The following section should be read in conjunction with the “Outlook” section in the Management Report and the Risk Report provided in the Financial Report 2009.

The global economic recovery has continued during the first half of the year. Global GDP is likely to expand by 4.5 % in 2010. Emerging markets in Asia and Latin America in particular are benefiting from improved world trade and robust domestic demand. Growth in Asia looks set to reach 8.5 % in the current year, with China posting nearly 10 % growth. Despite slightly disappointing recent U.S. labor market figures, U.S. GDP should grow by around 3.5 % in 2010. In the eurozone, fiscal consolidation efforts will probably cap growth at 1 % this year, with Germany posting the highest growth performance at 2 %. Cyclical risks remain, particularly in the U.S., which is suffering from persistently high unemployment. Worries about industrialized countries sliding back into recession are subsiding. The pace of expansion in China could also prove less dynamic, as indicated by weaker sentiment in recent surveys of purchasing managers. In Europe, setbacks that could affect the confidence in government finances cannot be ruled out, despite implementation of the stabilization program, initial progress on fiscal austerity measures and recent successful sovereign bond offerings.

The outlook for the banking industry is affected by a number of issues, including ongoing concern about public finances in several developed countries and potentially slower growth in the major economies of Europe and America. Regulatory reform of the banking sector is adding a further source of uncertainty, with fears that reforms could have a significant impact on banks’ capital requirements, profitability and ultimately the lending capacity of the financial sector. In the regulatory framework, the specific proposals of Basel III are currently being fine-tuned. The final outcome will likely depend on the results of impact studies conducted in coming months. Also, governments are expected to decide by year-end on potential further burdens for the financial industry in the form of bank levies.

By contrast, positive market reaction to stress test results for a large number of European institutions could have a beneficial impact on banks’ funding situation, which has tightened recently. The industry may also benefit from a continuous improvement in asset quality in many countries and market segments, which should support operating profitability. Consequently, not only banks’ retail operations but also their corporate business is likely to improve further in the near term, while capital market activities may face greater volatility than in the past twelve months.

The outlook for the Deutsche Bank Group continues to be influenced by the factors and trends which we described in the “Outlook” section of our Financial Report 2009, notably the uncertainty regarding changes in the regulatory framework. While we have proactively adopted measures which may reduce the impact of the recently enacted Dodd-Frank legislation in the U.S., including, for example, the limits on proprietary trading, our revenues and capital requirements may nonetheless be negatively impacted, for example, by the rules on OTC derivatives, central counterparty clearing and OTC swaps for CDS trading. We continue to monitor closely the incremental capital demand from any potential bank levies, the Dodd-Frank legislation, the potential Basel III impact and other regulatory initiatives. We will participate constructively in the discussions with regulators to promote a coordinated global approach to banking supervision.

In Phase 4 of Deutsche Bank’s Management Agenda we identified a potential for income before income taxes from our core businesses (before Corporate Investments and Consolidation & Adjustments) of € 10 billion. While some of the environmental variables are in line with or ahead of our assumptions, others have not yet reached the expected levels, particularly with respect to the normalization of interest rates. Our complexity reduction program is well on track to achieve the 2011 exit rate of € 1 billion annual efficiency gains, with roughly € 700 million of these already committed.

Deutsche Bank is well prepared for the many challenges – and opportunities – ahead. We will continue to consistently implement our client-focused strategy, which is characterized by risk discipline, capital efficiency and earnings diversification, and aiming to create sustainable value for our shareholders.

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