outlook there would be helpful. And also probably in a QE context, is this something which could help you de-lever quicker than originally expected? And then just a second question, the dollar was obviously pretty strong in the fourth quarter. Could you just tell us what the -- from a currency exchange rate point of view -- the impact was in terms of revenues and costs the in the fourth quarter year over year and quarter on quarter? Thank you.

So let me start with the NCOU. The NCOU portfolio is de-risking and reducing as we have stated. Obviously, we also have counter effects from model increases there. And therefore the year-on-year movement including operational risk charges and you know that operational risk charges in the mass are litigation driven and not only Deutsche Bank litigation driven but also industry litigation driven. And that obviously has an impact especially because we carry the legacy litigation within NCOU. The real de-risking was in excess of EUR10 billion total capital demand in the NCOU and that was then regrettably offset by these model increases that I alluded to. Overall for the bank, we still had the positive development that we had a lower, overall lower RWA and a good result especially in the fourth quarter. I would also like to allude to you that obviously the speed of de-risking as we have said in the NCOU will slow down and has slowed down. The year 2015 was the year in which we focused on the disposal of operating assets more than on the run-down of financial assets, and therefore we had overall obviously a slower pace in also balance sheet reduction. But if we continue to do the job and the -- we are not concerned about it. It's just going to be slower as we had previously told you. On your question around the FX, yes, obviously the FX impact as the euro strengthened, it's net positive for our EBIT. It's about 25% of our costs and revenue base is in US dollars, so obviously that has an impact. It is negative for our leverage ratio because we have a large part of our balance sheet that's US dollar denominated. And when that gets translated into euros it will grow over proportionally. On the Core Tier 1 ratio as the chart shows you we have no impact on the ratio. You see capital increases and you see RWA increases, but they are fairly matched to [indiscernible], so we normally don't have an impact. So the biggest negative impact will be on the leverage ratio. There's positive -- it's a slight positive impact on EBIT and no impact on Core Tier 1 ratio.

Thank you very much. That's very helpful. Can I just ask one quick follow up on RWA? During the prepared remarks you mentioned this Q1 uptick in RWA in CB&S and there was a question then during Q&A. Just to clarify, is it entirely due to seasonality and phasing dynamics or is there also an underlying change which you expect in Q1 of the regulatory model changes?

No, it's a multitude of topics and especially business coming back normally quite strong in the first quarter. But mainly seasonality, yes.

And the next question is from Stuart Graham of Autonomous Research. Please go ahead.

Hi. I have three questions please. The first one is the target for ROE, cost/income ratio and divisional profit you gave at the time of the capital raise, are they all still valid for 2015 and 2016 or are they on probation whilst you do your strategic review? And that's the first question. The second question then is I'm guessing you've submitted your plan to the Fed now on your US IHC and I wonder if you could update us on how that plan has changed, if at all, from what you've told us in the past. And then the third question is I'm guessing that you cleared that plan with the ECB as your new regulator and I wonder if you can tell us how their stance on capital down-streaming and large exposure limits has changed from the stance of Bafin if at all. Thanks.

Thanks Stuart for your questions. So our targets for 2015, they remain in place as targets and valid until we do the strategic review that we have announced. And obviously, if the strategic review will have an impact then we will then update the targets as per the strategic review. Achieving obviously our prospect return on equity target continues to be a challenge given that we have made substantial efforts to strengthen our capital base as you know. And additionally we expect some upward pressure on our tax rate due to the non-deductible litigation items, significantly increased bank levy charges that are basically not tax deducted as well as changed regional mix. So that's why overall it has become even more challenging and we have more headwind. But in terms of trying to achieve them until we replace them with the new targets out of the strategic review, we continue to run the bank towards these targets. To your IFC, the plan has been submitted indeed and there was no changes from what we have previously communicated. And please understand that obviously, we had discussions with all our regulators and despite the regulators also communicate with us, but I cannot comment on any of those observations and discussions.

And the next question is from the line of Jeremy Sigee from Barclays. Please go ahead.

