Ladies and gentlemen, thank you for standing by. I'm Miavale, your Chorus Call operator. Welcome and thank you for joining the First Quarter 2016 Analyst Conference Call of Deutsche Bank. Throughout today's recorded presentation, all participants will be in a listen-only mode. The presentation will be followed by a question-and-answer session. I would now like to turn the conference over to John Andrews, Head of Investor Relations. Please go ahead.

Operator, thank you, and good morning to everybody here in Frankfurt. I'd like to welcome you to the earnings call this morning. I'm joined by Marcus Schenck, our Chief Financial Officer, who will take you through the analyst presentation, which is public and available on our website at db.com. I'm also pleased to be joined by John Cryan, our Co-Chief Executive Officer, who will participate in the Q&A session at the end of today's prepared remarks. As we did last quarter, I would ask for the sake of efficiency and fairness that questioners please limit themselves to their two most important questions so that we can give as many people a chance to participate in the Q&A session as possible. And to ensure the absence of doubt, two questions do not means six. Let me also provide the normal health warning to pay a particular attention to the cautionary statements regarding forward-looking comments that you will find at the end of the investor presentation. With that, let me hand it over to Marcus to take you through the presentation.

Thank you, John. Good morning and welcome also from my side to our Q1 results call. We recorded net income for the quarter of €236 million, with revenues of €8.1 billion and non-interest expenses of €7.2 billion. RWA at quarter-end was €401 billion and leverage exposure was €1,390 billion. Core Tier 1 ratio stands at 10.7%, and leverage ratio is at 3.4%. Allow me a short comments on the calculation of the core Tier 1 ratio. It is fully loaded and takes into consideration the management board's decision not to propose any dividends on common stock for the fiscal year 2016, hence do not accrue for the same. Please note that this is still subject to no-objection by the ECB Governing Council. Clearly, this has been one of the most challenging quarters in a while because of the difficult market environment. All our businesses that are linked to the capital markets experienced a significant decline in revenues versus Q1 of 2015, whilst our other businesses remained more resilient and have not been affected in such a severe way. We actively manage our risk-weighted assets so that we did not have the usual seasonal increase in RWA during Q1. Nevertheless, Core Tier 1 ratio declined to 10.7%. The Hua Xia sale, which we expect to close in the second quarter would have added another roughly 50 basis points to our Core Tier 1 ratio. Let me go into some more detail for the quarter, starting with the usual net income bridge. Turning first to revenues: At constant exchange rates, reported revenues for the quarter are down €2.2 billion compared to Q1 of 2015. That is a 21% overall drop. Relative to the last quarter, which is the fourth quarter of 2015, revenues were up 24%. We saw a substantial decline in…

Thank you, Marcus. Operator, can we start the Q&A session, please?

Ladies and gentlemen, at this time, we will begin the question-and-answer session. And the first question is from the line of Daniele Brupbacher of UBS. Please go ahead.

Good morning, and thank you for the presentation. Just two things, one on Postbank and one on the NCOU, please. On non-core, you reiterated the below €10 billion targets for year-end, but obviously in Q1, there was a bit of slow progress here. Could you just talk us through what will drive the further reduction and how much dependent that is on market conditions in terms of – that we will see a bit of an accelerated profile? That will be helpful. And then just on Postbank, could you share your latest thoughts regarding the planned IPO? And in that context, for us, in order to value that business. If I look at slide 18, you did say the legal entity Postbank will still have somewhat different numbers driven by separation effects and C&A. Could you just quantify those? Does it mean that the €177 million pre-NCOU would be higher all over? That would be useful, thank you.

Good morning, Daniele. It's John. Maybe I'll take the one on NCOU and then Marcus can give you an answer on the Postbank question. On NCOU, I think the first point I'd make is that, it's important to realize that a lot of the positions left in NCOU are not straightforward market liquid positions. And a lot of the exits that we're planning for this year are actually negotiated exits. The skill set that we're applying to that division now is much more akin to sort of corporate finance, almost M&A style negotiations of each position. A lot of that is unbundling. For example, we've unbundled (38:28) insurance that holds – that have assets held against them. So, the position is driven by a hedge rather than by the asset side. On the equity portfolio, the two big positions we've now contracted to exit as Marcus said, the Red Rock IPO priced a couple of days ago and we've contracted with the buyer on the board and they take a while to complete; the IPO not but the negotiation with the regulator on the board will take a quarter or more. So, a lot of what we're doing is actually teeing up exits that will crystallize later in the year. You're right that in the first quarter some of the more liquid asset disposals were a bit slower, but we don't expect that to continue. And at the moment, it's not posing a problem to an extent that we need to reduce positions.

