Other Information

 (unaudited)

Non-GAAP Financial Measures

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.

Fully loaded CRR/CRD 4 Leverage Ratio

As part of its balance sheet management, the Group uses a fully loaded CRR/CRD 4 leverage ratio, which is Tier 1 capital on a fully loaded basis as a percentage of the CRR/CRD 4 exposure measure (which is derived by applying adjustments to IFRS total assets). Such non-GAAP financial measure is described in “Management Report: Risk Report: Balance Sheet Management”. This measure is calculated based on the Group’s current interpretation of rules and might therefore vary from the assumptions and estimates applied by the Group’s competitors. Accordingly, the fully loaded CRR/CRD 4 leverage ratio may not be comparable with similarly labeled measures used by the Group’s competitors.

Pre-Tax and Post-Tax Return on Average Active Equity

The pre-tax return on average active equity non-GAAP financial measure is based on IBIT attributable to Deutsche Bank shareholders, as a percentage of the Group’s average active equity, both as defined below.

In connection with the implementation of the Group’s communicated strategy, the Group considers the post-tax return on average active equity, both on a Group and a segment basis. The post-tax return on both average shareholders’ equity and average active equity at the Group level reflects the reported effective tax rate for the Group, which was 74 % for the three months ended June 30, 2014, and 58 % for the prior year’s quarter. The tax rate was 48 % for the six months ended June 30, 2014, and 38 % for the prior year’s comparative period. For the post-tax return on average active equity of the segments, the Group effective tax rate was adjusted to exclude the impact of permanent differences not attributable to the segments, so that the segment tax rates ranged from 35 % to 36 % for the current quarter and from 34 % to 36 % for the prior year’s quarter. The tax rate was 34 % for the six months ended June 30, 2014, and 34 % for the six months ended June 30, 2013.

IBIT attributable to Deutsche Bank Shareholders: The IBIT attributable to Deutsche Bank shareholders non-GAAP financial measure is based on income (loss) before income taxes as follows:

 

Three months ended

Six months ended

in € m.

Jun 30, 2014

Jun 30, 2013

Jun 30, 2014

Jun 30, 2013

Income (loss) before income taxes (IBIT)

917

792

2,597

3,206

Less income (loss) before income taxes attributable to noncontrolling interests

(1)

(1)

(21)

(10)

IBIT attributable to Deutsche Bank shareholders

916

791

2,576

3,196

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 the Group’s ratios based on average active equity should not be compared to other companies’ ratios without considering differences in the calculations. The Group adjusts the average shareholders’ equity for average dividends, for which a proposal is accrued on a quarterly basis and which are paid after the approval at the Annual General Meeting each year. Effective July 1, 2013, the definition of active equity has been aligned to the CRR/CRD 4 framework so that accumulated other comprehensive income (loss) excluding foreign currency translation, net of taxes, is now part of active equity. Prior periods have been restated.

 

Three months ended

Six months ended

in € m.

Jun 30, 2014

Jun 30, 2013

Jun 30, 2014

Jun 30, 2013

Average shareholders’ equity

58,125

56,990

56,877

55,803

Average dividend accruals

(703)

(625)

(757)

(681)

Average active equity

57,422

56,365

56,120

55,122

Pre-tax and post-tax returns on average active equity are presented below. For comparison, also presented are the pre-tax and post-tax returns on average shareholders’ equity, which are defined as IBIT and net income, respectively, attributable to Deutsche Bank shareholders, as a percentage of average shareholders’ equity.

 

Three months ended

Six months ended

in %

Jun 30, 2014

Jun 30, 2013

Jun 30, 2014

Jun 30, 2013

Pre-tax return on average shareholders’ equity

6.3

5.6

9.1

11.5

Pre-tax return on average active equity

6.4

5.6

9.2

11.6

Post-tax return on average shareholders’ equity

1.6

2.3

4.6

7.1

Post-tax return on average active equity

1.6

2.4

4.7

7.2

Book Value and Tangible Book Value per Basic Share Outstanding

Book value per basic share and tangible book value per basic share are non-GAAP financial measures that are used and relied upon by investors and industry analysts as capital adequacy metrics. Book value per basic share represents the Bank’s total shareholders’ equity divided by the number of basic shares outstanding at period-end. Tangible book value represents the Bank’s total shareholders’ equity less goodwill and other intangible assets. Tangible book value per basic share is computed by dividing tangible book value by period-end basic shares outstanding.

Tangible Book Value

in € m.

Jun 30, 2014

Dec 31, 2013

Total shareholders’ equity (Book value)

64,686

54,719

Goodwill and other intangible assets

(14,112)

(13,932)

Tangible shareholders’ equity (Tangible book value)

50,574

40,787

Basic Shares Outstanding

in million
(unless stated otherwise)

Jun 30, 2014

Dec 31, 2013

1

The basic shares outstanding have been adjusted for December 31, 2013 in order to reflect the effect of the bonus component of subscription rights issued in June 2014 in connection with the capital increase.

Number of shares issued

1,379.3

1,068.5

Treasury shares

(0.3)

(0.2)

Vested share awards

8.5

8.8

Basic shares outstanding1

1,387.5

1,077.1

 

 

 

Book value per basic share outstanding in €

46.62

50.80

Tangible book value per basic share outstanding in €

36.45

37.87

Cost-income ratio (adjusted) and Post-tax return on average active equity (adjusted)

In connection with the implementation of the Group’s communicated strategy, Deutsche Bank has announced aspirations, at the Group level and with respect to the CB&S Corporate Division, for its cost-income ratio (adjusted) and its post-tax return on average active equity (adjusted), both of which are non-GAAP financial measures.