Good morning. Just three follow up questions please actually. So one is on an earlier question about future capital requirements. You said you're not concerned because it's all on a phasing basis. But is it reasonable to think that requirements are drifting up from 10% to something higher, maybe 11% or 12% in the light of the letters the ECB has been sending and what we've seen in the US with JPMorgan requiring a higher level etc.? So would that be a reasonable expectation, first question. Secondly, a clarification. You mentioned bank levies being about EUR100 million you expect in 2015. Does that include everything including the contribution to the resolution fund as well as deposit guarantee fund all that side of things as well as the other forms of bank levy. Second question. And then thirdly, could you talk a bit more about the CB&S cost trajectory. I know you've talked about it a little bit and you flagged step-ups in regulatory cost, platform spend and also the compensation mix. But I just wondered how we should expect that to play out and whether any of those things give you a saving either in 2015 or 2016. So just the sort of trajectory of that hump.

Thank you. Let me start Jeremy, with some of your questions, the first one around the future capital requirements. Obviously it's no secret that there's phase in etc. and that we expect capital pressure to continue. We continue though to see our 10% as a prudent target overall. And anything we can see and that's obviously why you do a capital plan, we will be able to meet of this our own 10% targets. Obviously I don't know if there's any additional challenges coming. I made you aware that obviously there's -- now we assume a horizontal view of regulatory practices in Europe that may have an impact as well. But we -- obviously it's very difficult for us to estimate this from this perspective. But again in our phasing scenario we have ample room right now and therefore obviously also assuming that some of our one-off expense will start to tail off and we might be able to build capital, I think we should be fine from our perspective today. Now, the bank levies, the latest you know our estimate -- I didn't catch you whether you said 100 but I said several hundred in the presentation, over 2014. So it's significant. And the problem of this is it's still on the beginning of the year, so we cannot answer if it will be fully loaded to the first quarter. The number is not final, the maths is not final. That's why I can't give you any more specific numbers at this point in time. We -- on your question on the CB&S cost base, obviously we continue to target reductions in CB&S like in the rest of the bank. But obviously CB&S will be impacted by the SRF from 2015 and also increased regulatory spend. The trend we're just seeing, you know we gain efficiency on the one hand, but we have an additional control and regulatory spend to digest. But as you know, the underlying cost base in CB&S has really shown significant reduction over the last three years. And our current expectation is that this will continue in 2015.

Next question is from the line of Fiona Swaffield of RBC. Please go ahead.

Hi, good morning. Just a couple of clarifications on costs for the NCOU. On the NCOU slide, looking at the 2015 outlook, should I interpret it to be that the negative drag from the NCOU would remain relatively similar ex-litigation in 2015 and it's really 2016. Could you take us through how we should be thinking about the NCOU in future years? And then on the costs, on the underlying number of EUR23.8 billion, I just wanted to understand, are you saying that the EUR500 million of regulatory, I think [indiscernible] will drop out this year and then we'll get the benefit of underlying cost saves as well. So that should be substantially lower in 2015, the underlying cost base? Thank you.

Let me start. I was only asked how much of the additional regulatory cost of the EUR1.9 billion was -- we expect to be ongoing rather than one-off. And what I clarified is about EUR500 million of those were related to specific topics like the introduction of the CRD4 compensation guidelines which impacted our year-end result by EUR300 million which is a tiny effect. That should taper off but will not completely go off in 2015, but will start tapering off and should be done then by 2016/2017. As an example, I did refer the EUR500 million we had obviously is costs related, significant costs related to the AQR exercise that obviously should not repeat. And obviously we had quite a bit of investigations ongoing relating to the topics and as you know many of these investigations are in the process of being closed. So there will be some remainder in 2015 but from our current view, some of that will go off. There might be new investigations, but we don't think that there will be a new AQR. This is obviously things that I can't estimate at this point, but based on what we expect from today, some of these costs are one-off in nature and will disappear. And to your negative drag, the NCOU is about -- we will see another year of NCOU so yes [indiscernible] litigation. Obviously we have sold and disposed of quite a bit of assets, so some of the revenues will go down. We keep liabilities. Some of these liabilities still have a few years till maturity. There will be expenses related to those. I did disclose to you that the liabilities that are creating like a EUR100 million hit a quarter and obviously those liabilities we're not disposing right now. We also would like to make you aware that the NCOU as a business division carries allocated costs from the Group and our assumption is also that this allocated cost will not disappear for the Group but obviously might then over time go and migrate into the other divisions.

And the next question is from the line of Huw van Steenis of Morgan Stanley. Please go ahead.

