Ladies and gentlemen, thank you for standing by. I'm Mia, your Chorus Call operator. Welcome, and thank you for joining the First Quarter 2018 Analyst Conference Call of Deutsche Bank. [Operator Instructions]. I would now like to turn the conference over to James Rivett, Head of Investor Relations. Please go ahead.

Thank you, Mia. Good morning, and thank you all for joining us today. On our call, our CEO, Christian Sewing, will speak first; then James von Moltke, our CFO, will take you through the earnings presentation, which is available for download on our website, db.com. After the presentations, we'll be happy to take your questions. [Operator Instructions]. Before we get started, I'd like to remind you that the presentation may contain forward-looking statements which may not develop as we currently expect. I therefore ask you to take note of the precautionary warning on the forward-looking statements at the end of our materials. With that, let me hand over to Christian.

Thank you, James, and good morning to everybody. By now, you have seen the Q1 results posted prior to the call. And before I hand over to James to take you through the numbers in more detail, I would like to start and provide some introductory remarks. Our first quarter performance underscores the need for immediate action. Our shareholder returns are not satisfactory and, in fact, not acceptable. What I will present to you today is the first and immediate set of decisions the management board has taken. Some of the measures are of immediate nature. Others will take longer to implement. It demonstrates to you that we will act decisively, and we will change the path of our bank now. There is no time to waste. Deutsche Bank has all the resources it needs to thrive, great people around the world; deep and long-standing client relationships; and financial strength with a solid capital position, high levels of liquidity and a very conservative risk profile. This gives us the flexibility we need to redefine the core of our bank. We are a bank with close ties to the real economy. Our wide and loyal client base is key for us. We have developed these relationships over almost 1.5 centuries through our competence and product excellence in Germany and internationally. This is the core on which we want to build our business. And in some ways, the call to action is simple, focus, grow revenues and significantly reduce costs. Doing this will achieve better and more sustainable earnings and return for our shareholders. We are absolutely committed to do this. And as I wrote to our employees two weeks ago, we know where our greatest inefficiencies lie, and we are going to tackle them with absolute determination and without undue delay.…

Thank you, Christian, and good morning from my side. Building on Christian's comments, let us start with a summary of the considerable progress that we have made in several key areas on Slide 2. First, we reached several of our most important strategic milestones, including the partial IPO of our Asset Management unit, DWS, and the sale of our retail banking unit in Portugal after announcing the sale of the majority of our Polish retail operations at the end of last quarter. Second, the integration of Postbank with the Deutsche Bank Private & Commercial Bank is progressing well, and we still expect the requisite approvals for the legal merger of these two units to occur before the end of the second quarter. Third, we made progress on a number of large-scale regulatory as well as financial reporting changes, including the successful implementation of MiFID II and IFRS 9. And we made further advances in the implementation of PSD2 and European data protection requirements. Despite this progress, our first quarter performance was not satisfactory and exposes the need for significant capacity adjustments to generate sustainable profitability and returns. Christian has outlined a series of strategic and tactical steps that should help rebuild momentum in improving our cost issues without adversely impacting the revenue potential and return potential of our franchise. And as a reminder, our balance sheet is resilient and gives us the flexibility to reshape our franchise. Our fully loaded CET1 ratio was 13.4% at the end of the first quarter of 2018, with liquidity reserves of €279 billion and a liquidity coverage ratio of 147%. Let us start with the review of our group financial results on Slide 3. Revenues of €7 billion declined by 5% on a reported basis compared to the first quarter of 2017. The year-on-year…

Thank you, James. Mia, let's open up the lines.

[Operator Instructions]. And the first question is from the line of Jon Peace with Credit Suisse.

I realize it's probably very early days to give much detail behind your CIB restructuring, but the goal to get to 50-50 in terms of CIB and other revenues looks like you'd be cutting maybe about 10% to 15% of the revenues. That does seem right? And do you think that's enough to really transform the group profitability? And also, what sort of costs you think might be associated with the restructuring? And over what period would you book them? And are you confident of being able to make the AT1 payments throughout the process?