On your question in relation to Postbank, or the two questions, first on the difference between standalone and the segment, for the first quarter this will be roughly €45 million difference, which is essentially the de-consolidation costs being the single biggest item within that, so the separation cost that we incur when carving out those activities that needed to be carved out or handed back to Postbank. Now, where do we stand on the process, I think, here, I can only reiterate what we communicated in January which is that Postbank, a little bit like Deutsche Bank, has sort of two restructuring tasks. A, they have their own program to improve the cost position of the bank which is making a very good progress. And B, they're also looking to further enhance the asset mix of Postbank which is, I would say, super risk conservative at this stage. And they have now embarked on a route to basically enhance the margin profile of the bank making good progress as we can already see a bit of that in the first quarter by expanding more into consumer finance, as well as also increasing the corporate footprint of the bank. All of this will take some time, and as we said in January, we think we are highly likely better advised to await some of the improvements, both on the cost and on the margin side, before we embark on selling the assets.

Thank you very much.

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

Good morning from my side as well. So, I have three questions, please. The first one is a numbers question, I guess. I'm looking at Deutsche Bank making a profit but the tangible book value per share going backwards, and I guess the key reason is this foreign-currency translation impact of €1.1 billion this quarter, and I just wonder whether you can just shed some more light as to what the key moving parts were within this line. The second question I have is on capital formation and ECB's SREP ratio, so the ECB is saying that the SREP ratio for Deutsche is 12.25%. Deutsche is now broadly, I think, 200 basis points short of that number, so if we should take into account the guidance from the start of the year that this year is going to be broadly flat, potentially slightly loss-making as a whole, so, no capital formation this year. This then leaves you €8 billion of capital to be formed over the course of 2017 and 2018. I just wondered to what extent you feel that that is a target that's comfortably achievable. Because it does imply a reasonably steep return on equity for both 2017 and 2018. And the last question I have is the traditional question on the foreign bank organizations rules and their implementation, so I think we've got the quarter left until those rules go into effect, and I was wondering if you could update us as to how the preparations for the implementation of those rules are going. Thanks very much.

Good morning, Jernej. So let me start with the one that probably most people find relevant, which was your second question. Yes, SREP needs to then eventually be at 12.25%. Yes, we do expect capital ratio to predominantly be – to basically be flat for 2016. But no – I think your math is right when you assume that you keep RWA completely flat. But as we highlighted in our strategy announcement, there's two factors that will allow us to get to the required capital ratio. One is the generation of capital, both through basically producing profits but partially also through some disposals which we expect to have a positive impact, Hua Xia being an example for that. And then secondly, we will be taking down RWA, most notably, clearly here we need to highlight Postbank which will mean that there's €40-plus billion of RWA that will leave the bank. And we will also have a benefit from the reduction of the non-core unit which was not producing profits. We'll improve the Core Tier 1 capital ratio for the bank. So, that – those are and continue to be the drivers that we are very confident will allow us to achieve the necessary capital position.

Marcus, can I just ask, do you think that the disposal of Deutsche Postbank increases or decreases the SREP ratio requirement?

It doesn't change it.

Do you think it's – the ECB will say it's still 12.25%?

Yes.

Okay. Thank you.

Yes. Jernej, it's John. Don't forget that the SREP is based on phase-in ratio and in Q1, our phase-in ratio was 12%.

Yeah. I know.

The 10.7% we've shown you, 11.2% pro forma.

No, I get it. Yeah. Yeah. I get it.

