Financial Data and Key Metrics Changes - The post-tax return on tangible equity for 2025 was 10.3%, meeting the full-year target of above 10% and setting a foundation for a target of greater than 13% by 2028 [3] - Revenue for 2025 reached approximately EUR 32 billion, reflecting a 7% year-on-year increase and a 26% increase since 2021 [4] - Non-interest expenses decreased to EUR 20.7 billion, down 10% year-on-year, with a nearly EUR 1 billion reduction in the cost base since 2021 [4] Business Line Data and Key Metrics Changes - The Corporate Bank experienced revenue growth of over 40% since 2021, benefiting from a normalized interest rate environment and increased fee income [5] - The Investment Bank saw an 11% increase in client activity in 2025 compared to the previous year, with a focus on deepening and broadening the franchise [7] - The Private Bank improved its cost-income ratio to 70% and achieved returns above 10% in 2025 [7] Market Data and Key Metrics Changes - Net interest income (NII) for the fourth quarter was EUR 3.4 billion, totaling EUR 13.3 billion for the full year, in line with plans when adjusted for FX effects [9] - The loan book grew by EUR 5 billion in the fourth quarter, with strong underlying quality and growth in asset-backed financing and infrastructure lending [11] - The deposit book grew by EUR 29 billion in the fourth quarter, with significant growth in sight deposits from corporate clients [12] Company Strategy and Development Direction - The company aims to increase return on tangible equity from over 10% in 2025 to greater than 13% by 2028, with plans to improve the cost-income ratio to below 60% [8] - The strategy includes focused growth, strict capital discipline, and a scalable operating model to achieve these goals [8] - The company is positioning itself to become the European champion in its sector, with aspirations to improve market share and returns compared to European peers [32] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding the commercial real estate sector, indicating that while there have been challenges, they hope to see stability in appraisals and leasing behavior [41][42] - The company anticipates a moderate downward trend in provisions for credit losses in 2026, with an expected average run rate of around 30 basis points through 2028 [22] - The management team emphasized the importance of maintaining a strong liquidity position and a diversified funding base to navigate the current economic environment [14][15] Other Important Information - The company closed 2025 with a total issuance volume of EUR 18.7 billion, aligning with its target range of EUR 15 billion to EUR 20 billion [20] - The common equity tier one ratio was reported at 14.2%, with a decrease of 30 basis points compared to the previous quarter due to one-off effects [15] - The company plans to issue EUR 10 billion to EUR 15 billion in 2026, with significantly lower funding requirements compared to 2025 [20] Q&A Session Summary Question: Impact of not defending the LGF notch for senior non-preferred - Management explained that the decision was made to optimize funding composition and cost base, aligning with European peers and allowing for a more efficient balance sheet [29][30] Question: Measuring the goal of becoming a European champion - Management indicated that achieving market-leading positions in key segments and leading returns compared to European peers will be critical metrics for success [33][34] Question: Concerns regarding commercial real estate provisions - Management acknowledged ongoing challenges in the commercial real estate sector, particularly in office spaces, and indicated that new appraisals and tenant activity are influencing provisions [40][41] Question: Expectations for lumpiness in commercial real estate resolutions - Management stated that while some lumpiness may occur, they do not expect significant volatility in the portfolio adjustments, barring larger single exposure events [50][52] Question: Impact of the German yield curve on balance sheet funding - Management noted that credit spreads are more critical for funding, and a steeper yield curve could be beneficial for their interest rate strategy [53][55]

Core Viewpoint - State-owned banks in India are expressing concerns to the Reserve Bank of India (RBI) regarding the ineffective transmission of rate cuts to deposits, leading to a strain on their balance sheets as lending rates decrease more rapidly than deposit rates [1][4]. Group 1: Rate Transmission Issues - State-owned bank chiefs highlighted that external benchmark-linked loans allow for immediate repricing of assets with repo rate changes, while existing deposits are repriced at a slower pace [2][5]. - The disparity in repricing has resulted in a compression of net interest margins, with banks passing on 100 basis points of cuts on the asset side but only managing to reduce deposit rates by 30 basis points, creating a 70-basis point spread compression [4][8]. - Approximately 63% of floating-rate loans are linked to external benchmarks, while existing deposits only adjust when older, higher-cost deposits mature [5][7]. Group 2: Deposit Growth Challenges - Public sector banks have a higher proportion of floating loans linked to the marginal cost of funds-based lending rate (MCLR), while private sector banks have nearly 88% of their floating loans tied to external benchmarks, affecting their sensitivity to policy changes [6]. - Competition for household savings has intensified, with mutual funds now accounting for over one-third of bank deposits, compared to just 12.6% a decade ago, leading to a decline in deposit growth [8]. Group 3: Regulatory and Liquidity Factors - Regulatory factors, such as high runoff assumptions under the liquidity coverage ratio (LCR) framework, are exacerbating the issue by increasing liquidity buffers and funding costs [9][10]. - Economists suggest that RBI could enhance transmission by infusing liquidity into the banking system, which was in surplus of ₹2.58 trillion as of December 1 [11][12]. Group 4: Recommendations for Improvement - To improve deposit growth and transmission, a reduction in small savings interest rates is recommended, as these rates currently exceed bank term deposit rates [14][15]. - Suggestions include exploring floating-rate deposits and market-linked retail liabilities that could adjust in line with benchmark rates, facilitating faster transmission [16].

