Deutsche Bank AG (NYSE:DB)
Q2 2021 Earnings Call
Jul 28, 2021, 7:00 a.m. ET
- Prepared Remarks
- Questions and Answers
- Call Participants
Ladies and gentlemen, thank you for standing by. I’m Stuart, your Chorus Call operator. Welcome, and thank you for joining the Deutsche Bank’s Q2 2021 Analyst Call. [Operator Instructions]
We’d now like to turn the conference over to Ioana Patriniche, Head of Investor Relations. Please go ahead.
Ioana Patriniche — Head of Investor Relations
Thank you for joining us for our second quarter 2021 results call. As usual, our Chief Executive Officer, Christian Sewing, will speak first; followed by our Chief Financial Officer, James von Moltke. The presentation, as always, is available to download in the Investor Relations section of our website, db.com. Before we get started, let me just remind you that the presentation contains forward-looking statements, which may not develop as we currently expect. We therefore ask you to take notice of the precautionary warning at the end of our materials.
With that, let me hand you over to Christian.
Christian Sewing — Chief Executive Officer
Thank you, Ioana. A warm welcome from me as well. It’s a pleasure to be discussing our second quarter 2021 results with you today. We are now over halfway through our transformation journey, and we have continued to deliver against our milestones. For the second consecutive quarter this year, we have delivered a significant profit improvement driven by growing strength across our businesses. We generated EUR1.2 billion of pre-tax profit and EUR828 million of profit after tax. And that’s including a negative impact of around EUR230 million from the German Federal Court ruling or BGH ruling on consent for changes to consumer contracts, which we will discuss later in further detail. Despite a more normalized market environment in the quarter, revenues remained robust at EUR6.2 billion, down only 1% compared to the previous year. This demonstrates regained franchise strength at Deutsche Bank. We also continue to make progress on costs. We reduced our adjusted costs excluding transformation charges and reimbursement for Prime Finance from EUR4.8 billion to EUR4.5 billion year-on-year. And we continue to invest in the execution of our transformation agenda with more than 90% of our transformation projects now in the implementation phase. They are key contributors to our cost reduction progress. Risks are well under control, and so we continue to make progress toward achieving sustainable profitability. This quarter, we generated a 5.5% return on tangible equity. The headway we made across all business in the second quarter reinforces our confidence that we will be able to meet our profitability targets. Finally, we delivered another quarter of progress toward the goals we outlined at our Sustainability Deep Dive in May.
Now let me take you through the highlights of what we have achieved in the first half of this year on slide two. Our performance over these past six months shows that our 2022 targets and ambitions are well within reach. Refocusing our business around core strength is paying off. Revenues of EUR13.5 billion for the first half of 2021 fully support our trajectory to the 2022 revenue goal. We’ve reduced adjusted costs, excluding transformation charges, by roughly 4% year-on-year. Coupled with provisions for credit losses down 89% on the year to EUR144 million or seven basis points of average loans, we continue to see an improvement in our operating environment. We also reduced our cost/income ratio to 78% from 87% for the same period last year, which represents significant progress toward our 2022 target of 70%. And in the Core Bank, the cost/income ratio is even lower at 73%. Let’s now turn to profitability on slide three. Our relentless focus on delivering transformation is reaching the bottom…