And the – you almost answered your first question yourself. It is, indeed, mainly currency movement and the capital and then the AT1 that drives down tangible book value per share. On the FBO or the creation of the IHC, yeah, I would say we're well on track. The one item that we still find most challenging is making sure that we are in a position to produce all the required reports automatically from our systems given this has never in the past been really the way we looked at the business. That is probably the single biggest challenge. But we have – all the governance is now in place. We have reorganized the businesses so that we essentially run the IHC more or less as a separate division. Now, separate not as in it is no longer kind of linked into the businesses, but we have a management team for the IHC. There's a board for the IHC. The internal reporting has been set up for the IHC. So, we actually view this whilst costly, we view it as a project which is actually quite well on track and do not expect hiccups until beginning of June.

Okay. Thank you very much.

Next question is from the line of Kian Abouhossein of JPMorgan. Please go ahead.

Yeah. Hi. Thanks for taking my questions. First question is related to the cost side. €26.5 billion was set when the revenue environment was quite different. And year-on-year, your revenues are down around on a group basis, let's say, around 20%. And I'm wondering, I can understand the investment cost, wondering why there shouldn't be more room on the variable side as a minimum considering that the revenue line looks also weaker; and in that context, are we still talking with this kind of revenue environment that you see at €1 billion to €1.5 billion net cost reduction over three years? And then the second point, the second question is related to earlier indication that was given on profits where the indication was that we could have a slight loss of profits for the year. Considering that this was a very tough quarter, and it looks like you're doing more cost measures in the second half rather than the first half, and litigation is well managed, is it not fair to say that one can be more confident that you actually make a profit for this year? Thank you.

Okay. So, I think your first question, if I get it right, is why aren't we seeing more flexibility on the cost side yet?

Sorry, if I may say cost guidance. I mean, you're saying flat year-on-year. Revenues are down 20%. So, you know people should not – expect to pay the same as revenues go down.

Yeah. So, when I alluded to cost being set for the year, I said that we still expected the adjusted cost to be flat versus 2015. We are of course, and I think I highlighted that in my remarks, looking into potentially accelerating some of the cost measures that we have planned until the year 2018 as a reaction to what we are now seeing in the market. Clearly, if volumes – if market activities stay at a low level, then we will react to that. We have seen March and also April to clearly improve over the performance in January and February on the revenue side. So, in that sense, I would say, in a way, it's too early in the year. But we are looking at ways to potentially improve the cost position by accelerating some of the measures. But at this stage, we don't want to give out a revised guidance for that. The 2018 target is still our target. So, there's no change to that. I think we've always said in October that we think this is an absolutely realistic target for the bank, which we are highly confident we can achieve. And we've also never made a secret of the fact that if there's more that can get done, then more will get done. But our stated target is unchanged. Now, as it relates to net income for 2016, I think I can pass that on to John who I think was the last – who has made comments on that.

Yes, okay. And I don't think I have much to add over and above what I said publicly in London a month or so ago, which was on an operating basis, the year is looking in line – first couple of months were very slow, especially compared with how they normally are. The issue that we have is that we want to get an awful lot done this year. And the point I made about profitability is that to some extent the lower the profits or if we have a marginal loss, it could be more the hallmark of success and a bigger profit may be a hallmark of us not having achieved doing a lot of what we want to achieve. So, for example, although yet we haven't reached agreement with the workers' council in Germany, and so we haven't yet brought ourselves into a position where we post up the remainder of the restructuring reserves. We'd like to get there and we'd like to post our restructuring reserve. Similarly on litigation, we'd like to settle as many cases as we can and the possibility that that could cost us additional amounts, where we choose to settle at amounts over and above whatever reserve we might have just to clear it away and remove the uncertainty. So, to some extent, the worse the outlook looks on paper, it may be indicative of us being able to clear a lot of the backlog of work that we've set ourselves. But at the moment it's unclear to us whether we are making a small loss or a small profit, but at the moment, it's looking as though we are on the cusp.

Okay. Thank you very much.

Next question is from the line of Stuart Graham of Autonomous Research. Please go ahead.

Oh, hi. Thanks for taking my question. I had two questions. The €15 billion to €20 billion RWA managed down, where does that come from? I'm guessing it's in global markets. That's the only business where you could move RWA down so much; and last quarter you were saying how new business in global markets was really good and how you're investing, and how you really like that. So, how do you square that? Then I guess, as a subset to that question, what's the revenue attrition that you expect to come with that €15 billion to €20 billion? And then my second question was just a clarification question. Maybe I misunderstood, but, Marcus, you said that the Core Tier 1 ratio is going to be flat, flat on what? Is it presumably flatter, the year-end Q4 2015 rather than Q1 2016? Maybe I misunderstood. Thank you.