Financial Data and Key Metrics Changes - Record profitability was achieved in the first nine months of 2025, with revenues at EUR 24.4 billion, aligning with the full year goal of around EUR 32 billion before FX effects [3] - Adjusted costs remained consistent with guidance, with a post-tax return on tangible equity of 10.9%, meeting the target of above 10% [3][4] - The cost-income ratio stood at 63%, consistent with the target of below 65% [3] - Pre-provision profit increased to EUR 9 billion, up nearly 50% year on year, or nearly 30% when adjusted for Postbank litigation impacts [3] Business Line Data and Key Metrics Changes - Net commission and fee income rose by 5% year on year, while net interest income across key banking segments remained stable [4] - All four business lines delivered double-digit profit growth and return on tangible equity in the first nine months [6] - The Corporate Bank saw strong fee growth of 5% and was recognized as the best trade finance bank [7] - The Private Bank's profits surged by 71%, and assets under management in Wealth Management grew by EUR 40 billion year to date [7] Market Data and Key Metrics Changes - Loans grew by EUR 3 billion adjusted for FX effects during the third quarter, with strong underlying quality [9] - The deposit book expanded by EUR 10 billion in the third quarter, with significant growth in the Private Bank [10][11] - The liquidity coverage ratio was managed to 140%, demonstrating the strength of the balance sheet [11] Company Strategy and Development Direction - The company is on track to meet or exceed all 2025 strategy goals, with a compound annual revenue growth rate of 6% since 2021 [4][5] - Operational efficiencies of EUR 2.4 billion have been delivered or are expected, nearing the EUR 2.5 billion goal [5] - A second share buyback program of EUR 250 million was launched, bringing cumulative distributions since 2022 to EUR 5.6 billion [5] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving a return on tangible equity above 10% and a cost-income ratio below 65% for the full year [17] - Despite uncertainties in commercial real estate and the macroeconomic environment, lower provisioning levels are anticipated in the second half of the year [17] - The company remains focused on growing its franchise and expanding market share, particularly in the Corporate Bank [10] Other Important Information - The CET1 ratio increased to 14.5%, with a surplus above regulatory requirements [12][14] - The MREL surplus increased by EUR 2 billion to EUR 26 billion, providing flexibility for future issuance [15][16] Q&A Session Summary Question: Future Return on Tangible Equity - Management indicated that a 10% return on tangible equity could be a reasonable floor for future performance, emphasizing structural profitability improvements [20][21] Question: Private Credit and Commercial Real Estate Exposures - Management noted that private credit is not a concern, while commercial real estate remains a watch item, particularly in California and Washington State [22][23] Question: Receivables Financing Exposure - Management acknowledged some exposure in trade finance and ABS but emphasized it is not significant [28][29] Question: Tier 2 Capital Stack - Management confirmed that Tier 2 instruments remain valuable, but the focus has been on Tier 1 capital needs [32] Question: Sustainability Competitive Disadvantage - Management does not view the sustainability landscape in Europe as a competitive disadvantage, highlighting progress in their sustainability agenda [30][31] Question: Commercial Real Estate Issues - Management detailed that issues are concentrated in West Coast exposures, with ongoing efforts to work with sponsors for value preservation [36][39]