Giulia Aurora: Understood. Thank you.
Operator: Next question comes from Jeremy Sigee from BNP. Please go ahead.
Jeremy Sigee: Thank you. Just a couple of number detail things, please. Firstly, on the capital returns, can I just clarify what has been deducted from capital already is it the €0.45 and the €675 million, buyback but no extra have those both been deducted, and linked to that is the constraint when you talk about the 50% payout for the returns done over the course of this year, and in particular in the second half of this year, is the constraint 50% of this year’s earnings, 2024, or constraint being 50% of last year’s earnings, which a lot of it was accrued out of. And then the last question was just on the costs, I know we’ve talked a lot about it, but in the divisions, both the IB and the Corporate Bank were about €100 million heavier in the quarter, and I wasn’t very clear. I wonder if you could just talk a bit more about how much of that was specific items or sort of year end extra, and how much of that falls away. That’d be very helpful. Thank you.
James von Moltke: Sure. Jeremy, I think I got both of your questions, but feel free to follow up. Look, we would like to stick to the 50%. We think that’s prudent and ideally not go beyond. By putting out the dividend guidance that we have, I think the indication is management is confident of its ability to grow earnings from here. If you think about 50% of our net income to common for 2023, that actually gives us still a fair amount of room against the €1.6 billion that we’ve talked about today. To your question about what is, if you like, disregarded in the ratio based on interim profit recognition, the answer is the €900 million, the 45 cents [ph] is disregarded in the December ratio, the €675 million is not removed from that.
The €675 million we see as part of a discretionary program rather than the 50% payout ratio assumption, which in essence wasn’t in place for 2020 – in respect of 2023. That €675 million would represent about 20 basis points. And so in the rounding, we’d be at 13.5, maybe 13.6 pro forma for that second buyback. In IB and CB costs, I do want to just remind that CB took the lion’s share of the FDIC assessment, so there’s noise this quarter on that, as well as last year in the fourth quarter, there was a – what I’ll call a true up in the internal service cost allocation. So that’s been a bigger feature in for CB than the others. And in IB, of course, we’ve – that’s seen a fair amount of the investment in 2023, including, obviously, Numis in the fourth quarter.
So noise in both. And as we strip away now in Q1, you should see what I’ll call as a cleaner run rate in both of those businesses.
Jeremy Sigee: Thank you. And just to be clear, both of those things are in the adjusted costs. So the FDIC is in the adjusted costs. It’s not been stripped out as one off.
James von Moltke: Yes. FDIC was not stripped out as one off.
Jeremy Sigee: Okay.
James von Moltke: So the only thing that is, of all of that, the only thing that’s not in adjusted cost is the Numis impairment.
Jeremy Sigee: Perfect. Thank you very much indeed. Appreciate it.
James von Moltke: Thank you, Jeremy.
Operator: Next question is from Andrew Coombs from Citi. Please go ahead.
Andrew Coombs: Good morning. Two questions, please. Firstly, thank you for the net interest income walk. In the guidance for the decline that you gave for 2024, you talked about moving to a steady state level on deposit pricing. Perhaps you could just elaborate there on what your steady state deposit beta assumption is? I think your peers are at 40%, but perhaps you could elaborate there? Secondly, coming back to the non-net interest income growth, it looks like you’re targeting €1.6 billion a year in both 2024 and 2025, 9% to 10%. It’s a very healthy run rate that you’re guiding to. Within that, you’ve mentioned the four different components. So fixed income, origination & advisory, wealth and asset management. And you said that origination & advisory is the biggest component within that.
But perhaps I could ask two things. Number one, can you split out the growth between those four? And secondly, how much of it is driven by industry wallet versus how much is market share gains? Thank you.
Christian Sewing: So I’ll speak to the beta. Look, we sort of made a policy decision, if you like, not to talk about betas in specific terms externally. What we have seen, and I think we’ve talked about this before, our portfolios are quite varied. And by that I mean the deposit portfolio breaks out between private bank and corporate bank. And then in each of those businesses, really euros and dollars. And then, of course, there’s a dynamic around what is site and what is term. So there’s different sort of behaviors across those things. What we are thinking could happen is that with the expectation of the market now, that policy rates will start to go down, that the long-term interest rates have gone down. You may see a peak in terms of pass through, or we may have in fact seen a peak in terms of pass through, because now banks are reacting and our clients are reacting to a changed interest rate environment.
And hence we could – can’t say this was certainly, but we could be near a peak of the pass through associated with the rate increase cycle we’ve just been through. And now the question will flip to how sticky will customer rates be on the way down? So a completely different dynamic. As I’ve said, our – and we said this in Q3, and I guess I’d reiterate this, our beta assumptions assume a continued convergence towards the models as though the trend was still upwards, although there’s a possibility, as I say, that we’ve peaked and may run flat for a period of time before things start to move down. So an interesting dynamic around the betas. In terms of the split, I don’t want to go into too much detail, but I would say relatively evenly split between private bank, corporate bank and the fixed income and currencies business.