So, yes. First, your second question, yes, what I meant is referring to the year-end 2015 Core Tier 1 ratio, and that's for 2016 we expect to be flat on that. And then with regard to the €15 billion to €20 billion additional RWA reduction, confirmed, the lion's share is in global markets, but we expect that to be at around €10 billion and there are indeed also in the other segments ways that we see to reduce some of the RWA; in particular in our PWCC segment, we do see some potential to reduce without it having a material impact on the revenue side. So, it's not exclusively going to be market. It's basically spread across predominantly PWCC and markets.

But, I guess, then last quarter, you were saying how you like the new business in global markets, how you're investing, now you're burning the furniture in global markets in order to keep the capital ratio going up. I mean, I guess, back to Kian's question, you could cut cost, you could cut capital, you seem happy to cut RWAs in the business you were saying was good last quarter, how do we think about that?

So, look, I think we've always said that in markets we were going to reduce the perimeter. We were going to take down RWA, and there are activities that we are shrinking or partially exiting. Some of that is partially reflected already in our numbers. I highlighted it in particular in the area of securitized trading. We have, in the last couple of quarters, reduced our RWA through that segment, and we will continue to do that in the remaining quarters of the year. And there are some other segments that we highlighted at end of October. We have exited some of the emerging markets – global markets presence. Clearly the single biggest one to be highlighted there is Russia. So, we've always said that in GM we were going to reduce our RWA footprint. It doesn't mean we don't like the business, we always said we need to focus it more, and that will allow us to also reduce the RWA in that segment.

Maybe I misunderstood. So, I thought last time the message was 2016, RWAs in global markets were flat, and then 2017 and 2018, we cut them. It sounds like the 2017 and 2018 cut is you are now bringing forward into 2016. Is that correct?

Correct.

Okay. That makes sense. Thank you.

That's correct.

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

Hi. Morning. It was further questions on RWAs, two parts. Firstly, on op risk, obviously another big increase this quarter. And you mentioned you've held some of the increase you're already expecting. How should that play out going forward and if you got any comments on kind of recent proposals out of Basel kind of standardized versus AMA because I think your original guidance on op risk was based on AMA rather than standardized. So, how would that change? And just generally on the overall technical inflation that you expected on your 2020 update in October. Had anything changed to make you change that number or are you more confident, for example, the trading book review? How do you feel now that you've had more chance to look at the new final rule? Thank you.

So, let me start with your second question first on the inflation assumption. We obviously have clarity now on the FRTB. That, as we highlighted, came out in a way that we feel comfortable with it, and that is very much in line with our assumptions that we made at the end of October. With regards to credit and op risk, yeah, the final verdict from Basel is still pending. There have been new consultation papers. There's now going to responses back to that. We have not seen things or expect things that would cause us to change the inflation assumptions neither to the downside nor to the upside relative to what we communicated in October. So, our guidance for inflation would still be the same as we highlighted on October 29. We do expect for the year 2016 further increase in op risk largely because of how the impact of litigation cost works as the biggest driver. Now, with regard to the question of AMA versus standardized, I think what we see happening actually is a more or less a convergence of the two, also something that we alluded to in October of last year that indeed we see our AMA model driving up op risk quite materially in relation to the litigation charges and getting closer to where we would land using standardized approach. So, that, including the inflation assumption that we highlighted, we think that basically our AMA model will take us to the same level that we would stand at with standardized approach.

Thanks very much.

Fiona, I'd just like to add that – just to clarify, we're not making any changes to our plans as a consequence of the two working papers the BCBS issued a consultation on operational risk-weighted assets, non-credit risk-weighted assets. And we're relying, therefore, little bit on the strong statements made by the GHOS, The Group of Governors and Heads of Supervision that there'll be no net impact on capital requirements for banks. That seems to reflected by the noises coming out of Brussels. But as Marcus said there, there could on the surface be an impact as the BCBS papers were implemented, as they were issued for consultation. But so far, no changes at all to our approach.