Hi there. Just two quick clarifications. One in the non-core unit, given that you've still got that 15% of your RWAs there and you're telling us that the pace of change will slow, one way to read this is that the cost to exit assets has been actually so high you're actually playing quite a long game. And I noticed your IAS-39 assets are pretty much flat. So as we think about this, should we actually think it's not just the next two years, but actually there's just a longer tail as you're playing a longer game to exit those assets at a reasonable price? And then secondly, in retail and obviously you're a long way off from your 12% target, and given the headwinds from QE that Anshu mentioned, what extra cost cutting or efficiencies should we start to be thinking about for the retail division and maybe at least conceptually what sort of levers are you thinking about pulling? Thanks.

On the second question, I would defer to the strategic review. I think that's better to discuss in this light. And on the first question on the NCOU you are right that obviously we -- and which we always said that the easy to sell part went first and that also as you saw even delivered profit there and our disposal exit had quite a success. It financially also a success. We have always told you that we're going to wait for some [indiscernible] we have some significant maturities coming. So it doesn't make sense to dispose of some of these assets shortly before they mature especially if they don't carry any further loss. So yes, the activity will be reduced and there are -- not all, but there are a few longer dated, longer running assets in this as well that will be more difficult to dispose. But fair value/book value gap on IAS-39 assets is very small and that's in that sense not a concern we have.

Next question is from the line of Andrew Lim of Societe Generale. Please go ahead.

Hi, good morning. Thanks for taking my questions. Just on a couple of comments that you made earlier about some costs within the NCOU which are carried for the Group and would be reallocated back to certain divisions as the NCOU winds down to zero. I was just wondering if you could quantify that in some sense. And then my second question is about the investment bank. If we try and look at the risk-weighted assets and say, an allocation of leverage exposure for the I-bank then the implied risk density is actually really low for the investment bank, something 23%, 24% which seems a lot lower than peers. And what I'm getting at here is that for the Group, the I-bank as much as any other division has a reason for low risk weight density. And I'm wondering if that's something that you concur with for the I-bank and why if that is the case that should be so. Is it something to do with business mix or different types of modeling that you use? And then my third question is on the loan processing fees. I just wanted to get a sense of confidence from you as to this being an issue which is completely resolved or whether this is something that could inflate in the future. I know you said there's no expectation of further fees going into 2015. Is that on the basis of an industry settlement and that's your share of it or is that just basically your assessment of what should be paid out as of this moment in time?

Okay, Andrew let me cover your questions. The costs of the NCOU that are allocated is around EUR450 million that we will -- that is currently corporate costs allocated. Some of it obviously as NCOU disappears may go but obviously most of it will probably stay as allocated costs from the Group. The component of this that will go is there is obviously some direct costs included that is related to central staff for example or projects that are related to the NCOU explicitly that we can allocate directly and some of it obviously is then Group cost.

Sorry, is that EUR450 million on a quarterly basis or annual basis?

No, no, annual. We couldn't afford it on a quarterly basis.

Okay.

It would be too much of the Group tax in that sense. So that -- this is the number. The second was your question on density [indiscernible]. I think at the end of the day you can really conclude that it's the quality of the book. Our RWA density is better than our competitors' ones. It's what we've seen in the Group overall. You know we have -- you have to look at our loan loss provisions as one of the driver of RWA density. It's so much better and therefore [indiscernible] why we carry lower RWAs.

Sorry, can I ask would you agree that your investment banking risk-weighted density is a lot lower than comparable investment banking for other peers.

Yes.

And why would that be the case then?

I didn't get your last question. We are much lower that's true. But obviously we have a big rates business. We have a big rates business and you also have to look at the mix of our businesses. That's why our RWA density is lower. And you have to look at the quality of our assets and if you look at our loan loss experience for example etc. we just are different. And so it's partially business model driven and partially quality of assets driven. And it's a known factor. We've had this discussion previously. Okay? The loan processing fee question is we believe it's resolved. We've put reserves aside, plenty of reserves aside. You know it's driven by a court ruling. Customers could send in claims until December 31 of 2014. There might be minor true-ups , but we feel -- we continue to feel that we're quite well provisioned for that. And all our German competitors should feel similar effects at the moment. But we believe the issue is let's say largely resolved.

Next question is from the line of Omar Fall of Jefferies. Please go ahead.