So thanks for your questions, although I'll - in score keeping, I'll note that there were three of them. The 2021 expectation of revenue shares obviously includes some amount of growth that we anticipate in the PCB and Deutsche - and Asset Management segments, so you can't focus only on the trajectory of one business as you think about that mix. Obviously, the mix can change both by shrinking what we think of as the less stable revenue sources and growing the most stable sources. And clearly, that will inform our investment decisions from here. In terms of costs, obviously, the actions we announced this morning will result in higher severance and other restructuring costs. We expect to take those, where possible, in 2018. Clearly, that will result in an increase in the early guidance that we gave for this year, which would have been closer to €500 million. We raised that guidance to €800 million taken in 2018. And as it relates to the AT1 payment and the ADI, as we reported last quarter, we have built strong buffers in terms of our payment capacity, and we expect those to improve, among other things, given the merger of Postbank and the German retail and commercial bank. Clearly, AT1 is something we manage and watch carefully. But in general, the HGB or statutory accounts will correspond reasonably closely with the IFRS accounts. And the other thing I'd point out is we are, I think, becoming more optimistic that, over time, there may be legislative relief associated with the statutory gates on AT1 payments.

And the next question is from the line of Kian Abouhossein with JPMorgan.

The first question is related to, again, restructuring charges because I guess, right now, the key is what credit agencies think about this restructuring rather than what the analysts or shareholders think. And I just want to see, first of all, have you talked to credit agencies already? And in that context, how should we think about the additional €300 million that you just mentioned in restructuring charge? Is it - is there more to come in '19, '20, 21? And in that context, how should we think about the legacy book that you're probably going to be creating if you're reducing rates assets? Is there going to be charges related to that, or can that be run off potentially without any charges? If I may, just a second question. Can you talk a little bit about the exposures that we are talking about that you're reviewing, not - I'm not asking how much you're actually reducing but what you're reviewing, capital that is being looked at which doesn't make adequate return, leverage exposure and balance sheet and staffing. If you can give us ballparks, that would be very useful.

Sure. I'll try to give you as much as I can. As you and Jon earlier noted, it's early days in implementing these actions. I'd say, first of all, as it relates to the restructuring charges, again, we do seek to take this in 2018. As you will have, I think, surmised based on Christian's earlier comments, those charges will fall largely outside of Germany, and so they can be implemented more readily. As it relates to the rating agencies, I'd point to note, obviously, we engage with our rating agencies frequently. We're always careful about commenting externally about those discussions. But if you read the recent reports of the rating agencies about us and several of our European peers, they are looking for the restructuring of activities to happen quickly and decisively. And so our hope and expectation is that, in general, it's a positive. The rating agencies tend to look out over long periods of time. And while we acknowledge the restructuring charge are, of course, a burden on our financials, the goal clearly is to grow our margins and improve the sustainable profitability, which we think, overall, is a positive from a credit perspective. To go to your question about the legacy book, we are in a very, very different place from a few years ago, so the comparison that you might draw to the type of assets that were in our NCOU really is not apt in this case. What we're seeking to do is really reduce, principally, leverage exposure, where we've seen leverage exposure and, to some extent, the GAAP balance sheet committed to just less profitable, less high return areas. And, obviously, as you run off those types of positions, they are generally highly liquid secured positions. And for those that are unsecured, we're very comfortable that they are appropriately marked and can either be monetized or run off in line with or better than what the current balance sheet would show. So much of the delevering we envisage at this point relates to assets which naturally run off, as I say, or can be done with no or extremely low costs.

If I just may, just very briefly, this €300 million, is that the full restructuring charge? Just it looks very low for the potential restructuring that we are talking about. I just want to get that clarified, if I may.

Sure. Remember, it's €800 million for the full year, so it's a larger number when you consider all the actions. The €300 million is the increase relative to our earlier points or our earlier expectations.

But we shouldn't expect any restructuring charges going forward, after '18?

