Target Definitions


This document and other documents the Group has published or may publish contain non-GAAP financial measures. Non-GAAP financial measures are measures of the Group’s historical or future performance, financial position or cash flows that contain adjustments that exclude or include amounts that are included or excluded, as the case may be, from the most directly comparable measure calculated and presented in accordance with IFRS in the Group’s financial statements. The Group refers to the definitions of certain adjustments as “target definitions” because the Group has in the past used and may in the future use the non-GAAP financial measures based on them to measure its financial targets.

The Group’s non-GAAP financial measures that relate to earnings use target definitions that adjust IFRS financial measures to exclude certain significant gains (such as gains from the sale of industrial holdings, businesses or premises) and certain significant charges (such as charges from restructuring, impairments of intangible assets or litigation) if such gains or charges are not indicative of the future performance of the Group’s core businesses.

IBIT attributable to Deutsche Bank Shareholders (Target Definition): The IBIT attributable to Deutsche Bank shareholders non-GAAP financial measure is based on income before income taxes attributable to Deutsche Bank shareholders (i.e., excluding pre-tax noncontrolling interests), adjusted for certain significant gains and charges as follows.

 

Three months ended

Six months ended

in € m.

Jun 30, 2010

Jun 30, 2009

Jun 30, 2010

Jun 30, 2009

1

Gain from the recognition of negative goodwill related to the acquisition of parts of ABN AMRO’s commercial banking activities in the Netherlands of € 208 million.

2

Gain from the sale of industrial holdings (Daimler AG) of € 126 million.

3

Impairment of intangible assets (Corporate Investments) of € 151 million.

4

Impairment charge of € 278 million on industrial holdings and an impairment of intangible assets (Corporate Investments) of € 151 million.

Income before income taxes (IBIT)

1,524

1,316

4,317

3,131

Less pre-tax noncontrolling interests

(7)

17

(22)

20

IBIT attributable to Deutsche Bank shareholders

1,516

1,332

4,294

3,151

Add (deduct):

 

 

 

 

Certain significant gains (net of related expenses)

(208)1

(126)2

(208)1

(126)2

Certain significant charges

1513

4294

IBIT attributable to the Deutsche Bank shareholders (target definition)

1,309

1,357

4,086

3,454

Pre-Tax Return on Average Active Equity (Target Definition): The pre-tax return on average active equity non-GAAP financial measure is based on IBIT attributable to Deutsche Bank shareholders (target definition), as a percentage of the Group’s average active equity, which is defined below. For comparison, also presented are the pre-tax return on average shareholders’ equity, which is defined as IBIT attributable to Deutsche Bank shareholders (i.e., excluding pre-tax noncontrolling interests), as a percentage of average shareholders’ equity, and the pre-tax return on average active equity, which is defined as IBIT attributable to Deutsche Bank shareholders (i.e., excluding pre-tax noncontrolling interests), as a percentage of average active equity.

Average Active Equity: The Group calculates active equity to make comparisons to its competitors easier and refers to active equity in several ratios. However, active equity is not a measure provided for in IFRS and you should not compare the Group’s ratios based on average active equity to other companies’ ratios without considering the differences in the calculation. The items for which the Group adjusts the average shareholders’ equity are average unrealized net gains (losses) on financial assets available for sale and on cash flow hedges (both components net of applicable taxes), as well as average dividends, for which a proposal is accrued on a quarterly basis and for which payments occur once a year following the approval by the general shareholders’ meeting. Tax rates applied in the calculation of average active equity are those used in the financial statements for the individual items and not an average overall tax rate.

in € m.
(unless stated otherwise)

Three months ended

Six months ended

Jun 30, 2010

Jun 30, 2009

Jun 30, 2010

Jun 30, 2009

1

The tax effect on average unrealized gains/losses on financial assets available for sale and on cash flow hedges was € (404) million and € (408) million for the three and six months ended June 30, 2010, respectively. For the three and six months ended June 30, 2009, the tax effect was € (802) million and € (835) million, respectively.

