Form 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13
a
-16 OR 15
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-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the month of April 2020
Commission File Number 1-15242
DEUTSCHE BANK CORPORATION
(Translation of Registrant’s Name Into English)
Deutsche Bank Aktiengesellschaft
Taunusanlage 12
60325 Frankfurt am Main
Germany
(Address of Principal Executive Office)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F: Form 20-F ☒ Form 40-F ☐
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ☐
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):☐
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Explanatory note
This Report on Form 6-K contains as an exhibit an ad hoc release of Deutsche Bank AG (together with its consolidated subsidiaries, the “Group”), dated April 26, 2020, announcing results for the first quarter 2020 and an update of its outlook for full year 2020. This Report on Form 6-K and the section of the exhibit captioned “Updates to 2020 financial targets” are incorporated by reference into Registration Statement No. 333-226421 of Deutsche Bank AG. The first four paragraph of the exhibit are not intended to be incorporated by reference into Registration Statements filed by Deutsche Bank AG under the U.S. Securities Act of 1933, because they are superseded for such purposes by the following paragraphs.
Effective January 1, 2020, the Group prepares its financial statements for non-U.S. purposes (including the financial information in the ad hoc release) in accordance with IFRS as endorsed by the European Union (EU) and applies portfolio fair value hedge accounting for non-maturing deposits under the IAS 39 carve-out provisions (commonly referred to as the “EU carve-out”). The reason for the Group’s adoption of the EU carve-out is to align the Group’s hedge accounting approach with its risk management practice and the accounting practice of its major European Union peers.
For purposes of its filings with the U.S. Securities and Exchange Commission (such as the Earnings Report as of March 31, 2020, which Deutsche Bank AG intends to file with the SEC on a Report on Form 6-K on April 29, 2020), the Group will prepare its financial statements in accordance with IFRS as issued by the International Accounting Standards Board (IASB), which does not provide for an election to use the EU carve-out.
In any given period, the net effect of the use of the EU carve-out on revenues and profit can be positive or negative, depending on the fair market value changes in the positions being hedged and the hedging instruments.
For the three-month period ended March 31, 2020, the Group’s net revenues and profit before tax under IFRS as endorsed by the EU using the EU carve-out were 132 million euros higher than under IFRS as issued by the IASB and the Group’s profit (loss) post tax under IFRS as endorsed by the EU using the EU carve-out was 70 million euros higher than under IFRS as issued by the IASB.
Accordingly, for the three-month period ended March 31, 2020, Deutsche Bank expects to report under IFRS as issued by the IASB Group profit before tax of 74 million euros and a loss post tax of 4 million euros. Under IFRS as issued by the IASB, revenues are expected to be 6.2 billion euros with noninterest expenses of 5.6 billion euros, including contributions to the Single Resolution Fund of 0.5 billion euros. Provisions for credit losses are expected to be 0.5 billion euros, or 44 basis points of loans. (There is no difference in noninterest expenses or provision for credit losses under IFRS as issued by the IASB as compared to EU IFRS as endorsed by the EU using the EU carve-out.)
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As of January 1, 2020, the Group’s regulatory capital and ratios continue to be calculated and reported on the basis of IFRS as endorsed by the EU, but effective January 1, 2020 the Group will apply the EU carve-out. As of March 31, 2020, this had a positive impact of 70 million euros toward the CET 1 capital of 43.7 billion euros and a positive impact of about 2 basis points toward the CET 1 ratio of 12.8%, in each case under IFRS as endorsed by the EU using the EU carve-out.
In any given period, the net effect of the use of the EU carve-out on CET 1 capital can be positive or negative, depending on the fair market value changes in the positions being hedged and the hedge instruments.
As stated in the ad hoc release, the CET1 ratio of 12.8% at quarter-end was down from 13.6% at year-end. The decline in the CET1 ratio in the quarter included approximately a 30 basis points negative impact from the revised securitization framework and approximately 40 basis points of items precipitated by the COVID-19 pandemic.
Exhibit 99.1 : Ad hoc release, dated April 26, 2020, of Deutsche Bank AG, announcing results for the first quarter 2020 and an update of its outlook for full year 2020.
Forward-looking statements contain risks
This report contains forward-looking statements. Forward-looking statements are statements that are not historical facts; they include statements about our beliefs and expectations. Any statement in this report that states our intentions, beliefs, expectations or predictions (and the assumptions underlying them) is a forward-looking statement. These statements are based on plans, estimates and projections as they are currently available to the management of Deutsche Bank. Forward-looking statements therefore speak only as of the date they are made, and we undertake no obligation to update publicly any of them in light of new information or future events.