I don't want to rule out - you're looking out further. We've - in a typical year, there will always be some amount of restructuring. But certainly related to the actions we announced this morning, we are aiming to execute them within '18. Obviously, we have to make sure we establish those reserves in accordance with IFRS accounting standards. And clearly, that's a reasonably high bar in terms of the definition of the specific actions, but we will be working as quickly as possible to both execute and establish those reserves.

Yes, apologies for the follow-up.

No worries. Thanks, Kian.

And the next question is from the line of Andy Stimpson with Bank of America Merrill Lynch.

Could we talk about just how much leverage you think you can actually cut from that rates and repo business? I'm wondering whether, actually, this - you're cutting more leverage and exposure from that business rather than costs, which is why the restructuring charge seems a bit lower than maybe what we're all expecting. And then secondly, with the COO replaced, I'm just wondering what the future is for the IT strategy, which was pretty vital, I think, with your thought to taking down the fixed cost base. And maybe you could talk around what you see the future for that project, please.

Sure. And your point is something that has clearly attracted a lot of our attention and work over the last several weeks and months, though, so we've looked at actions like the ones we analyzed this morning - that we announced this morning, and we've worked on the analysis. Look, the - we are acutely aware that some of these actions will essentially remove revenues from the company. But where those revenues were associated with leverage exposure, that was very low ROA, we clearly think, though, that's the right decision from the shareholders' perspective. But clearly, we need to ensure that the associated costs are not just front, as we said, but middle and back, and infrastructure cost can be removed along with that. That takes real focus and determination, and it's something that we, as a management board, are committed to doing. The challenge, of course, is that, it's very often, revenues come out more quickly than costs and, hence, the need to move quickly this year to address that. If I think about COO, clearly, there is - it is important to drive the efficiency there as well. As you've followed over several years, we've made significant investments; and over time, those investments themselves should drive efficiencies in our operations. The other thing to note in COO is that reductions in infrastructure and staffing can often happen without significant restructuring charges because they often relate to external and contractor workforce, and those are reductions that can be made, again, without incurring restructuring charges.

Potentially I add one more point to the COO. So completely agree with James on his outline. I think, though, that we have a significant chance and opportunity to again look, and that is a clear task of the COO to again look throughout the organization for duplication, for redundancies which we have across the business lines, including shadow functions in the support and infrastructure functions. And with also the new COO, knowing this bank for the last 25 or 30 years, I think there will be good opportunities to cut that back, and that is clearly a focus which starts in Q2 and will be a focus for 2018.

Okay. So will you - just to clarify, will you be keeping a lot of the metrics around cutting reconciliations and things? Will you be keeping those or updating us on those because that is - I think we all found that is quite helpful to tracking how you guys are actually tackling the core fixed cost problem?

Absolutely. We've been managing COO to KPIs, and with those are KPIs that we track sort of weekly, monthly, and that's a critical discipline that we will continue.

Next question is from the line of Magdalena Stoklosa with Morgan Stanley.

I've got two questions. The first one is about - you're really not giving us a context of your overall thinking of your U.S. CIB franchise because all of the three first points on the business review point to rethinking of the U.S. because, effectively, you've got the Corporate Finance, of course, U.S. Rates, a part of Global Equities as well. So I'm just curious how you - how within the pivot to Europe, Asia you are thinking about your remaining U.S. business, question one. And question two, really, could you give us a sense of the kind of current cost of running two separate entities from the regulatory perspective when you look at Postbank and Blue Bank? And particularly in the context of the ECB waiver yesterday, what kind of level of those regulatory costs would the waiver eliminate almost immediately versus the impact of the - of your ability of managing the group liquidity, group capital on the - from the entire group perspective?

Sure. Thank you, Magdalena. So I'll take a stab at both questions, and Christian may want to...

Yes.