I would say the only change in guidance that I would dare to make at this stage is that there's one assumption where I think we would probably revisit that and that is in October of last year, we said that we expect the inflation all to be applicable with January of 2019. We know for FRTB it's going to be end of 2019. I dare to say that our base case on the other two would probably also not necessarily now land for January of 2019, which is maybe just a detail point but it may be more than a detail point because going back to Jernej's question on the creation of capital to get to the relevant ratios; I think we have at least one more year to get to the relevant ratios compared to what we had expected in October of last year.

Thanks.

Next question is from the line of Al Alevizakos of HSBC. Please go ahead.

Hello. Good morning. Thanks for taking my questions. Both of my questions are effectively on capital and leverage. Quick question following Fiona's question just before. What I'm wondering is if you believe that actually SREP requirements will still stay at 12.25%, when all these rules come into place in 2019? And the second part of the question is whether you believe that you still need the 4.5% to 5% leverage ratio? And also, John, to your comment that I've read on Bloomberg probably last week, what's your opinion now on AT1 securities? Do you still target to issue another €3 billion to €5 billion or now this plan is scrapped? Thank you.

Maybe I'll take the first one and then John talks about AT1. So, look, I think so far, we can only rely on what we've been told and we've been told by the ECB that our SREP level has dropped 0.25%. So I think it would not be prudent to make the assumption that once the inflation kicks in, we sort of anticipate that we will see a decline in the SREP level. I don't think that it would be prudent for us plan for that. Clearly, we're always scratching our head in trying to better understand what exactly is meant when basically all the regulators are saying that they don't want all the new rules to have an impact on the capital position on average for the bank. Exactly how the math is going to work and I'm sure you hear the same from our peers that everything that we're seeing so far come out of Basel is pointing towards an RWA increase. I have not yet spoken to many that are highlighting that you're seeing a bit decrease. So, if there is on balance an increase in RWA and all the ratios stay constant, math would say that then there is more capital needed somehow. But – as I said, we are not planning for a decline in the SREP level. I don't think that would be prudent. On leverage ratio, here our target still is, as you mentioned, 4.5% to 5%. It's really more a target for us. It's not I would say a binding constraint like the SREP level. So, the SREP level we absolutely have to be north of 12.25%, north as in there has to be some buffer to be put on top of that. On the leverage ratio, the ECB we see it to be more relaxed on that metric but given how the perimeter reduction works for the bank given where we expect us to be from a capital position, the 4.5% to 5% is more something that will almost automatically result. But it's not as firm a target for us as the 12.5% on the Core Tier 1 ratio. And on AT1, John, you want to comment?

Well, I think the AT1 is part of a bigger issue for us when we look at the structure of our capital. At the moment, we're still working on the assumption that the German rule on the TLAC comes into full force and effect, I think, in January next year, that then renders us, I think at the moment, something like a TLAC ratio of something like 27%, which is way above the requirement. We have – essentially, TLAC, I think the latest number is about €109 billion, maybe even slightly higher. It's in the appendix. €66-billion-plus of which would be non CET1 TLAC. The question is whether we're held to that as the limiting factor or whether we do need to issue some form of AT1. We always look at the AT1 from a group consolidated perspective. We do use it, actually, internally between entities. And there, it does have a useful use for us. And it will remain part of the potential toolbox. But at the moment, just looking at the price, for example, of our 6% euro AT1, now would not be a good time to issue any of this stock. And I think the market is still very uncertain as to the way that it operates. It's still a little bit subjective. It's not clear how it ranks versus TLAC although it forms a part of our TLAC, and because there's a subjective override from the perspective of the regulators. But they're our views. But I'm not sure those views are always certain, and when I speak to investors, I get such varying views that all I can conclude is that we still need to do a lot of education work, or the market generally needs to do a lot more education. So, it's still potentially part of the toolbox, but it's not a particularly attractive instrument for us from a pricing perspective. And I still think it's not as well understood by the market as it should be. And also, in the context of a German company involves issuing shares, and I've got this philosophical view that if you issue shares and have them count as debt, it's not as good as issuing shares and having them count as shares. But that's my view.

Okay. Thanks very much.

