Core Viewpoint - Major investment banks on Wall Street are raising alarms about increasing speculative behavior and rising leverage levels in the U.S. stock market, indicating that bubble risks are accumulating [1]. Group 1: Speculative Activity - Goldman Sachs warns that high-risk activities in the U.S. stock market have surged, with indicators of market speculation reaching historical highs, second only to the 2000 internet bubble and the 2021 retail trading frenzy [2]. - Goldman Sachs' speculation trading indicators show that current levels are at historical peaks, except for the periods of 1998-2001 and 2020-2021 [6]. - The basket of stocks with the highest short interest has seen price increases exceeding 60%, indicating potential for further gains but also increasing the risk of a downturn [7]. Group 2: Leverage Levels - Deutsche Bank highlights that margin debt levels have reached a "dangerous" threshold, with total margin debt exceeding $1 trillion for the first time in history as of June [3][8]. - Margin debt surged by 18.5% over two months, marking the fastest pace of leverage increase since late 1999 or mid-2007, which poses potential threats to credit markets [8]. - Deutsche Bank strategists suggest that unless unexpected tariff reductions or a more dovish stance from the Federal Reserve occur, the current market exuberance may not be sustainable [9]. Group 3: Monetary Policy and Regulation - Bank of America emphasizes that loose monetary policies and relaxed financial regulations are contributing to rising bubble risks, with global policy rates expected to decline further from 4.4% to 3.9% over the next 12 months [10]. - The consideration of regulatory reforms aimed at increasing retail investor participation is noted, with the expectation that more retail investors will lead to greater liquidity, volatility, and bubble risks [11]. - Despite the stock market reaching new highs driven by economic resilience and optimistic corporate earnings, the S&P 500 index has underperformed compared to international peers this year [12].

Financial Data and Key Metrics Changes - Deutsche Bank reported a pre-provision profit of EUR 6.2 billion for the first half of 2025, nearly double the same period in 2024 [5] - Net commission and fee income increased by 4% year on year, aligning with the goal to boost revenues from fee-based and capital-light businesses [5] - Net interest income (NII) across key banking book segments was EUR 3.4 billion, up 5% quarter on quarter, with a full-year NII guidance of EUR 13.6 billion [10][11] Business Line Data and Key Metrics Changes - All four business divisions delivered double-digit returns in the first half of 2025, with the Corporate Bank positioned to capitalize on investment opportunities in Germany and Europe [6][7] - The Investment Bank is focused on consolidating its position in the European FICC franchise, while the Private Bank is seeing improvements in returns due to transformation efforts [7][8] - Asset Management has over EUR 1 trillion in assets under management, positioning it well for both German and European investors [8] Market Data and Key Metrics Changes - Loan growth of EUR 3 billion was observed in the second quarter, with a strong underlying quality of the loan book [12] - Deposits grew by EUR 4 billion during the second quarter, reflecting a stable and high-quality deposit portfolio [13][14] - The liquidity coverage ratio increased to 136%, driven by lower net cash outflows, indicating a strong liquidity position [14][15] Company Strategy and Development Direction - Deutsche Bank is on track to meet its 2025 financial targets, with a compound annual growth rate of 5.9% since 2021 [9] - The bank aims to achieve EUR 2.5 billion in operational efficiencies, with EUR 2.2 billion already delivered or expected [9] - The focus remains on self-help and improving internal operations before considering mergers and acquisitions [36][38] Management Comments on Operating Environment and Future Outlook - Management expressed confidence in the bank's trajectory towards delivering a return on tangible equity (RoTE) of above 10% and a cost-income ratio below 65% [24] - Despite uncertainties in the macroeconomic environment, a reduction in provisioning levels is anticipated in the second half of the year [24] - The bank's strong capital position and second-quarter performance have been recognized by rating upgrades from Morningstar DBRS and Fitch [25] Other Important Information - The CET1 ratio improved to 14.2%, up 42 basis points sequentially, reflecting strong earnings and capital efficiency measures [17][18] - The bank plans to issue between EUR 15 billion and EUR 20 billion to meet 2025 funding requirements, with EUR 10.9 billion already issued year to date [21] Q&A Session Summary Question: Capital distribution policy and CET1 ratio - Management confirmed that the distribution policy remains unchanged, intending to repatriate 50% of earnings via dividends and share buybacks, with a CET1 ratio above 14% allowing for additional distributions [29][30] Question: Ratings direction and expectations - Management expressed optimism about further positive rating revisions from other agencies, following upgrades from Morningstar DBRS and Fitch [31][32] Question: Involvement in M&A activities - Management reiterated a focus on internal improvements before considering M&A, acknowledging mixed conditions for cross-border mergers in Europe [36][38] Question: U.S. commercial real estate (CRE) provisions - Management indicated a reduction in the CRE portfolio due to paydowns and charge-offs, with cumulative credit loss allowances currently at EUR 700 million [49][50] Question: Investment banking pipeline and NDFI lending - Management noted a strong investment banking pipeline, particularly in M&A and equity transactions, while also addressing lending to alternative asset managers [57][62]