Add, frankly, in both. Look, I think the announcement as it relates to the U.S., and obviously, it's not only a U.S. story, but the announcements today really reflect a focus of our resources, including in the U.S., on activities, clients, products where we have strengths and where those activities can be tied more closely with our European core. And so there are things that naturally fall out of that perimeter. And these actions that are, of course, then targeted to creating a more profitable, higher-margin U.S. business, we are not withdrawing in total from U.S. CIB. That's an important thing to underscore. We're focusing our U.S. CIB resources broadly defined in those areas that are the most closely tied to our position as a leading corporate-led European investment bank. So that's how we think about the U.S. elements of this restructuring, and we think that it ties with a clearly defensible core perimeter for our businesses, which will enable us to continue to participate in what is naturally the still the biggest global revenue pool. If I go quickly then to the waiver, the waiver is principally about capital and liquidity flexibility within the legal entity structure of the organization, so it doesn't specifically divide - drive costs, although it clearly leads to some efficiencies in terms of funding in the organization as a whole. And to your point then about the organizational structure of the two entities, clearly, going from 2 to 1 legal entity allows us to eliminate some overlap, and it's that overlap that was built into the synergy targets that we've announced previously. And frankly, that overlap reflects, if you like, the synergies that we're able to extract the most quickly because the legal entity headquarter efficiencies are the most quick to implement. IT and other things come over time.

James, there is nothing to add. I mean, when I talked about the strengths and the core strengths of the Corporate & Investment Bank, those items which I listed are clearly also standout for the U.S. So clearly, this is not an exit from the U.S. business, but what we want to ensure is that we further strengthen this core business. There we have to invest, and that means that we will remain absolutely also in the U.S. in those businesses. And to the waiver, everything has been said. It is a precursor of now taking out the synergies of building this one legal entity with one management board, and then we are able to integrate processes, IT, and do this, what we promised, take out €900 million of synergies, where the majorities are cost synergies.

Next question is from the line of Andrew Coombs with Citi.

Two questions, one on equities and then one actually on the CIB business. On equities, you've specifically stated that you're looking to shrink your global finance business. Could you just talk a bit about what you think the knock-on consequences of that could be for both your cash and derivatives offering as well and to what extent your review of that business take into account those areas as well? And then secondly, on PCB, I was quite surprised about plans to expand in both Italy and Spain. That was like a little bit of U-turn there. What gives you confidence that you can grow there and compete with the local banks?

Sure. Thanks, Andy. Look, on equities, we wanted to call out Prime Finance really, again, focusing on the leverage exposure in the business. We have leading capabilities and a strong platform in Prime Finance. And so the decision today is really to focus. There is a tail of clients to whom we commit a certain amount of balance sheet, and it's about sort of eliminating that tail and focusing our business and the extension of balance sheet on the largest, most profitable clients with which we have the deepest relationship. So it's about focus. It's always hard to estimate the precise interactions between Prime Finance and cash and derivatives; but on the whole, we expect them to be relatively modest. Clearly, Prime Finance offers some degree of flow and support in terms of the infrastructure, but we see them to be more separated, if you like, than integrated in terms of impact. If I turn to your questions about PCB, Italy is not at all U-turn. That's been very much part of our core PCB offering and, frankly, is a strong franchise, has a strong market position and capabilities in - concentrated in Northern Italy. Spain is differentiated. We agree with your observation that in Spain, you're competing with a lot of - a small number of very strong local competitors. Our franchise has been reasonably targeted, both geographically and in terms of products. We tend to be skewed towards investment products, and we think that is an area where we can be competitive. In many ways, some of our international areas have been laboratories, where we can experiment with technologies and products that have been quite successful. And so we do see the opportunities to invest profitably in those two markets.

Next question is from the line of Jernej Omahen with Goldman Sachs.