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

Good morning. Thank you. My first question is coming back on to the cost point, and specifically just taking global markets. It looks like the underlying costs there are about €400 million or €500 million heavier than they should be. They're very close to last year's 1Q which is a much higher revenue level and €400 million or €500 million above the 2Q, 3Q cost run rate underlying, which is a much more similar revenue run rate. So, are there any specific items, lumpy things causing that heavier 1Q 2016 cost level in global markets, because otherwise, it seems a bit baffling. My second question is about NCOU. You talked about successfully running down the assets in NCOU and potentially allowing you to fold it back in, so effectively it disappears. I just wondered what that means for the P&L drag from NCOU because if we look at consensus expectations, they're really quite a heavy drag, something like €3.5 billion in 2016, still €1.5 billion in 2017. And I just wondered if there's scope for some of that P&L drag to disappear as the assets effectively disappear now.

So, let me first go into your first question. I think your first question is suggesting that we do see an increase in our adjusted costs in global markets quarter-on-quarter, that's actually not the case. So, there's a decline on the adjusted costs in our markets segments quarter-on-quarter. So, I don't know what exactly you are alluding to there.

Well, let me tell you there's a very slight decline year-on-year, so you've set a number of €2.335 billion for 1Q 2016 clean, and clean for 1Q 2015, it was €2.4 billion; but clean for the remaining quarters of last year was €1.9 billion, €1.9 billion, €2.0 billion based on the numbers that you gave for litigation and restructuring and severance. So, versus 2Q, 3Q or 4Q, it looks from your number it's a €400 million or €500 million increase in the cost level in global markets.

So, the biggest difference is that the bank levy has been fully booked into the divisions this quarter, unlike what we did last year where we phased that into divisions throughout the year. So, that's a big driver for the segments. And in fact, the front office – when you look at the direct costs of the front office, they actually have taken out both people and costs. We have seen some increase on our infrastructure cost sides, which we always said is a longer journey to take that down, but sort of the biggest difference is – it's on the bank levy. Now, with regards to your other question, do you want to do that, John?

I'm happy to do it. I think, Jeremy, on the NCOU, the plan is at the end of the year for there not to be that much left to get back into the divisions. At the moment, there are a couple of asset groups which we would approve going back. There are some performing mortgages that can go back into the PCC International businesses. On the non-performing ones, I think we'd rather remove them. I think when you look at the previous numbers for NCOU, there are a couple of items that you should take into account. One is the high cost (71:45) they're out of the NCOU. But the other big item for NCOU would be the litigation amounts. It's been charged with a considerable proportion of our overall litigation charges, and as a consequence, upon its windup, we would expect that to disappear. So, the ongoing drag from assets that currently constitute the NCOU next year would not be material.

And do the operating costs disappear as well whether it's people, or systems.

Yeah. There are very few people left – the systems they use and their rent from global markets to a large extent, but that would go, yes.

You have some more detail in the appendix where you can also see that there is a €96 million charge for the quarter, which is allocated. Half of that is essentially people that you can clearly identify that solely work for the non-core units. So, for example, I think in the finance we have something like 30 people working in finance for the non-core unit. With the non-core unit disappearing, you wouldn't need that. So, the €100 million or €96 million for the quarter, 50% of that is cost that will really go away with the closure of the non-core unit. The remainder is really allocated cost, which will be sticky and then remain to be part of the bank.

Okay. That's very helpful. Thank you very much.

Next question is from the line Amit Goel of Exane. Please go ahead.

Hi. Thank you. I just got a question trying to reconcile the capital and the earnings guidance. So, I'm just to trying to understand if the group is kind of breakeven and risk-weighted assets are down about 5% during the course of the year, plus there's a 50 basis point gain and from the Hua Xia stake sale, how you get to a flat CET1 ratio at year-end? If there's some other kind of capital effect that I'm missing?

So, the – I mean, the overall RWA reduction this year will result from running down the non-core unit to below €10 billion. As we highlighted, we will also see some further perimeter reduction in markets as Stuart enquired, this is largely accelerating some of what was planned for the outer years. The non-core until will have some negative P&L effect which we highlighted. But – so, from a net income point of view, there is, we do expect the year to be quasi-neutral, i.e., there is no big positive, no big negative number that we're targeting. And hence, the guidance for the Core Tier 1 ratio being more or less flat as we were at 11.1% as of last year, and that's roughly where we would expect to land also at the end of the year with RWA being then more at the €380 billion to €390 billion level. So, RWA is going to be slightly down over the year, and there's no material net income, and that's what gets you then to a quasi-flat Core Tier 1 ratio.