Financial Data and Key Metrics Changes - The company reported a pre-provision profit of EUR 6.2 billion, nearly double compared to the same period in 2024 [4] - Net commission and fee income increased by 4% year on year, aligning with the goal to boost revenues from fee-based and capital-light businesses [4] - Net interest income (NII) across key banking book segments was EUR 3.4 billion, up 5% quarter on quarter, with a full-year NII guidance of EUR 13.6 billion [10][11] Business Line Data and Key Metrics Changes - All four business divisions delivered double-digit returns in the first half of the year [5] - The Corporate Bank is well-positioned to capitalize on investment opportunities in Germany and Europe [6] - The Investment Bank is focused on consolidating its position in the European FICC franchise, while the Private Bank is seeing improvements in returns due to transformation efforts [6][7] Market Data and Key Metrics Changes - The company achieved a compound annual growth rate of 5.9% since 2021, within the target range of 5.5% to 6.5% [7] - The liquidity coverage ratio increased by around two percentage points to 136%, driven by lower net cash outflows [14] - The net stable funding ratio slightly increased to 120, reflecting a stable funding base with over two-thirds of funding from global deposits [15] Company Strategy and Development Direction - The company is on track to meet its 2025 financial targets, focusing on operational efficiencies and capital efficiencies [9] - The strategy includes further increasing value generation beyond 2025, with a focus on self-help and improving the bank's fundamentals before considering mergers and acquisitions [35][39] - The company aims to maintain a CET1 ratio above 14% to provide flexibility for additional shareholder distributions [29] Management's Comments on Operating Environment and Future Outlook - Management anticipates a reduction in provisioning levels in the second half of the year despite uncertainties in the macroeconomic environment [24] - The company is optimistic about the recovery of debt capital markets and expects a normalization of activity in the second half of the year [58] - Management is focused on risk management actions to minimize exposure in commercial real estate and is actively working on loan modifications and sales [51][63] Other Important Information - The company has completed around 60% of its issuance plan for the year and plans to issue primarily more senior instruments in the second half [25] - The strong capital position and second-quarter performance led to a rating upgrade from Morningstar DBRS and an upgrade of short-term ratings by Fitch [24][32] Q&A Session Summary Question: Thoughts on capital and shareholder distributions - The company intends to repatriate 50% of earnings via dividends and share buybacks, maintaining a CET1 ratio at the low end of the target range [29] Question: Expectations on ratings and future upgrades - Management is confident that continued delivery of targets will result in further positive rating revisions over time [32] Question: Involvement in M&A over the next eighteen months - The company remains focused on self-help and improving its fundamentals before considering any M&A activity [35][39] Question: Current status of U.S. commercial real estate (CRE) provisions - The cumulative credit loss allowance against the stress test outcome is EUR 700 million, with ongoing efforts to manage and stabilize the portfolio [49][51] Question: Need for new AT1 issuance to call upcoming AT1 securities - The company is assessing the need for new AT1 issuance to call the upcoming AT1 securities, with no decision made yet [48] Question: Investment banking pipeline and market conditions - The investment banking pipeline is strong, but there have been delays in transactions due to market stability concerns [56][58]

Group 1 - The current market is experiencing heightened speculative behavior and rising leverage levels, leading to accumulated bubble risks [1][2][3] - Goldman Sachs indicates that speculative trading activity is at historical highs, only surpassed by the 2000 internet bubble and the 2021 retail trading frenzy [1][2] - Deutsche Bank warns that margin debt has exceeded $1 trillion for the first time, with an 18.5% increase in margin debt over two months, marking the fastest pace since late 1999 or mid-2007 [1][3] Group 2 - Bank of America highlights that loose monetary policy and relaxed financial regulations are contributing to increased bubble risks, with global policy rates expected to drop further [1][4] - The increase in speculative trading is reflected in the rising trading volumes of unprofitable stocks and those with high valuation multiples, particularly among major tech companies and firms involved in digital assets [2][3] - The potential for a widening of high-yield credit spreads by 80 to 120 basis points is anticipated due to the rapid growth of margin debt [3]

Core Viewpoint - Deutsche Bank anticipates that the price trends of silver and platinum may align closely with those of gold [1] Group 1 - Deutsche Bank's forecast suggests a correlation between the price movements of silver, platinum, and gold [1]