I've got two questions, really. So firstly, on the targets, I think - okay, thank you for reiterating the cost targets, and it's good to see that, that's back on the agenda. But I noted the - I noted that the return on equity or return on tangible equity reiteration, the 10% that we had for a while now, was missing when you went through the other targets. Can I just ask a bigger-picture question? So the bank is now shrinking towards non-investment banking activities. Retail banking made a 7.5% return on equity this quarter. How do you think about the achievable returns for the Deutsche Bank when you reach your new desired constellation of activities? So that would be the first question. The second question would be this. I think it's good that you see - the Deutsche Bank sees growth opportunities in Germany, Spain and Italy. I was just wondering, how do you think about scale in each of these markets that you have? I guess consolidation of the German banking market is one of the constants in the Deutsche Bank debate. If there's opportunities for consolidation, if there's opportunities for gaining scale in these three markets, how would you think about those?

Sure, and thanks for the questions. No, absolutely, and if you look at our interim, we reiterate the ROTE target of 10%. Clearly, a management team needs to focus on managing a company to earn more than at least its cost of capital or more. And it won't - my comments won't surprise you. If you break down the business, clearly, Asset Management is in a position to earn above 10% - significantly above 10%, we would expect. We think it's in our control to drive returns to and above that level in PCB, in part driven by the efficiencies from the domestic market integration and the impact of interest rates over time, of course. You have to remember that as interest rates normalize, the PCB business should get a significant uplift from that. And so that can get you to our - the cost of capital before you start to think about additional growth or additional consolidation opportunities. We feel as though, at least in our home market, we do have the scale to compete and thrive. In some ways, I think our focus is on making sure that we build the right business in Germany from the platform that we have before we would think about acquiring new customers and potentially consolidation or participating in consolidation. And if you think about scale then in the other markets like Italy, Spain and Belgium, clearly, one recognizes there that we aren't going to compete at the same scale as our peers. I think it's about building unique intellectual property and selling propositions. Whether that, as I mentioned a moment ago, is in investment product offerings or positioning the business more towards affluent client, we do think those are markets in which we can create unique selling propositions that help us compete without the scale of the domestic players.

Next question is from the line of Stuart Graham with Autonomous Research.

Two questions, please. The first is plenty of commentators have estimated the cost of shutting down the whole investment bank. Spreadsheet land says that's a good idea, whereas I think your idea is it - I think your view is it's a dumb idea. So when you look at those estimates, what do you think outside is a missing? Is it higher restructuring costs, higher cost to shift legacy assets, revenue leakage in other businesses, et cetera? That's my first question. The second question is on the extra €300 million of restructuring costs. On the usual rule of thumb that restructuring costs are €100% to 150% of cost saves, that implies €200 million to €300 million of cost saves from your CIB reshaping. I think that's something just like 3% of your non-European CIB costs, so frankly, that looks like tinkering to me. So my second question is, how is this different, what you've announced today, from what John Cryan was talking about on the previous call, namely the dynamic management of running the businesses?

So listen, on the first question, I'm very cautious about debating the merits of that particular course of action sort of on a public call. I think suffice it to say, and I'd say this with emphasis, it's the belief of the management board, the supervisory board, that the greater value path is in shaping the CIB to deliver its returns on equity rather than undertaking a course of action that creates much more significant restructuring costs without the potential to drive better returns on the other side. So that is a strong view at the management and the supervisory boards, notwithstanding the recognition of the challenge that we have in ensuring that we can manage that business to deliver on those returns. In terms of the restructuring costs, again, I would remind you that we're speaking about €800 million, not just the incremental €300 million. And so I think you can guess from that, that the actions we're announcing this morning clearly build on expectations about actions that were planned before the leadership transition. So in the first quarter, our severance costs and restructuring amounted to only €40 million, so there is a lot of work still to do within the year to execute on restructurings. And if you think about the - just the ratios that we can drive, again, with, we think, a disproportionate set of these costs being recognized in markets where - or jurisdictions where the cost of sort of workforce reduction is towards the lower end, we think we can drive the efficiencies that we're targeting within this level.