Okay. But I was just thinking with the stakes sale in Q2. So, surely that's also then obviously creating an uplift. So, you get to that 11.2% plus or minus whatever the earnings are in Q2.

That is correct. But I also want to highlight just so that people don't get carried away, we did have for the first quarter a very low litigation charge. Our statement that we'd still expect a material litigation cost clearly falls off what we had last year but still material for the remainder of the year as we are very actively working on resolving the major issues as John highlighted. This is the year of restructuring which is litigation, which is driving down the non-core units, and which is booking provisions for – in particular for the head count reduction in our German activities.

Okay. Okay. Thank you.

Next question is from the line of Nicholas Herman of Citigroup. Please go ahead.

Yes. Good morning and thank you for taking my questions. In PWCC, revenues felt quite weak even after accounting for the Hua Xia valuation effects and the dividend. How much do you think of the revenue decline is one-off in nature and how much do you think can bounce back? And then, in asset management, we've now seen three consecutive quarters of outflows. You are rationalizing the portfolio. But how much more outflows do you expect to continue to come? Thank you.

So, on the second question, we don't plan for more outflows. That's definitely not our target. I think we, like many others, have – of our competitors, have seen outflows in particular in Q1 of this year. I don't think that we stand out in any shape or form there. So, there's no plan to shrink the perimeter further or exit certain activities, business-to-business, that we view as a growth business. On the PWCC side, I think here, we need to look at this by diving a bit deeper into the different segments in our German business which has been holding up quite okay. There we expect to see some pickup on the investment and insurance product that has been particularly weak in the first two months. So, basically our clients didn't do a lot. People were very passive, and we didn't see people transacting. That is slightly changing. We continue to expect there to be pressure on the deposit side given the interest rate situation, and we are seeing some improvement on some of the credit side in particular as we've seen in the last eight weeks, I would say, improvement on the margin side. So, overall for the year, I think there's a risk that PWCC in the German business might come out slightly below where we were last year, but we're still reasonably on track there. In our wealth business, the situation there was obviously impacted much more by the market environment in the first quarter. So, we've seen, as in our retail business, clients be very passive on the investment side. That is starting to pick up. In wealth, I would also like to highlight that here it's partially also us starting to implement some of the regulatory requirements that are going to kick in, in…

That's extremely helpful. Thank you very much. If I just ask one just quick follow-up on asset management on costs, do you expect any – the DOL fiduciary ruling came out early this year, do you expect any increase in costs or impacts to the operations there, as well?

We don't think it's particularly material. No.

Okay. Great.

No.

Thank you.

Next question is from Andrew Stimpson of Bank of America. Please go ahead.

Thanks. Good morning, guys. Coming back to the point on the costs in markets, can you say – and sorry if I missed this but can you say how much the bank levy was in the markets business please? Because I guess the way I was looking at it was that costs are only down by about 3% year-on-year but your revenues have dropped by 30%. So, just trying to get an idea of how much you've already flexed the cost on an underlying basis, please? And then secondly on prime services, you said that revenues and balances grew which is good but it was a little surprising to me given, A, what happened in the first quarter; and B, obviously some of the bank-specific stuff that you went through particularly in February; and then thirdly, and probably most importantly, you are still very much a leverage-constrained bank at the minute. So, to grow one of the famously, more leverage-constrained businesses just seems odd strategically but maybe you could comment around your thinking on that, please? Thank you.

So, on the – maybe I'll start with your last question. I mean, by the way, one of the reasons why our leverage ratio right now is where it is at 3.4% is the fact that we are carrying quite a substantial amount of cash and liquidity on the balance sheet. And now, there is still the de-leveraging program that we alluded to actually first time back in April of last year that we are in the process of executing. Now, we didn't do a lot or we didn't do anything material in the first quarter of this year which shouldn't come as a big surprise given that basically this was a completely silent market and there was basically nothing one could do. That de-leveraging has gotten quite a lot more traction in the last few weeks. So, we do expect that de-leveraging to continue in particular in our markets business. So, there's no change to our target to drive down leverage in quite a material way over the next couple of years. And hence, that in conjunction with us clearly expecting to start to generate capital from next year onwards will also drive up the leverage ratio. On your first question, I think the global markets bank levy charge in 2016 was about €400 million, that was booked for the first quarter and then I think your second question was on prime brokerage. You want to do that?

