Following is the transcript of an interview with Deutsche Bank Chief Financial Officer, James von Moltke, and CNBC's Annette Weisbach
AW: Let us look at the first quarter, revenues are down across all business lines. So why is that, what's the reason?
JVM: So a number of drivers - revenues are down across all business lines. Globally down 5 percent and X/FX down 1 percent for the group. You're seeing some pressures in the businesses that are perhaps idiosyncratic. If I look at PCB (Private & Commercial Bank) for example, it's down 2 percent but flat after some adjustments for non-recurring items. DWS is down also. But it reflected a stronger year in the prior year, and some degree of outflows in assets under management. In CIB (Corporate & Investment Bank), we obviously saw a weaker performance than we did a year ago, and clearly we were not able to participate as much in the improved market environment, as we'd like to have done. I should also add though that FX adjustment is a big impact on our businesses. So, because we report in euros, and the euro appreciated by about 15 percent relative to the dollar on an average basis in the quarter - that had a large impact on our revenues.
AW: Looking at the market volatility and you're also saying that you couldn't benefit from that improved market environment as much as you would have liked. Why is that? Why couldn't you do that?
JVM: So we did improve in certain, participate in certain businesses, particularly in February when the market volatility was higher. It was an uneven quarter in fairness. The early January period and/end March didn't see the same degree of volatility in the marketplace and therefore not the same opportunities. When the opportunity existed, we participated.
AW: OK let's look at that quarter as perhaps the low point for Deutsche. Can we characterize it as such? Are you planning on moving on like next quarter to improve revenues? Clearly also the Investment Bank.
JVM: Certainly our goal is to stabilize and grow from here. The actions that we announced this morning will have some impact on the forward revenue trajectory. But given that the market environment in 2018 overall is more positive than 17, in our outlook statements in the interim report, we suggested that we would work to be flat year over year, in terms of revenues in globally and essentially flat in CIB.
AW: Let's look at what you said about the strategy or the alignment of the strategy. There will be cuts in investment banking across all the United States. Can you quantify those a bit? How much headcount will have to go, how much revenue will be impacted?
JVM: So we're reluctant to go into specific numbers at this point. It's obviously early days, in acting on the decisions that we've made. And also frankly, we want the focus to be on stabilizing the organization, moving quickly to execute on the decisions we've made and giving clarity to our clients, in terms of where we are going to continue to participate and where we'll step back. A significant amount of what we're working on as well relates to leverage exposure and bringing down the balance sheet, more than it does to dramatic restructuring actions.
AW: There's no word about Asia. What's the plan here?
JVM: I think in general the discipline here is about defining ourselves in relation to our European core, our European strengths. And so that's not about exiting geographies like the United States and Asia, but about ensuring that the discipline is there, to be active in areas where there are products strength of ours, working with clients with whom we have longstanding relationships, and in our connection with our home markets of Germany and Europe.
AW: I remember vividly that some years ago, Deutsche Bank was saying they wanted to anticipate in the growth market like the United States and Asia, and that's where you can make money. So the new strategy looks like Europe, the low growth region, will be your core market right?
JVM: So we'll still participate in those markets. We believe that being in the United States, being in Asia is part of being a global investment bank and bringing those capabilities back to Europe. So we do intend to participate in the growth opportunities in those markets. But it's clearly a scaling back of our ambition that we once had in markets like the United States.
AW: Let's look at the capital markets. There is a sense that the capital markets have lost a bit of patience with Deutsche Bank and the shares. What would you tell investors, why should they stick to your shares?
JVM: So we're acutely aware that it's been a long running restructuring story, and today's announcements represent some additional restructuring. At the end of the day we have to define and defend the core perimeter for the company. We believe we've found that and the premier right now is on execution, making sure we move quickly to adjust the businesses to that core perimeter.
AW: If you look around, which bank do you have in vision that could be like Deutsche Bank, or could be the Deutsche Bank in the future? Is it something like BNP Paribas, is it something like a big Commerzbank?
JVM: We want to be Deutsche Bank in the future. We want to play to our strengths that are historically there - whether it's the client relationships that we have, or the product strengths that we have. We do believe we will be unique in the eurozone post-Brexit in terms of the breadth of our product capabilities; the depth of our teams and experience. So I don't think there's a need to model ourselves against other banks, so much as focus on doing what we're good at.
AW: Many analysts are saying that you're very bad at cost management. We have seen a revision of the cost target for 2018 anyway, also earlier this year. So what's the plan here? Is the plan to deliver more on the cost side of things?
JVM: So we would ourselves acknowledge that we haven't always delivered on the targets that we set ourselves for cost management. And so I think we've been forceful in our communication we need to be now forceful in our actions delivering against those targets. With respect to the target for 2018 we did disclose earlier this year that would we miss that target. And we've said essentially a cap at 23 billion. The difference is we disclosed is really related to M&A - so disposals that we are unable to complete, or have suspended relative to our earlier planning. There have been some other inflationary factors, Brexit costs had run, they are higher than we'd expected and there was a delay in achieving some of the synergies with Postbank. But those were offset by FX, so it's principally the impact of the M&A disposal programme, that you're not seeing in in 18, relative to our original forecasts.
AW: You were talking about trust of clients, but also the trust of employees, I think, is key to the success of the bank. So, how's morale?
JVM: I think employees want to see decisive leadership, and to follow the vision of what the bank is going to be in the future. So from our perspective, I think being able to define that, take decisive action, is something the employees have been looking for. And are our hope and expectation certainly is that we'll carry the employees with us. And they will engage in defending that core perimeter and restoring the profitability, and frankly the image of the company in the months and years to come.
AW: Thanks a lot.
JVM: My pleasure.
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