Sorry, James, if I can, just two quick follow-ups. I take what you say on the first question, but can you just reassure me there is some maths behind your analysis, it's not just blind faith? Or is that just the maths of this is what it costs us to shut the investment bank down, this is what it costs us to keep it going, this is - and therefore, the ROE looks better, it's not just some blind belief? And secondly, just to confirm, I mean, the €300 million is the incremental from the measures you've announced today? The €500 million was already in analysts' estimates. It was already what you've been talking about. So the €300 million is the measures you've talked about rates in the U.S., the equity business, et cetera?

Yes. And so I can certainly reassure you that we've evaluated a number of alternatives for the company, and we've been doing that work over several months. I've referenced in the past a view that the management team currently has and previously had, that we needed to reallocate resources to areas around our core. And as Christian said, the DNA of the bank, the purpose that we serve, especially in CIB, is to serve clients with a product set in which we believe we are more than competitive; in many areas, world leading, and do so on the basis of the deep client relationships that we have, particularly in Germany and in Europe.

I just want to reiterate that point, Stuart, to your first question. I think we really have to recognize, and that's what I meant in the messages, that we are in various products within the investment bank, the Corporate & Investment Bank, market leading in Europe but even globally. There is no reason to reduce that or take that out. What we have to do is to further invest in those and, therefore, shrink in other business where we are not competitive and, in the future, not competitive, and hence, we need to invest into these business. But I think where we have a market-leading position already, then we should sustain and we will invest into that. Number two, with regard to also what has changed, I'm deeply convinced that the delivery and execution of measures we discussed will change rigorously from a timing point of view, and you will see the delivery of those actions which we announced today very, very quickly. It's not only about announcement, it's in particular about execution. And that's what we are there for, and that's what the management board will do.

Next question is from the line of Daniele Brupbacher with UBS.

During the prepared remarks, you mentioned the potential change of treatment of guaranteed funds, and I think you were referring to this already with Q4 results. Back then, you quantified the estimated impact to something like 40 basis points potentially. If you could just update us on that number. And then secondly, more generically, I mean, it's a bit along the lines of Stuart's question in terms of this decision-making process. And really in qualitative terms, if you think about the stakeholders, be it shareholders, regulators, employees, rating agencies or even politicians, what was probably the biggest constraint in this process, and what's probably limited in terms of your ability to change certain things, if at all? And in this context, I mean, Deutsche clearly had a central funding model in the past. This seems to be changing given changes on the legal entity from speeds, texts and what have you. Is this what you are seeing today partially the result of these changes that the central funding model is put at risk, at least?

So I'll start just with the guaranteed funds question, and I'm sure Christian will want to comment on the sort of thought about the constraints. So on guaranteed funds, you're right, and we were - we've been working with our peers and the regulators to define the changes. I will say at this point in time, the - without wanting to get in front of a final decision on the part of the EBA and the ECB, we think that the alternatives considered are far more benign than our concerns sort of 3 and 6 months ago or 3 and 5 months ago. And so at this point, we think the impact would be considerably lower than what we were thinking a few months ago.

I think on your qualitative question, I refer a bit back to the comments I made earlier. But I think we have to criticize ourselves and the management board that we had - took too long and reiterated decisions which were taken and which were not executed. And I think I've got quite a good view on Deutsche Bank's strengths over the last 10, 20 and 30 years. And we have to get back to an environment, once decisions are taken, that we implement it and execute it because that is also important to have a clear vision for 100,000 people who work in this institution and who want to have clarity. And I think in particular on the execution part, we took too long, and we reiterated, and that is something which we will not do any longer. Once decisions are taken, we will execute. It has nothing to do with other stakeholders, it's within the discipline of the management board and the leadership team, and this will go down into the organization.

Next question is from the line of Alevizos Alevizakos with HSBC.

Two questions. One question is basically on the leverage ratio. I'm just wondering, looking forward, and I know it's still early days, as everybody has suggested, but I was wondering, like under the new Deutsche Bank, do your ambition changes for the - at 4.5%, especially given that if you reduce sort of the businesses, as you've said, maybe your G-SIB buffer could come potentially down? And then, James, you just mentioned that you always look at the ROTE as a function of the cost of capital. Now the new Deutsche Bank will be 65% of revenues from stable sources, so do you think that the implied cost of capital goes down? And how could this affect the ROTE target going forward?

