Stuart Graham: And the stock of provisions on that book?
James von Moltke: Stock provisions is, I think, in total, around probably EUR 50 million against the Stage 3, not against that EUR 1.6 billion, but — to Stage 3.
Operator: Next question is from the line of Nicolas Payen from Kepler Cheuvreux.
Nicolas Payen: I have two. The first one would be on the revenue path going into 2024. You mentioned that we might have seen the peak in terms of interest rates repricing, you have a bit of deposit shift and increasing beta as well as slowing growth in mortgages and loans in general. So what do you think about revenues going into 2024? And the second question, sorry to come back on the idiosyncratic event of March. But as you mentioned, you have a strong liquidity buffer, conservative risk management. And if you were one of the most banks under pressure from a stock price point of view in March, what can you do to change the perception about the riskiness and the stronger fundamental of the ?
James von Moltke: So I don’t know if you want to start. Revenue path, look, I’ll make a couple of comments. Christian will I’m sure add. Look, we’re not at a point where — I’ll start with the Investment Bank because that’s where our investors tend to start. I don’t think we’re at a point of sort of peak revenue potential in the Investment Bank. Because just if you think about where we are, for example, right now in Origination & Advisory, that’s still sort of recovering. So we think there’s scope to improve there. As Christian mentioned, I think we’ve got scope to invest in that area and improve our market shares, leave aside the market wallet performance. Financing is doing quite well, both in volume sort of — or market opportunity terms and in spreads.
And then I think our markets businesses have been strong performers and also risk managers. Of course, in that business, we’re going to ride a little bit the volatility and the volumes in the marketplace, but we feel good about the way the business has come together under Ram’s leadership. So all of those things would tell us we can at least sustain and perhaps improve on the Investment Bank. The — Christian mentioned earlier, Private Bank still has a way to run in terms of the momentum that interest rates deliver, let alone assets under management, loan and deposit growth in the case of loans at loans outside of mortgages. So we feel comfortable there’s a good path there. And while some of the — I think we’re probably past peak lag, but we’re not past the generalized improvement in the rate environment in Corporate Bank.
Lastly, I think the Asset Management business by executing the plan Stefan Hoops has laid out has a clear path to growth in assets. Obviously, it will ride the market a little bit but is also not anywhere near sort of its peak revenue potential. So all of those things, I think, feed into ’24 and then ’25, and there is sort of a sustainable momentum built into that. Your second question was liquidity in March and what can we do? Look, we’re acutely aware that — I don’t think we were singled out uniquely, but we were in a group that were potentially perceived as vulnerable to the issues that arose. As I said earlier, it’s gratifying that the market can very quickly identify that those vulnerabilities did not exist with us or, frankly, our peers in Europe that might otherwise have also come in to pressure.
I think the answer to your question is the more we execute on our strategy, the more we deliver sustainable profitability but also the more we put historical issues around control failures and other events in the past. I hope that what I would — some call muscle memory will fade in the market and the sort of the beta nature of Deutsche Bank will fade. As a management team, I think we’re all very committed to achieving that goal. It lies in our hands to some extent around execution. It lies in investors’ hands in terms of their support for our securities.
Operator: Next question is from the line of Adam Terelak from Mediobanca.
Adam Terelak: I had one on NII and one on capital. Could you give us a little bit of update on the NII trajectory from here? Clearly, expectation on rates have gone up but also deposit betas seem to be low. So just a bit of color on both sides of the balance sheet there and what that means for this year’s guidance. And just to add kind of what your deposit assumptions are from here within that guidance, the full year ’23 and beyond? And then secondly, on capital, Christian, you mentioned the EUR 15 billion to EUR 20 billion of RWA relief. I just want to understand your guys thinking on how to redeploy that kind of EUR 2 billion plus potentially of capital unlocked whether that’s going to go back into the balance sheet, what businesses you see growth in or kind of what decisions would come to returning that to shareholders, as you mentioned?
And finally, just a clarification. On 4Q, you were talking about kind of the regulatory inflation to come with offset. Is the market risk benefit you’ve taken this quarter the offsetting item that we’ve discussed in previous quarters?
James von Moltke: So Adam, I’m not sure I follow all the questions, but let me start with NII trajectory. What I do is refer you back to Page 26 of the February 2 materials. Now we’re not going to update the NII trajectory sort of every quarter. But I would say that the assumptions there on Page 26 are still pretty good assumptions. There are always movements up and down in how NII will perform. But this idea that we would put on at that time, 900, I think it’s actually a little bit better than 900 given assumptions have improved relative to our expectations at that time this year is still a really good assumption. So we did EUR 13.65 billion of net interest income last year. If that grew by EUR 1 billion or more, that would be a good assumption.
There might be sort of a plateau or even a small dip in ’24. And then as you see, there’s another leg up in ’25 as the interest rate characteristics in the Private Bank come through. So that — I think that guidance still holds. Now one thing just to advise you, if you look at interest income in Q1 and attempt to annualize it, you won’t get to that number precisely because as we highlight, there’s been a swing in the characteristic of the revenue recognition. Think of it a little bit like trading NIM in the U.S. banks, more of the revenues were characterized as fair value through P&L in Q1 than would be typical, and we can get into the reasons for that. But — so don’t be concerned that there’s any difference in the guidance from that sort of anomaly.
We’re very comfortable with the guidance that we’ve given. And actually, at the moment, we’re seeing, based on the curve and the funding profile, we see a little bit of upside to our earlier guidance.
Christian Sewing: And Adam, on your capital question, look, one thing is clear, if you see market opportunities like I tried to describe it, obviously, some of RWA optimizations, we will certainly reinvest also into the one or the other business. But clearly, we also believe that with the increased profitability, which we expect and with that capital efficiency, which we outlined on Page 7. And by the way, again, this has not been only a top-down but bottom-up analysis, which we even curtailed a bit top-down. So there is real potential. Of course, we will think about how much of these additional savings we can also hand back to our shareholders. So I think if you ask me today, it will be a combination of reinvestment into those business, which is really then capital rewarding and where we have a very good story for our shareholders and investors, but part of that will be also given back to the shareholders.
James von Moltke: And maybe just to build on that, what Christian said, to give you a bit more specific guidance, we — if I look at the consensus RWA number for 2025, which is 422, without wanting to get pinned down to specific numbers because, as Christian says, it’s quite dynamic. Think of the EUR 15 billion to EUR 20 billion as being a net reduction from that guidance. So we would expect, based on everything we know right now, to be somewhere in the low 400s, 400 to 410. And so that can give you a sense if you’re building your model based on organic revenue generation, the Basel III impact that we’ve talked about of about EUR 30 billion of RWA gives you a little bit of sense of where it can provide, at the very least, additional support for the capital trajectory that we’ve laid out already.
Adam Terelak: Great. The final point was whether the regulatory tailwinds you had this quarter was the kind of the offsetting item we’ve discussed against the model?
James von Moltke: No, it’s all still — there was — the one item that we talked about was a market risk RWA item. That was in the plan but is not part of the net 40 to 60 that I talked about earlier.
Operator: Next question is from the line of Kian Abouhossein from JPMorgan.