Yeah. Just on prime brokerage, the point you made about maybe market concerns back in February about our counterparty credit. I think what we've done is that we've made a lot of progress with most of our major institutional counterparts in communicating to them the point on the TLAC; the fact that our TLAC ratio is sitting at 27% of RWAs at the moment. And I think they recognized that the rating they should be looking at for example is the Moody's counterparty credit rating. Because if you look at the senior unsecured debt rating, you're looking at something that is a TLAC rating and I alluded earlier to the fact that that's a little uncertain at the moment because people are not I think yet totally au fait on how that might work. The CDS references the TLAC. So the CDS, I think we've successfully communicated to many major institutions, is also referencing something that isn't indicative of our counterparty credit rating. So, when we focus clients on the A2 rating, I think they're more than satisfied with us as a counterpart. And generally speaking, in our prime finance business, in our repo business, they like the service levels. They like the products that we offer, and we are keen to grow balances there. You shouldn't forget that we're a bank and we're in the business of using our balance sheet in lending. And there's too much focus, I think, sometimes on shrinking ourselves to greatness. We're in business to grow Deutsche Bank. We just want to grow it in the right places. And prime finance is an area where we see good margins. We think it's a well controlled business. It's a business that the guys in equities like because they build their business around it. So, that will continue to be an area of focus and investment for us.

Brilliant. Thank you. And just to come back on the bank levy. Is that €400 million for the group or for markets?

That's just markets.

Okay. Thank you.

It's about 80% or so allocated to global markets.

Sure. Thank you.

Next question is from the line of Huw van Steenis of Morgan Stanley. Please go ahead. Huw van Steenis - Morgan Stanley & Co. International Plc: Good morning. Thanks very much for a helpful call this morning. Two just clarifications. First, on operational risk, I think on the previous call, you mentioned that operational risk would probably offset the shrinkage in the non-core unit, which I interpreted as a kind of €20 billion potential increase for the year of which we've had €8 billion today. Would that still be sensible sort of expectations for the full year or with the new change in standards for op risk, is there a risk that there will be continued inflation as some cases get settled? And then, secondly, just on this point about counterparty concerns fading. Would you argue that now they are completely being kicked into touch, or is there still more that you can win back over the coming months and quarters? Thanks.

On operational risks, we did say that we saw something like €8 billion for the rest of the year. Most of that would come from some industry metrics into our model.

But that's litigation charges that we see in the industry and in our own books that's driving this...

Sorry Huw, the other point I was going to make is we've already seen €8 billion in Q1. Huw van Steenis - Morgan Stanley & Co. International Plc: Yes.

That's €16 billion for the year with some generous rounding. Huw van Steenis - Morgan Stanley & Co. International Plc: Yes.

But that will not completely offset the non-core unit decline because in the non-core units, there's another €20 billion plus that we expect to come down for the remainder of the year and on the – I think your second question on counterparty concerns, still existing or fading away, look I think we've clearly seen already in March and that continues to be the case in April, a much more sort of normal business activity. We clearly also have some noise in the context of us exiting some clients, exiting certain markets. And so that no longer – we don't see this being a very relevant topic. I think people are also more and more starting to understand the issue that as a counterparty we're actually a much better counterparty from a rating perspective today; or to be technically precise, we will be as of January of next year when the German law will become effective than what we have been six months ago. Huw van Steenis - Morgan Stanley & Co. International Plc: Yes. Fantastic. Thank you.

In the interest of time, we have to stop the Q&A session right now. And I hand back to John Andrews.

Thank you, everyone, and apologies, we have to move on to a press call. For the handful left in the queue, obviously the IR team stands by to respond to any and all questions over the course of the day and beyond. And thanks for the taking the time to attend the call this morning.

Ladies and gentlemen, the conference has now concluded. You may disconnect your telephone. Thank you for joining, and have a pleasant day. Good bye.