So thanks for the questions. I'll quickly go through them. No change to our leverage ratio target. We've reiterated the 4.5% target, that's over time. But I would say that relative to our earlier planning, the actions that we announced today may accelerate our path a little bit. As it relates to the G-SIB surcharge, it's early to think that we might start to go down in those rankings. Certainly, you'd expect lower leverage balance sheet to - and also cross-jurisdictional liabilities to help in that regard, but that takes time. It's a relative measure to the industry. And also, we'd end up with a floor as a D-SIB as opposed to a G-SIB, so we're not, yes, at least in the near term, focused on benefits there. In terms of cost of capital, I - it's always, in some ways, a theoretical exercise to think about cost of capital. But you're correct that the more stable, less volatile our business becomes, one would expect that the beta changes, and cost of capital goes down; not something we've really factored into our thinking at this point. And at the end of the day, I also have a personal belief that cost of capital is as much about investor expectations as it is about the capital asset pricing model or other theoretical constructs that get you to a cost of capital.

Next question is from the line of Jeremy Sigee with Exane.

Two questions, both on capital, please, Slides 6 and 7. First one, on the risk-weighted metrics, I just wondered if this - if I'm thinking about the adverse impact you've had here both on OCI and the CIB RWA inflation, is there any scope for those to reverse back as we go into the remainder of the year? And second question, perhaps more importantly given it's your binding constraint, just following up on the previous discussion about the leverage ratio, so the target is unchanged. I just wondered what we could expect on leverage exposure because I think there's been the hope for a while that you could reduce leverage exposure, either through your liquidity portfolio coming down or through better netting. But again, here, in fact, just going the other way, it's going up. So I just wondered, perhaps with the new rescoping that you're talking about for the CIB business, where could we imagine leverage exposure coming out on a kind of 2 to 3 year view, from what's been a fairly steady €1.4 trillion level, how much lower should we think about that going in the medium term?

So great questions, Jeremy. Thank you. So yes is the short answer to your first question. There were some items in the CET1 numerator changes in the quarter that may well be temporary. And there were some increases in capital deductions from - on the tax line, in DTA, that can certainly change course during the year. OCI is another area where we had a - sort of an unusual drift. And I'd also note that this DWS, the split in the recognition of the minority interest benefit was something that in the final analysis is simply a timing difference with the change - with the completion of the legal entity reorganization taking place in April. So we do see some benefits potentially coming back that are timing related. And of course, the deleveraging that we will engage in would affect not just the leverage exposure but also in, to some extent, risk-weighted assets. If I think about your second question just on leverage exposure more broadly, we do expect a relatively meaningful reduction in the underlying business activity. What you saw this quarter was really just seasonal changes in terms of market activities from December to March. You would generally see pending settlements go up. Now that pending settlements is included in the leverage exposure calculation, recall that, that was a change that took place last year and introduces, at least until it goes away, some more volatility in the leverage exposure. And lastly, I would observe that some of the improvements in leverage exposure came exactly from where you're pointing to, which is improvements in essentially netting and collateral efficiency in the structure. So some of the offset to the pending settlements, in fact, came from those areas.

And looking forward, I mean, could we imagine something of a scale of kind of €100 billion or €200 billion reduction in that? I mean, that's - just I mean, to fully close the gap to your 4.5% target, you'd need to reduce by €250 billion, I think, roughly, if that was the only thing that changed. Is that scale of leverage exposure reduction feasible? Can we imagine that?

I think in scale terms, I wouldn't want to commit to a number. But in scale terms, it should be an impact that at least approaches those levels. And so obviously, it's a numerator and a denominator. The denominator will help, and it's - as I've just reiterated, it's a path forward towards the 4.5%. You've heard us say a number of times, we take the - obviously, all capital ratios are important to manage and focus on, but we've given ourselves more time towards that target deliberately because we felt there that the focus was on the CET1.