Cost-income ratio (adjusted) is calculated by dividing adjusted cost base (described below) by net revenues (reported).

Post-tax return on average active equity (adjusted) is calculated by dividing net income attributable to Deutsche Bank shareholders (adjusted) (described below) by average active equity (described above).

Adjusted cost base is a non-GAAP financial measure most directly comparable to the IFRS financial measure noninterest expenses. Adjusted cost base is calculated by adjusting noninterest expenses under IFRS for (i) the costs-to-achieve (CtA) of the Group’s Operational Excellence (OpEx) program, (ii) litigation expenses, (iii) policyholder benefits and claims, (iv) other severances, (v) impairment of goodwill and other intangible assets and (vi) other divisional-specific cost items.

IBIT attributable to Deutsche Bank shareholders (adjusted) is a non-GAAP financial measure most directly comparable to the IFRS financial measure income before income taxes (IBIT). It is calculated by adjusting IBIT attributable to Deutsche Bank shareholders (which, as described above, is itself a non-GAAP financial measure based on net income under IFRS) for (i) CRR/CRD 4 CVA (mark-to-market movements on related hedges), DVA and FVA, (ii) OpEx CtA, (iii) other severances, (iv) litigation expenses and (v) impairment of goodwill and other intangible assets.

Net income attributable to Deutsche Bank shareholders (adjusted) is a non-GAAP financial measure most directly comparable to the IFRS financial measure net income. It is calculated by adjusting IBIT attributable to Deutsche Bank shareholders (adjusted) for the income tax expense (benefit) impact for the period.

The Group believes that the presentation of these measures excluding the impact of these items provides a more meaningful depiction of the underlying fundamentals of its businesses impacted by such items.

Reconciliation of the movement of reported to adjusted parameters.

 

Three months ended

Six months ended

 

Jun 30, 2014

Jun 30, 2013

Jun 30, 2014

Jun 30, 2013

in million
(unless stated otherwise)

CB&S

Group

CB&S

Group

CB&S

Group

CB&S

Group

N/M – Not meaningful

1

CRR/CRD 4 Credit Valuation Adjustment (CVA), Debt Valuation Adjustment (DVA), Funding Valuation Adjustment (FVA).

2

Includes CtA related to Postbank and OpEx.

3

Within income before income taxes of the Segments, noncontrolling interests are reflected as expenses.

4

Based on net income attributable to Deutsche Bank shareholders.

Net revenues (reported)

3,532

7,860

3,579

8,215

7,608

16,253

8,126

17,606

CVA/DVA/FVA1

(114)

(151)

(88)

(88)

(106)

(246)

49

49

Net revenues (adjusted)

3,646

8,011

3,667

8,303

7,714

16,499

8,077

17,557

 

 

 

 

 

 

 

 

 

Noninterest expenses (reported)

 (2,603)

 (6,693)

(2,794)

(6,950)

 (5,150)

 (13,159)

(5,372)

(13,572)

Cost-to-Achieve2

(161)

(375)

(20)

(357)

(272)

(685)

(122)

(581)

Other Severance

(5)

(16)

(20)

(42)

(17)

(43)

(20)

(52)

Policyholder benefits and claims

0

 (80)

0

7

0

(132)

0

(185)

Litigation

(259)

(470)

(452)

(630)

(240)

(470)

(508)

(762)

Impairment of Goodwill & Intangibles

0

0

0

0

0

0

0

0

Other disclosed cost specific items

0

(29)

0

(17)

0

(114)

0

(49)

Adjusted cost base

 (2,178)

 (5,723)

(2,301)

(5,910)

 (4,621)

 (11,715)

(4,722)

(11,944)

 

 

 

 

 

 

 

 

 

Income (loss) before income taxes (reported)

885

917

758

792

2,376

2,597

2,666

3,206

Income (loss) before income taxes attributable to noncontrolling interests3

N/M

(1)

N/M

(1)

N/M

(21)

N/M

(10)

IBIT attributable to Deutsche Bank shareholders

885

916

758

791

2,376

2,576

2,666

3,196

CVA/DVA/FVA1

(114)

(151)

(88)

(88)

(106)

(246)

49

49

Cost-to-Achieve2

(161)

(375)

(20)

(357)

(272)

(685)

(122)

(581)

Other Severance

(5)

(16)

(20)

(42)

(17)

(43)

(20)

(52)

Litigation

(259)

(470)

(452)

(630)

(240)

(470)

(508)

(762)

Impairment of Goodwill & Intangibles

0

0

0

0

0

0

0

0

IBIT attributable to Deutsche Bank shareholders (adjusted)

1,423

1,928

1,339

1,909

3,012

4,020

3,268

4,542

 

 

 

 

 

 

 

 

 

Cost/income ratio (reported)

 

85 %

 

85 %

 

81 %

 

77 %

Cost/income ratio (adjusted)

 

73 %

 

72 %

 

72 %

 

68 %

Average Active Equity (six month ended)

 

 

 

 

22,715

56,120

19,659

55,122

Average Active Equity (three month ended)

24,045

57,422

20,346

56,365

 

 

 

 

Post-tax return on average active equity based on net income (reported)4

9 %

2 %

10 %

2 %

14 %

5 %

18 %

7 %

Post-tax return on average active equity based on net income (adjusted)4

15 %

3 %

17 %

6 %

17 %

7 %

22 %

10 %