By their very nature, forward-looking statements involve risks and uncertainties. A number of important factors could therefore cause actual results to differ materially from those contained in any forward-looking statement. Such factors include the conditions in the financial markets in Germany, in Europe, in the United States and elsewhere from which we derive a substantial portion of our trading revenues, potential defaults of borrowers or trading counterparties, the implementation of our strategic initiatives, the reliability of our risk management policies, procedures and methods, and other risks referenced in our filings with the U.S. Securities and Exchange Commission. Such factors are described in detail in our 2019 Annual Report on Form 20-F, which was filed with the SEC on March 20, 2020, on pages 13 through 47 under the heading “Risk Factors.” Copies of this document are readily available upon request or can be downloaded from www.deutsche-bank.com/ir.
This report and other documents we have published or may publish contain non-GAAP financial measures. Non-GAAP financial measures are measures of our historical or future performance, financial position or cash flows that contain adjustments that exclude or include amounts that are included or excluded, as the case may be, from the most directly comparable measure calculated and presented in accordance with IFRS in our financial statements. Examples of our non-GAAP financial measures, and the most directly comparable IFRS financial measures, are as follows:
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Non-GAAP Financial Measure |
Most Directly Comparable IFRS Financial Measure |
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Net income attributable to Deutsche Bank shareholders, Adjusted profit (loss) before tax |
Profit (loss) before tax |
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Revenues excluding specific items |
Net revenues |
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Adjusted costs, Adjusted costs excluding transformation charges, Adjusted costs excluding transformation charges, bank levies and expenses associated with the transfer of the Prime Finance business to BNP Paribas |
Noninterest expenses |
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Net assets (adjusted) |
Total assets |
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Tangible shareholders’ equity, Average tangible shareholders’ equity, Tangible book value, Average tangible book value |
Total shareholders’ equity (book value) |
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Post-tax return on average shareholders’ equity (based on Net income attributable to Deutsche Bank shareholders) |
Post-tax return on average shareholders’ equity |
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Post-tax return on average tangible shareholders’ equity |
Post-tax return on average shareholders’ equity |
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Tangible book value per basic share outstanding, Book value per basic share outstanding |
Book value per share outstanding |
For descriptions of non-GAAP financial measures and the adjustments made to the most directly comparable financial measures under IFRS, please refer to “Supplementary Information (Unaudited): Non-GAAP Financial Measures” on pages 431 through 439 of our 2019 Annual Report (which Annual Report 2019 constitutes a part of our 2019 Annual Report on Form 20-F).
When used with respect to future periods, our non-GAAP financial measures are also forward-looking statements. We cannot predict or quantify the levels of the most directly comparable financial measures under IFRS that would correspond to these measures for future periods. This is because neither the magnitude of such IFRS financial measures, nor the magnitude of the adjustments to be used to calculate the related non-GAAP financial measures from such IFRS financial measures, can be predicted. Such adjustments, if any, will relate to specific, currently unknown, events and in most cases can be positive or negative, so that it is not possible to predict whether, for a future period, the non-GAAP financial measure will be greater than or less than the related IFRS financial measure.
Regulatory fully loaded measures
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Our regulatory assets, exposures, risk-weighted assets, capital and ratios thereof are calculated for regulatory purposes and set forth throughout this report under the regulation on prudential requirements for credit institutions and investment firms (“CRR”) and the Capital Requirements Directive (“CRD”) implementing Basel 3, which were published on June 27, 2013 and which apply on and after January 1, 2014. CRR/CRD provides for “transitional” (or “phase-in”) rules, under which capital instruments that are no longer eligible under the new rules are permitted to be phased out as the new rules on regulatory adjustments are phased in, as well as regarding the risk weighting of certain categories of assets. Unless otherwise noted, our CRR/CRD solvency measures set forth in this document reflect these transitional rules. We also set forth in this report such CRR/CRD measures on a “fully loaded” basis, reflecting full application of the final CRR/CRD framework without consideration of the transitional provisions under CRR/CRD, except as described in respect of the applicable measure. Measures calculated pursuant to our fully loaded methodology are non-GAAP financial measures.
We believe that these “fully loaded” calculations provide useful information to investors as they reflect our progress against the regulatory capital standards and as many of our competitors have been describing calculations on a “fully loaded” basis. As our competitors’ assumptions and estimates regarding “fully loaded” calculations may vary, however, our “fully loaded” measures may not be comparable with similarly labelled measures used by our competitors.
For descriptions of these fully loaded CRR/CRD measures and the differences from the most directly comparable measures under the CRR/CRD transitional rules, please refer to “Management Report: Risk Report: Risk and Capital Performance: Capital, Leverage Ratio, TLAC and MREL” on pages 97 through 111 of our Annual Report 2019, in particular the subsections thereof entitled “Development of Own Funds”, “Development of Risk-Weighted Assets” and “Leverage Ratio”, and to “Supplementary Information (Unaudited): Non-GAAP Financial Measures: Regulatory fully loaded measures” on page 439 of our Annual Report 2019.
When used with respect to future periods, our fully loaded CRR/CRD measures are also forward-looking statements. We cannot predict or quantify the levels of the most directly comparable transitional CRR/CRD measures that would correspond to these fully loaded CRR/CRD measures for future periods. In managing our business with the aim of achieving targets based on fully loaded CRR/CRD measures, the relation between the fully loaded and transitional measures will depend upon, among other things, management action taken in light of future business, economic and other conditions.