Average shareholders’ equity

40,328

34,254

39,121

33,165

Add (deduct):

 

 

 

 

Average unrealized gains/losses on financial assets available for sale and on cash flow hedges, net of applicable tax1

49

899

151

1,100

Average dividend accruals

(407)

(272)

(449)

(299)

Average active equity

39,969

34,882

38,823

33,965

 

 

 

 

 

Pre-tax return on average shareholders’ equity

15.0 %

15.6 %

22.0 %

19.0 %

Pre-tax return on average active equity

15.2 %

15.3 %

22.1 %

18.6 %

Pre-tax return on average active equity (target definition)

13.1 %

15.6 %

21.1 %

20.3 %

The non-GAAP financial measure for growth in earnings per share is Diluted earnings per share (target definition), which is defined as net income attributable to Deutsche Bank shareholders (i.e., excluding noncontrolling interests), adjusted for post-tax effects of significant gains/charges and certain significant tax effects, after assumed conversions, divided by the weighted-average number of diluted shares outstanding.

For reference, the Group’s diluted earnings per share, which is defined as net income attributable to Deutsche Bank shareholders (i.e., excluding noncontrolling interests), after assumed conversions, divided by the weighted-average number of diluted shares outstanding, is also provided.

in € m.
(unless stated otherwise)

Three months ended

Six months ended

Jun 30, 2010

Jun 30, 20091

Jun 30, 2010

Jun 30, 20091

1

Prior year’s amounts for the post-tax effect of certain significant gains/charges and for diluted earnings per share (target definition) have been adjusted.

2

Gain from the recognition of negative goodwill related to the acquisition of parts of ABN AMRO’s commercial banking activities in the Netherlands of € 208 million.

3

Gain from the sale of industrial holdings (Daimler AG) of € 126 million and an impairment of intangible assets (Corporate Investments) of € 98 million.

4

Impairment charge of € 221 million on industrial holdings, a gain from the sale of industrial holdings (Daimler AG) of € 126 million and an impairment of intangible assets (Corporate Investments) of € 98 million.

Net income attributable to Deutsche Bank shareholders

1,160

1,092

2,922

2,277

Add (deduct):

 

 

 

 

Post-tax effect of certain significant gains/charges

(208)2

(28)3

(208)2

1934

Certain significant tax effects

Net income attributable to Deutsche Bank shareholders (basis for target definition EPS)

952

1,064

2,714

2,470

 

 

 

 

 

Diluted earnings per share

€ 1.75

€ 1.64

€ 4.35

€ 3.53

Diluted earnings per share (target definition)

€ 1.43

€ 1.60

€ 4.04

€ 3.83

Leverage Ratio (Target Definition): A leverage ratio is calculated by dividing total assets by total equity. The Group discloses an adjusted leverage ratio, which is calculated using a target definition, for which the following adjustments are made: (1) total assets under IFRS are adjusted to reflect netting provisions applicable under U.S. GAAP but not under IFRS, to obtain total assets adjusted (pro forma U.S. GAAP), and (2) total equity under IFRS is adjusted to reflect fair value gains and losses on all own debt (post-tax), to obtain total equity adjusted. The tax rate applied for this calculation is a blended uniform tax rate of 35 %. These adjustments are intended to provide an adjusted leverage ratio that is more comparable to those of certain of the Group’s competitors, which use U.S. GAAP and designate all their own debt at fair value.

Assets and equity
in € bn.

Jun 30, 2010

Dec 31, 2009

1

Estimate assuming that all own debt was designated at fair value. The cumulative tax effect on pro-forma fair value gains (losses) on all own debt was € (1.8) billion and € (0.7) billion at June 30, 2010 and December 31, 2009, respectively.

Total assets (IFRS)

1,926

1,501

Adjust derivatives according to U.S. GAAP netting rules

(735)

(533)

Adjust pending settlements according to U.S. GAAP netting rules

(139)

(71)

Adjust repos according to U.S. GAAP netting rules

(9)

(5)

Total assets adjusted (“pro-forma U.S. GAAP”)

1,043

891

 

 

 

Total equity (IFRS)

42.6

38.0

Adjust pro-forma fair value gains (losses) on all own debt (post-tax)1

3.4

1.3

Total equity adjusted

46.0

39.3

 

 

 

Leverage ratio based on total equity

 

 

According to IFRS

45

40

According to target definition

23

23

Service Functions

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