Next question is from the line of Andrew Lim with SG Corporate and Investment Banking.

Just following up on some follow-up questions. Obviously, I mean, there's a bit of focus on the CET1 leverage ratio; and leverage ratio, we've had some impacts there. I was wondering if you could clarify what the impact would be on the CET1 capital to CET1 ratio and then maybe also to leverage ratio from the AT1 coupon impact. And also, maybe update us on the impact from the guaranteed funds.

Sure. So as I mentioned them in our prepared remarks, the capital distributions in the second quarter together would represent 15 basis points. In terms of the impact of the restructuring, we are, as I think we've noted before, not accruing interim profits into capital during the year. And so as a consequence, the restructuring charges would be - would not have an impact inside the year. If I - just answering on the - just to reiterate on the guaranteed products, at the moment, the dialogue would suggest that the ultimate impact would come in well below our initial estimates or perhaps concerns, again, based on some proposals that have been circulated between the industry and the supervisors.

And then, I mean, I guess on a follow-up, a lot of finance guys, I guess, are looking for a lot more detail on what profitability is of all of these businesses you're looking to delever, what your RWAs are, the leverage exposure and so forth. Is there going to be some kind of like Investor Day, where you talk about this in more detail?

So I don't want to commit to an Investor Day on the fly, but we recognize that we need to be able to give our investors more detail about the long-term impact of these actions, and so that's something that we aim to do as soon as we can. I will say I think the priority is - as Christian has outlined them, it's to make sure we implement these actions quickly and drive really stability in the franchise, our people, our clients and, thereby, protect and, eventually, grow revenues. So that is a clear target goal of ours as we implement these changes. So that's our near-term perspective. In the medium term, we'll be able to give you more detail, more clarity as to how these actions will drive improved margins, profitability down the road and also more efficient use of our capital resources.

Next question is from the line of Anke Reingen with RBC.

The first question is on your - maybe your comment on the revenue split about 50% from PCB and DWS, and I just wondered if you are willing to give us some sort of indication of your expected split in risk-weighted assets and leverage exposure by 2021. And then secondly, just on the expected benefit to your funding costs, from your ability to use the Postbank deposits across the group, if you can please quantify this.

Sure. On the second question, it is basically an extension of what we are ready to do. So the important thing was to preserve the existing waiver, which, of course, we've achieved and are very pleased to have achieved based on really detailed close interactions with the ECB. It offers a degree of additional flexibility. But in the end, we are - and this may go to the earlier question about our funding structure. Funding structures in companies like ours are evolving over time as we react to regulatory changes and what have you. And so I think the waiver, again, extends our flexibility somewhat but shouldn't be over sort of loaded in terms of its importance. We clearly need to manage liquidity across our legal entity structure appropriately. In terms of the mix of RWA, you can see in our disclosure there's an appendix slide which provides the RWA ex the OpRisk RWA. And certainly, you'll see that evolve. RWA in the PCB business grows relatively slowly. It's an accrual business, so as you put on loans and credit risk exposures, it grows with that, more or less in sympathy, and is not as exposed to changes in regulation. What you'd expect to see over time is some amount of reduction in RWA in CIB as we focus that franchise, which, among other things, can help to offset some of the regulatory inflation that's out there but, overall, should result in a reduction of capital applied to it. We'll also note that we see movements in risk-weighted assets. But in general, as you simplify and remove complexity from the company, that should help us also manage the OpRisk and the associated ROA over time.

Okay, but you're not able, at this point, to give us any more in terms of percentage split for risk-weighted asset and leverage exposure between the different parts of your business?

Again, not in detail. But I think you'd see sort of modest adjustments in PCB and some, I'd say, relatively modest in the near-term adjustments in the CIB franchise; double digits, I'd say, from here, but I don't think a significant shift in the very near term.

In the interest of time, we have to stop the Q&A session, and I hand back to James Rivett.

Thank you very much for everyone for your time today. The Investor Relations team is around to take your many follow-up questions, I'm sure. I'll speak to you soon.