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Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: April 28, 2020
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By: /s/ Serdar Oezkan |
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Name:Serdar Oezkan |
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Title:Managing Director |
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By: /s/ Mathias Otto |
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Name: Mathias Otto |
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Title:Managing Director and Senior Counsel |
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Exhibit 99.1
Ad-hoc Release | April 26, 2020
Frankfurt am Main, April 26, 2020 – Deutsche Bank expects to report group profit before tax of 206 million euros and net income of 66 million euros, above market expectations.
Revenues are expected to be 6.4 billion euros with noninterest expenses of 5.6 billion euros, including contributions to the Single Resolution Fund of 0.5 billion euros. Provisions for credit losses are expected to be 0.5 billion euros, or 44 basis points of loans. Consensus estimates showed a wide range around each of these results.
Deutsche Bank’s Common Equity Tier 1 (CET1) ratio was 12.8% at quarter-end, down from 13.6% at year-end. The decline in the CET1 ratio in the quarter included approximately a 30 basis points negative impact from the revised securitization framework and approximately 40 basis points of items precipitated by the COVID-19 pandemic.
Full details of Deutsche Bank’s first quarter results will be disclosed as planned on April 29, 2020. Results are prepared in accordance with IFRS as adopted by the EU.
Updates to 2020 financial targets
In anticipation of business opportunities and elevated client demand and in light of the current macroeconomic environment, Deutsche Bank is reviewing its 2020 CET1 and leverage ratio targets.
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The bank’s CET1 ratio of 12.8% at quarter end was approximately 240 basis points above its current pillar 2 regulatory requirement. This has been lowered from 11.6% at 1 January 2020 to 10.4% following the ECB’s early implementation of CRD V Article 104(a) and the reduction of the Counter-Cyclical Capital Buffer. A reduction in capital requirements reduces the level below which the bank would be required to calculate a Maximum Distributable Amount (MDA). The MDA is used to determine restrictions on distributions on CET 1 capital and Additional Tier 1 instruments.
The short-term implications of the COVID-19 pandemic make it difficult for the bank to accurately reflect the timing and the magnitude of changes to its original capital plan. Deutsche Bank’s priority is to stand by its clients without compromising on capital strength. It is therefore possible that the bank will fall modestly and temporarily below its previous CET1 target of at least 12.5%. Deutsche Bank remains committed to maintaining a significant buffer above its regulatory requirements at all times.
This revised outlook acknowledges that credit extension to support clients at this time could increase risk weighted assets for several quarters. In addition, there are a series of pending and proposed regulatory adjustments which could improve the bank’s reported CET1 ratio.
This potential additional balance sheet growth also means that the bank is unlikely to reach its 2020 fully-loaded leverage ratio target of 4.5%, absent regulatory adjustments to the leverage ratio calculation which may increase the banks reported ratio.
Given the temporary nature of the aforementioned capital items, the bank will continue to work towards its 2022 targets of a 12.5% CET1 ratio target and 5% leverage ratio.
Deutsche Bank reaffirms its other financial targets, including for 2020 adjusted costs excluding transformation charges and reimbursable expenses associated with the transfer of the Prime Finance platform to BNP Paribas of 19.5 billion euros.
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Contact:
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Sebastian Krämer-Bach |
About Deutsche Bank
Deutsche Bank provides commercial and investment banking, retail banking, transaction banking and asset and wealth management products and services to corporations, governments, institutional investors, small and medium-sized businesses, and private individuals. Deutsche Bank is Germany’s leading bank, with a strong position in Europe and a significant presence in the Americas and Asia Pacific.
Forward-Looking Statements
This release contains forward-looking statements. Forward-looking statements are statements that are not historical facts; they include statements about our beliefs and expectations and the assumptions underlying them. These statements are based on the plans, estimates and projections currently available to the management of Deutsche Bank. Forward-looking statements therefore speak only as of the date they are made, and we undertake no obligation to update any of them in light of new information or future events. By their very nature, forward-looking statements involve risks and uncertainties. A number of important factors could therefore cause actual results to differ materially from those contained in any forward-looking statement. Such factors include the conditions in the financial markets in Germany, in Europe, in the United States and elsewhere from which Deutsche Bank derives a substantial portion of its revenues and in which the bank holds a substantial portion of its assets, the development of asset prices and market volatility, potential defaults of borrowers or trading counterparties, the implementation of strategic initiatives of the bank, the reliability of the bank’s risk management policies, procedures and methods, and other risks referenced in the bank’s filings with the U.S. Securities and Exchange Commission. Such factors are described in detail in the bank’s SEC Form 20-F of 20 March 2020 under the heading “Risk Factors”. Copies of this document are readily available upon request or can be downloaded from www.db.com/ir.
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