Group 1 - Adidas Group's stock price decreased by 2.2% after the European market opened [1] - Deutsche Bank's stock price fell by 2.3% following the same market opening [1]

Market Overview - The market capitalization of major US stocks shows varied performance, with Oracle at 762.30 billion, Mastercard at 321.36 billion, and Visa at 770.15 billion, reflecting increases of +0.66%, +0.86%, and +0.68% respectively [3] - Exxon Mobil's market cap is 679.53 billion, with a slight decrease of -0.98%, while Johnson & Johnson and Netflix show minor changes of -0.08% and -0.05% respectively [3] - Companies like Wells Fargo and Cisco have market caps of 270.15 billion and 279.59 billion, with respective increases of +0.98% and -0.58% [3] Notable Stock Movements - T-Mobile US Inc experienced a significant increase of +6.20%, reaching a market cap of 272.19 billion [3] - General Electric and Coca-Cola saw market caps of 285.05 billion and 298.76 billion, with increases of +0.37% and +0.91% respectively [3] - Companies like Disney and Goldman Sachs have market caps of 229.06 billion and 221.80 billion, with slight changes of +0.01% and -0.60% [3] Sector Performance - The technology sector shows mixed results, with Intel at 991.05 billion, down -3.28%, while AMD increased by +2.46% to 254.92 billion [5] - The consumer goods sector is represented by companies like Procter & Gamble and Coca-Cola, with market caps of 371.68 billion and 298.76 billion, showing slight increases [3][4] - The energy sector, represented by Exxon Mobil and Chevron, shows varied performance, with Exxon down -0.98% and Chevron up +0.66% [3] Summary of Key Companies - Oracle's market cap stands at 762.30 billion, reflecting a positive trend [3] - Mastercard and Visa show strong performance with market caps of 321.36 billion and 770.15 billion, both increasing [3] - Companies like Pfizer and Comcast have market caps of 1579.81 billion and 1332.00 billion, with Pfizer showing minimal change and Comcast down -3.16% [4][5]

Core Insights - Deutsche Bank reported a significant turnaround in its second-quarter 2025 earnings, achieving a profit of €1.49 billion ($1.75 billion) compared to a loss of $143 million in the same quarter last year [1][9] - The profit before tax reached €2.4 billion ($2.8 billion), a substantial increase from $411 million in the prior-year quarter, with a 34% year-over-year growth when adjusted for prior litigation impacts [2][9] Revenue and Expenses - The bank's net revenues were €7.8 billion ($9.2 billion), reflecting a 3% increase year over year [4] - Non-interest expenses decreased by 26% to €4.9 billion ($5.8 billion) compared to the prior-year quarter, while adjusted non-interest expenses were €5 billion ($5.9 billion), down 1% [4] - Provision for credit losses was €423 million ($498.8 million), marking an 11% decline from the previous year [4] Segment Performance - Corporate Bank reported net revenues of €1.9 billion ($2.2 billion), down 1% year over year due to decreased Business Banking revenues [5] - Investment Bank's net revenues were €2.7 billion ($2.8 billion), up 3% year over year, driven by growth in Fixed Income and Currencies [5] - Private Bank's net revenues increased by 2% to €2.4 billion ($2.8 billion), while Asset Management saw a 9% rise in net revenues to €725 million ($854.9 million) due to higher performance and transaction fees [6] Capital Position - Deutsche Bank's Common Equity Tier 1 capital ratio improved to 14.2% as of June 30, 2025, up from 13.5% in the prior year [7] - The leverage ratio on a fully loaded basis increased to 4.7%, compared to 4.6% in the previous year [7] Strategic Outlook - The company is expected to benefit from a strong balance sheet and a shift towards a capital-light business model, which will support its financial performance [8] - The declining expense base is anticipated to contribute positively to the bank's bottom-line growth [8]