Hi, good morning. Just two questions please. Firstly, and apologies if I missed this at the beginning, but just on the prudential valuation of EUR1.5 billion to EUR2 billion, could you just highlight when that will be taken please? And then secondly, just some more color on the rates business within. It's somewhat confusing to hear the fairly unanimous commentary from the US brokers on the recovery in rates in Q4 thanks to higher [indiscernible]. Yet you're saying it was more challenging for you in this quarter due to Europe. Can you just highlight whether that was largely a positioning issue or related to client activity? Also, does the guidance you gave for the strong start to the year encompass rates as well please? Thank you.

Omar, let me answer your first -- the first question and Anshu is going to answer the second question. The approval will go into our capital, official capital count as soon as the European law, as soon as the European parliament is debating it and as soon as it becomes law we'll include it. Nevertheless we have disclosed it to you so you could calculate the effects yourself on our capital ratios. And then Anshu.

Regarding Q4, no, there was nothing remarkable about our positioning. It's possible that perhaps the bulk of the asset reduction which is going on could be happening in the rates business. Maybe that had an impact. Hard to tell you why there's a differential between us and the competition. We definitely had a better experience in credit markets and in equities than we did in the fourth quarter. In the first quarter, definitely call rates are running quite a bit higher than the same quarter last year.

Next question is from the line of Robert Murphy of HSBC. Please go ahead.

Yes, morning guys. I just wanted to come back to costs. And obviously your original plan had quite a lot of CtA charges. But when I look at your underlying cost base and it has drifted down a little bit over the last three years, but plus or minus it's around EUR24 billion. Revenues have ticked down a bit. So the underlying cost to income ratio is still 74%, 75% even adding back the DVA stuff. So I'm just trying to understand how much more restructuring you're going to have to pay to get your cost/income ratio down to 65 because I think from my numbers you're going to get another 700 or 800 to take versus your original plan. Thank you.

So first of all, I would like to echo what Anshu also said. We are not so happy about the cost development. As we have done in the presentation, we told you that obviously partially regulatory costs, partially business costs has affected therefore our achievements in our OpEx program. Currently we are not planning further investments into the cost base to achieve the cost/income ratio. And again we have EUR1.2 billion of savings to come now in 2015 according to the numbers if you calculate the EUR3 billion we already disclosed and the total effectiveness of the program as we had laid it out. So we should see a decrease in the cost base in the underlying cost base coming. That's all that we can say. Regretfully obviously and that's these one-off costs I was referring to, we have quite a bit of one-off costs to absorb mainly for regulatory activity.

So are you saying that your new strategic review isn't going to lead to massively more restructuring?

No, no, I'm not commenting on the new strategic review because there's no decisions yet. So it's for me difficult to make any comments on that. I can give you additionally that don't forget that the sale of the Cosmopolitan for example will positively affect our cost base because about EUR500 million because we owned it till December 20. So at the end we have a full year cost effect on Cosmopolitan which will also be reduced. So just to give you some idea that the some of the activities that are coming will obviously have an impact on the cost base.

And your last question is from Jon Peace of Nomura. Please go ahead.

Yes, thanks for taking my question. I've got two actually. The first one is on your risk-weighted assets, you've obviously got quite a bit of run-off still to come from the non-core unit. So if you think of your EUR400 billion total, where could that go in the medium term once you've gone through these various exercises from the ECB etc. you've highlighted. Do you think it could be more than EUR450 million, more than EUR500 million or is that too much to expect? And then the second question is in your recent discussions with the ECB have they given you any instructions around the dividend in terms of your ability to pay target capital levels etc. Thanks very much.

Jon, to your second question, please understand that I cannot comment on discussions we have with regulators. And the second on the RWA, it's very difficult for us to estimate this and we believe they will continue to go up. We expect that. Partially we obviously expect still some business growth but partially we know that there's additional headwinds coming in terms of additional regulations. It's very difficult for us to estimate as I said the comparison of regulatory practices across Europe, where this is going to result. So it isn't good for us to make statement or any estimate about it. So we did make you aware that operational risk will continue to increase. You know we have litigation. Both litigation settlements of the bank as well of other banks influence this operational risk and that one is for sure going to climb and to increase. So we regretfully can't give you a better outlook.

I hand back now to John Andrews.

Operator, thank you very much and apologies that we have to end this a bit early today. As you know we do have a press conference that the management now has to attend to. Obviously the Investor Relations team is at your service for any follow-up questions. Do feel free to reach out and again thank you.