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March 21, 2018
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Folie 0 Research Deutsche Bank Jan Schildbach 21 March 2018 Research Deutsche Bank European bank performance 10 years after the crisis London, 21 March 2018 Jan Schildbach Re search Deuts che Bank Jan Schil dbach 21 March 2018 - 80 - 60 - 40 - 20 0 20 40 60 060708091011121314151617 U S b an ks La r ge Eu ro pean ba n ks Net income S ourc es : FDIC, c om pany report s , Deut s c he B ank Res earc h U S D / E UR b n, up t o Q 4 1 7 European banks have become more profitable, but revenue gap to US peers widened further in last few years 2 70 80 90 100 110 120 130 140 0 6 07 08 0 9 10 11 12 13 1 4 15 16 17 U S b an ks La r ge Eu ro pean ba n ks Total revenues S ourc es : FDIC, c om pany report s , Deut s c he B ank Res earc h Q1 2006 = 100, up to Q4 17 * *** ****** Research Deutsche Bank Jan Schildbach 21 March 2018 … as low rates have hurt banks’ interest income with only limited impact on lending 3 100 105 110 115 120 125 130 135 140 H 1 0 9 H 2 H 1 1 0 H 2 H 1 1 1 H 2 H 1 1 2 H 2 H 1 1 3 H 2 H 1 1 4 H 2 H 1 1 5 H 2 H 1 1 6 H 2 H 1 1 7 H 2 EUR bn, top 20 European banks Net interest income Sources: Company reports, Deutsche Bank Research -9 -6 -3 0 3 6 9 12 0809101112131415161718 US Euro area Lending to the private sector % yoy, up to Jan 18 Sources: ECB, FDIC, Deutsche Bank Research Research Deutsche Bank Jan Schildbach 21 March 2018 … yet low rates have massively helped asset quality 4 0 10 20 30 40 50 60 70 80 06 07 08 09 10 11 12 13 14 15 16 17 US banks Large European banks Loan loss provisions USD / EUR bn, up to Q4 17 Sources: FDIC, company reports, Deutsche Bank Research 0 8 16 24 32 40 48 56 0 4 8 12 16 20 24 28 D e c 0 9 D e c 1 0 D e c 1 1 D e c 1 2 D e c 1 3 D e c 1 4 D e c 1 5 D e c 1 6 D e c 1 7 France* Germany* UK US Italy* Spain Portugal Ireland Greece (right) Cyprus (right) Non-performing loans as % of total loans NPLs in selected countries * No data available for Q1 and Q3, data for Germany only available for Q4. Sources: IMF, Banco de España, Banco de Portugal, Banca d'Italia, Deutsche Bank Research Research Deutsche Bank Jan Schildbach 21 March 2018 Cost pressure remains high, but capital issues have been resolved 5 40 45 50 55 60 65 70 2010 2017 Cost-income ratio of Europe's 20 major banks Sources: Company reports, Deutsche Bank Research %, unweighted average 4 6 8 10 12 14 16 D e c 0 8 D e c 0 9 D e c 1 0 D e c 1 1 D e c 1 2 D e c 1 3 D e c 1 4 D e c 1 5 D e c 1 6 D e c 1 7 Fully loaded Current/transitional rules Core Tier 1/Common Equity Tier 1 ratio* of Europe's 20 largest banks %, unweighted average Sources: Company reports, Deutsche Bank Research * Basel II; Basel 2.5 applied from Q4 11 on, Basel III from Q1 14 on Research Deutsche Bank Jan Schildbach 21 March 2018 2017: second-best annual result since financial crisis - Revenues still depressed - Banks cut costs and benefit from improving asset quality – driven by low interest rates and economic recovery * what happens in the next recession? - Capital levels have more than doubled since 2008 * massive de-risking and shrinking US competitors are far ahead - Revenues on a stable upward trend - Loan growth and loan losses have suffered somewhat from rising interest rates, but overall remain resilient - Profitability moving from one record to the next European outlook: - Rising rates likely to strengthen interest margins, but also slow down volume growth (again) European banks shrink to (pro)fit 6 Research Deutsche Bank Jan Schildbach 21 March 2018 Contact Jan Schildbach Deutsche Bank Research Head of Banking, Financial Markets and Regulation Mainzer Landstr. 11-17 60329 Frankfurt/Main Germany Phone: +49 69 910-31717 E-mail: jan.schildbach@db.com Internet: www.dbresearch.com Research Deutsche Bank Jan Schildbach 21 March 2018 © Copyright 2018. 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