Economic Overview - The global economy grew by 3.0% as of June 30, 2025, down from 3.3% at the end of 2024, with emerging markets growing at 4.0%[4] - The global economy is expected to grow by 3.0% in 2025, with inflation projected to decrease to 3.8%[100] - The U.S. economy is anticipated to grow by 1.6% in 2025, contingent on favorable tariff negotiations and trade agreements[100] - Economic performance in Europe remains subdued, with growth forecasts for Germany improving but still below trend, influenced by U.S. trade policies and geopolitical tensions[136] Deutsche Bank Financial Performance - Deutsche Bank's compound annual revenue growth rate since 2021 was 6.1% at the end of the first half of 2025, within the target range of 5.5% to 6.5%[14] - Profit before tax for the first half of 2025 was €5.4 billion, more than double the first half of 2024, driven by a 12% revenue growth to €16.5 billion[28] - Post-tax return on average shareholders' equity (RoE) improved to 9.8%, up from 2% in the prior year period, while post-tax return on average tangible shareholders' equity (RoTE) was 10.9%, up from 2.2%[29] - Profit before tax for the first six months of 2025 was €1.4 billion, up 13% year on year, with a post-tax RoE of 14.8%, an increase from 14.4% in the prior year[51] Revenue and Profitability - Net revenues in the second quarter of 2025 rose 14% year on year to €8.3 billion, aligning with the bank's full-year 2025 revenue ambition of around €32 billion[33] - The bank's cost/income ratio target is below 65%[17] - Noninterest expenses decreased by 15% year on year to €10.2 billion in the first half of 2025, reflecting a substantial reduction in nonoperating costs[34] - Corporate Bank reported a profit before tax of €1.4 billion, up 13% year on year, with a post-tax RoE of 14.8%[31] Business Segment Performance - Investment Bank's profit before tax increased by 18% year on year to €2.4 billion, with a cost/income ratio of 54%[31] - Private Bank achieved a profit before tax of €1.1 billion, up 50% year on year, with a post-tax RoE of 9.3%[31] - Asset Management's profit before tax rose 52% year on year to €429 million, with a post-tax RoTE of 24.1%[31] - The Private Bank's total net revenues for the first half of 2025 were €4.8 billion, a 2% increase year-on-year[66] Capital and Liquidity - Deutsche Bank aims for a Common Equity Tier 1 capital ratio within an operating range of 13.5% to 14%[11] - The Common Equity Tier 1 (CET1) capital ratio improved to 14.2% at the end of Q2 2025, up from 13.8% in Q1 2025[41] - Customer deposits were €655 billion in Q2 2025, down from €667 billion in Q1 2025, but up from €646 billion in Q2 2024[46] - The Liquidity Coverage Ratio was 136% at the end of Q2 2025, above the regulatory requirement of 100%[45] Cost Management - The bank's operational efficiency program is on track to complete its €2.5 billion target, with significant cost savings realized through restructuring and workforce reductions[15] - The cost/income ratio improved to 59.5% in Q2 2025, down from 91.7% in the prior year quarter[47] - Noninterest expenses for the Private Bank decreased by 8% year-on-year to €1.6 billion, primarily due to lower nonoperating costs[65] Credit Quality and Provisions - Provision for credit losses was €423 million in the second quarter of 2025, down 11% from the second quarter of 2024, indicating improved credit quality[38] - Provision for credit losses decreased to €22 million in Q2 2025 from €135 million in the prior year quarter, reflecting a model update[50] - Provision for credit losses was €399 million for the six months ended June 30, 2025, compared to €492 million for the twelve months ended December 31, 2024[187] Strategic Initiatives and Outlook - Deutsche Bank reaffirms its revenue goal of around €32 billion at Group level in 2025, before foreign exchange rate effects[112] - The bank's strategic Global Hausbank strategy aims to build a foundation for sustainable profit growth and achieve its 2025 financial targets[108] - Deutsche Bank expects a reduction in provisions for credit losses in the second half of 2025 compared to the first half, maintaining solid asset quality[122] - The bank has completed the majority of its current €750 million share repurchase program and is seeking approval for a second program in 2025, potentially enabling capital distributions exceeding €2.1 billion[124] Regulatory and Geopolitical Environment - The geopolitical landscape, including conflicts in the Middle East and Ukraine, continues to pose risks to market confidence and the bank's financial results[142][143] - Regulatory changes in the EU, including the CMDI review and proposed changes to securitization rules, may impact Deutsche Bank's operations and capital objectives[150][154] - The U.S. Federal Reserve has maintained interest rates while the European Central Bank has cut rates four times in 2025, leading to a diverging monetary policy landscape[137] Technology and Innovation - Deutsche Bank continues to adopt AI technologies, launching "Paula," a client-facing Generative AI chatbot in 2025, aimed at enhancing productivity[169] - The bank is actively monitoring emerging cyber threats and adapting mitigation strategies to address evolving risks in its operations[156][157]

Core Viewpoint - Deutsche Bank's chief European economist Mark Wall indicates that the European Central Bank (ECB) has paused its easing cycle in July, raising questions about whether this is a temporary halt or a long-term observation, with significant uncertainty remaining [1] Group 1: ECB Policy and Economic Outlook - The ECB's decision to pause is seen as a reasonable approach to maintain policy flexibility amid high uncertainty [1] - There is a potential risk of rising inflation due to strong economic resilience combined with large-scale fiscal stimulus if trade uncertainties diminish [1] - The market may soon shift its focus from the "last rate cut" to the timing of the "first rate hike" [1]