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Let's bring you right now our interview and conversation with the CFO of Deutsche Bank, James von Moltke, who's been speaking to balloom Bugs.
Oliver Crow, take us through a little bit the composition of why where that our performance was.
Sure, absolutely so. Investment bank and FAKE both up eleven percent year on year, and that's against what was already a good quarter last year. We think it's it's across the board. Frankly, there's really only the rates complex has been down given the market environment. Even there, we think we've been winning market share. But our credit complex, emerging
markets and also FX all performed well this quarter. I think it's the cumulative impact of investment that Rob Nayak and his team have been making over the past several years. So we're very pleased with that performance.
And Harry's developing in now in the fourth quarter. And are you're expecting that to sort of ramp up? We have a sort of knife edge US election, you know, very hard to call. Is that going to sort of be a boon to trading?
Well, Well, look we're off to a good start in the quarter, so that's encouraging. We think the conditions of the third quarter have carried through without the volatility, incidentally, that we saw in August. Usually we see strength around a US election, you know, as investors and also corporates need to position and react to changes in the markets and expectations, and so that's what we'll expect to see really once we get past the milestone number of fifth right.
And also this year was marked by sort of a lot of provisioning for the post bank situation that you're still dealing with. There still awaiting a court ruling. We got some of that money back.
Is it enough to.
Justify a buyback this year? I know that now you've asked for the authorization or is it going to be more into next year? Can you U clarity on it?
Yeah, so we have applied for authorization for a further buyback which would be executed in twenty twenty five. The postbank provision we've seen a release this quarter which is good on the basis of settlements that we were able to finalize. We have a court case today actually this morning,
so we're expecting more news on that. Hard to say what the direction is, but it's certainly been supportive we think we've reacted well to the setback that was the court's sort of expression back in April, and it's gratifying to have gotten through that with strong capital and now with settlements behind us, a mitigation of the income statement impact, and.
Looking at that buyback into twenty twenty five. What sort of size are you aiming for.
Well, we won't speak directly to size, but we've laid out a sort of a capital plan which is which is of increasing levels of return to our investors, representing a normalization in some respects of catchup which we expect to achieve over the next couple of years relative to peers.
And also noticing that provisions were up but interestingly down massively in commercial real estate. Can you talk us through that a little bit.
Well, yes, So provisions have been influenced this year by a few transitory effects, all of which we expect to either ameliorate or cease next year. One has been the impact of the Pustbank integration, second HA being a couple of larger corporate in Europe, which in our case we're hedged. So the impact to shareholders if you like, was moderate. But as you say, commercial real estate has been going
through a cycle that we've been living with. We'd actually called relatively early for a stabilization in that credit environment. We've seen that continue in the third quarter. Whether that's driven by interest rates, the economy now, interestingly, lease activity, and of course the indices that you can see publicly, all of those things tell us there's a stabilization for us.
We were down by over thirty four percent or so in provisions in commercial real estate, and actually that included a sort of an acceleration based on a sale that we're contemplating of some valuation adjustment. So we feel that trend is well established now.
And talking of sales, it's been a big core also for M and A within Germany, your origination advisory business up twenty five percent. You've been able to capitalize on that. Then we have sort of our market share this year.
I mean, we're up significantly over fifty percent this year in last year's revenues. With that a market share gain to around two and a half two point six percent so far this year. That's encouraging. The wallet was a little bit softer in Q three, but we think that was sort of seasonal and temporary. The momentum is there. And we look forward with the investments that we've made in Origination advisory franchise to participating and further improving our market share.
And I wonder what it tells us more broadly about the German economy, because a lot of this M and A has been incoming to Germany and not sort of going out. Is there sort of a sense of Germany for sale a little bit, particularly with the weakness in the economy.
I don't see that at all, and I think it's actually both ways. And whether it's M and A or just the foreign direct investment that's taking place, we see certainly two way flows. I mean, Germany always has some sort of interesting features around sort of private middle market companies sometimes selling strategically or to private equity, and then our large industrial companies making investments abroad. That has been the trend. I don't see that necessarily changing.
And also question of M and A obviously will not have escaped your attention. What's been going on to Commerce Bank and down the street, And obviously there's been a lot of talk through the years about Deutsche Bank commerce Bank potentially getting together. You obviously observed what's been going on, You considered getting involved opted not to. I'd just like to get from you kind of the sort of process of what you observed and where you ended up into sort of the decisions you made.
Well, look, we were always looking at our option set as any sort of well managed company should, and domestic consolidation is clearly on the list of things that you
would look at as you observe your option set. We've been i think, pretty consistent in saying the industrial logic for bank mergers makes sense, but that we needed time to be fully ready, and that time hasn't come, and so we're focused on executing our strategy, focused on delivering against promises we've made to our shareholders and stakeholders, and it's sometimes nice not to be distracted by by other things and just execute as I think the third quarter
and the year to date showed that we've been focused on execution.
