James von Moltke: Thanks, Jeremy.
Operator: The next question comes from Andrew Coombs from Citi. Your question, please.
Andrew Coombs: Good afternoon, two follow ups to Christian please, if I may. The first was on this point about with alpha versus beta in terms of the revenue growth. If I look at your guidance for 2023, up to €28 billion to €29 billion versus 26.7 in 2022, on an adjusted basis. You’ve said that rate after adjusting for higher funding costs will be €0.9 billion of that. So at the lower end of your range, it does appear that rates are actually the majority of the expected growth in 2023 unless you’re assuming a normalization in market revenues or something else? Perhaps if you just elaborate on that. And then my second question would be, in response to the answer you gave to Daniele, the first time round, before the conference cut off.
I think you talked about some of these regulatory model reviews. And you were saying about how there’s the risk that in the end, create regulatory soundness, the regulator almost goes too far for European banks to remain competitive. And some I wanted to ask your view that in light of heightened capital requirements, or any businesses, which you think are now uneconomic and where you can’t compete, and where you would be better off exiting, or at least downsizing? Thank you.
James von Moltke: So, Andrew why don’t I start? And I think — and pass it on the Christian on how it informs capital allocations? I think it’s a really good question. Just briefly on the revenues. Yeah, if you take the, the gain on sale out of the 27.2, our starting point is 68.9 — 26.9, sorry, at the 900 million to get to 27.8. And to get the middle of the range, we’d have to grow in every other aspect of the company by about €700 million. That doesn’t seem too stretchy to us, given the momentum in the businesses on all of those drivers, and also some unusual items we had in the year valuation. And timing is always a little uncertain, as we’ve talked about. So hence, if you like the confidence you’re hearing from management about the path forward.
And in the beta discussions, we’ve talked about, we’ve brought forward some of the benefits that would other have — otherwise have been in the ’24 period, a little bit in ’25 into ’22, and ’23, hence some of what you’re seeing. On the REG side, yes, you’ve heard us say this a few times. The more you put floors into the IRB models, the more things outside of economic risk drivers are reflected in how we need to capitalize the businesses, it does affect the return on capital that we earn from them. And it means we have to look at capital allocation carefully. So that’s something we’ve always been focused on remain intensely focused on, as we adapt now to a changing regulatory environment.
Christian Sewing : Yeah, there was hardly anything to add, Andrew. But, when I talk about this regulatory items, it’s not only the model discussion, which James, I think talked a lot about now. In Europe, also these additional items like SRF counter cyclical capital buffer and of course, you are looking then from a portfolio allocation also, next to all the impacts from Basel III, what does it mean? And this is exactly what we are doing. And there we are thinking and that was one of the comments I made, where we can I think even get better in the final when the fine tuning of the portfolio allocation and thinking about what does it mean in two or three years for that in that business. I think we have shown it already also in parts of the investment banking business, within our transformation, that we made the right calls.