And I guess you know, if this were to go through with UniCredit and commerce market would make an entity larger than Deutsche Bank. We've obviously had consolidation in the Swiss market. We also have BBVA Sabadel, so this is really a moment for European consolidation. I imagine that makes you sort of reflect on your position not only within Germany
but within Europe. Where does Deutsche Bank want to what spaces they want to occupy in that landscape and a landscape that is more consolidated with bigger banks.
Well, let me start by saying, we intend to remain number one in Germany and we think that consolidation here doesn't really change our competitive landscape. Germany is a very competitive market as it stands, and we compete against both huperfeiens Bank that is UniCredit and Commerce Bank in our home market, so that doesn't change much. But your point is one that we agree with. We think Deutsche Bank is positioned to play a leading role in European consolidation.
We think that scale in banking, especially in the regulatory environment we live in today, is something that's important and something we observe again in competition with our US competitors as a strength. So in time, absolutely we see that. So that's taking place, and sometimes the first few transactions sort of set off a wave, and I think that's what you're getting at, and we certainly believe that that begins.
So when do you think the moment is ready for Deutschemak to sort of exit this kind of turnaround mode into a sort of slightly more aggressive, more maybe acquisitive, more sort of proactive mode.
Well, look, I don't want to set a clock because it's it's always hard to say, but look, twenty five is an important milestone year for us. I mean, we've been working hard over the years through the transformation of the company to position us as exceeding in terms of performance, exceeding our cost of capital, showing a sustainable picture to our shareholders, resolving the remaining control, and other investments that we needed to do to make being on the front
foot competitively. We think we're well on our way to that, and next year is an important milestone.
And from the sort of uncertainty around commerce, like have you been able to sort of acquire clients over the last couple of months and expect that to happen if there is in fact a takeover.
Look, we it's always helpful competitively when two competitors are distracted by corporate events, that creates opportunity. We're ready to capitalize on that opportunity. As you'd expect discussions take place, but I'd say it's early days. We think we're very well equipped as the leading Bank of Germany with our capabilities, our international network, our product capabilities and also our relationships to support the German economy and to be the leading bank in Germany.
And there's also a new commission within the within Europe being led by Mario Draggy and his Competitive Competitiveness Report. It seems like policymakers are more receptive to advice on how to make things more competitive. So if James von Malka were able to bring sort of one change at the EU level to make banking in Europe more competitive, what would you suggest.
Well, what's now called the Savings and Investment Union and the Banking Union. We've been advocating for years and I personally believe in it because the the size of the market and again given all of the industrial logic we talked about a moment ago about m and A is
furthered by those types of changes. And we all see the need of in the economy for financing of the green transition, of the digital transition, of infrastructure investment, public deficits, and these are things that the banking industry would be better equipped to be able to serve if those reforms came through. So we're pleased with what we see both in the new Commission, in the Mission letter for Commissioner Albuquerque or Commissioner Designate, and also in the Draggi Report.
This is an important moment for Europe to sort of grasp the nettle and move.
Forward, and an important moment also for the United States. An election just a couple of weeks away. What are clients telling you about how they're preparing themselves for the outcome?
Look almost any way the the American election comes out, I think there's a recognition in Europe that we need to be more agile, more dynamic, more competitive, not just against the United States but also against arising Asia. And that's I think that's very clear. You know, our clients are reading the newspapers and and understand some of the policy differences that are likely to come out of an election one way or the other. Of course, the congressional
election is important too in this context. So so I think people are aware of the change, getting ready for what lies ahead. I think most importantly trat tariffs, and we've been through that before in Europe, and so so that the trade relationship that we have with the United States but also with China is going to be an important feature of the post election period.
And just a final word. Obviously, we've been waiting for the comeback in the German economy for what feels like more than two years now. Do you have any sort of reason to be optimistic that that is imminent or do you think that we are kind of going to be slogging through for a bit long?
Look, we've been We've been frustrated and that the recovery has has taken so long. You know, the the transition that the German economy is going through around exports, currency, energy prices of these things is significant. However, we had been expecting growth to begin to accelerate in the second half of this year and that doesn't seem to be
the case. Our economists are calling for about one percent growth next year in Germany, and I think that's still still a fair case to expect, but that transition has been has been longer and tougher than we might have hoped for. Again, it ties back to I think there is a policy mix that can help unlock some of the growth potential and accelerate this adjustment.
And what are those kind of you think those policy points that would help do that well?
I think the first of all the burdens of bureaucracy. I think most most, not just financial institutions, but corporates would tell you that there needs to be a moderation of that. There are fiscal incentives that can be put in place. There is support for a venture capital and some of the investing. Securitization is a big item within the within the financial sector reforms that we would advocate.
So there's lots to do without asking taxpayers for more money, so that very often things get get stuck on government funding. But we think there's a there's a whole lot that can be growth stimulus without the need for additional fiscal.
Support and budget neutral things that could happen to really turn on the German.
Beneficial as far as it generates tax revenues. Okay, don you might see a fire. James Wilkos speaking to Bloomberg's Oliver cro