FINANCIAL INSTITUTIONS

ISSUER COMMENT30 January 2020

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Deutsche Bank AGQ4 2019: Persistent execution of strategic revamp graduallymoves DB into calmer waters

Deutsche Bank AG (DB, A3/A3, negative, ba11) reported a fourth quarter net lossof €1.5 billion, following a net loss of €409 million in the prior-year quarter2. On aMoody's adjusted (pretax operating basis3), DB reported a €30 million pretax profit for Q42019, compared to a pretax loss of €206 million one year ago. Once again, the results wereinfluenced by charges and other earnings-relevant effects related to DB’s strategic revamptotaling €1.1 billion in the quarter. Overall, the results are slightly ahead of our expectations,showing further tangible progress on DB's more radical shift in strategy.

'Core Bank' profitability improves, despite persistent revenue strain. In 2019, DB’s 'CoreBank' reported pretax profits of €2.8 billion, up from €2.6 billion in 20184. During the quarter,pretax profits stood at €465 million, up from a loss of €78 million in Q4 2018. This was achieveddespite revenue challenges in Global Transaction Banking (down 6% year-over-year) and thePrivate Bank (PB, down 2%), largely reflecting the negative effects of the persistently ultra-low interest-rate environment and business perimeter changes as a result of the restructuring.Supporting the result, Investment Bank (IB) revenue increased 22%5 and Asset Management(AM) boosted revenue by 31%. At group level, revenue fell 1% year-over-year, this timecompensated for by a 6% decline in operating expenses6.

Improved balance sheet efficiency makes the bank simpler and easier to manage.Management executed on several key milestones, reducing risk-weighted assets (RWAs) withinthe bank's CRU7 by 36% to a lower-than-anticipated €46 billion, whilst leverage exposuresfell to €127 billion, a strong 55% decline year-over-year. The ongoing transfer of DB's globalprime finance and electronic equities clients business to BNP Paribas (Aa3/Aa3, stable, baa1)will support a further swift de-risking and downsizing of the group's funded balance sheet,supporting DB's efforts in more tightly managing related metrics.

Stable capital adequacy metrics and improved leverage. DB digested €5.6 billion oftransformation-related charges and other effects in 2019, 70% of the total expected chargesduring the 2019-22 period8. Despite this burden, DB maintained its Common Equity Tier 1(CET1) ratio flat year-over-year at 13.6%, and the firm’s leverage ratio improved 10 basis pointsto 4.2%. During 2020, DB will therefore benefit from significantly lower costs from its ongoingtransformation, supporting its efforts in recording the first tangible benefits of its restructuring.Sustained success of the execution will, however, continue to rely on DB's ability to stabilizeand later grow 'Core Bank' revenues against the continuously challenging macroeconomicenvironment.

MOODY'S INVESTORS SERVICE FINANCIAL INSTITUTIONS

Detailed considerations

Exhibit 1

Common Equity Tier 1 (CET1) ratio and Tier 1 Leverage Ratio for Global Investment Banks, as of 31 December 2019

17.0%

14.3%13.7% 13.7% 13.6% 13.4% 13.4%

12.5% 12.4%

12.1% 12.0% 12.0% 11.5%

6.3%5.4%

6.2%5.7%

4.2%

6.3%4.8%

4.4%

5.5%

4.3%

6.2%

4.0%

6.4%

0.0%

3.0%

6.0%

9.0%

12.0%

15.0%

18.0%

baa2 a2 baa1 a3 ba1 a2 baa3 baa2 baa2 a3 baa1 baa1 a3

MS HSBC GS UBS* DB JPM BCS** SG CS* RBC CITI BNP BAC

CET1 ratio Tier 1 Leverage ratio Median CET1 ratio (13.4%) Median leverage ratio (5.5%)

(1) As of Q3 2019 for BNP Paribas, Barclays, Credit Suisse, HSBC and Société Générale; Q4 2019 for the rest; (2) Basel III fully phased in advanced approach for all US banks. Citi has onlyreported CET1 ratio under the standardized approach which is the binding constraint. The CET1 ratio under the advanced approach shown in the chart is Moody’s estimate; (3) Tier 1leverage ratio for US banks is the supplemental leverage ratio (SLR) (4) BS and CS leverage ratio reflect Common Equity Tier plus Low Trigger Additional Tier 1 and High-Trigger AdditionalTier 1 securities. (5) Barclays leverage is reflective of the spot UK leverage ratio.Source: Company reports, Moody's Investors Service

Solid liquidity safeguards bondholders as restructuring progresses. DB maintained an excess of €55 billion over its requirementsstipulated by the Liquidity Coverage Ratio (LCR), which stood at 141% as of the end of 2019 (Q4 2018: 140%).

Continued cost control and good asset quality will support profitability in 2020. Adjusted costs for the quarter stood at €5.1billion, down 6% year-over-year. With that, DB hit its target of €21.5 billion of adjusted costs for the full year, a reduction of 6% over2018. The bank reiterated its target of achieving a further 9% reduction in adjusted costs to €19.5 billion in 2020, meaningfully supportingits future underlying profitability.

DB booked loan loss charges of €247 million in the quarter, flat year-over-year, yet up from €175 million in Q3 2019. Cost of risk slightlyincreased over the quarter, although the reported 17 basis points (annualized; against risk-weighted assets) remained low in the historicalcontext, underpinning DB’s solid balance sheet profile.

The Corporate Bank (CB) reported a pretax loss of €107 million compared with pretax profits of €327 million during the same periodlast year. Being slightly below expectations, the result largely reflects €277 million of restructuring and transformation costs borne bythe segment in Q4 2019. Revenue declined 5% year-over-year to €1.3 billion, reflecting lower cash management revenue in GlobalTransaction Banking and lower securities services revenues owing to DB's exit of the equities business. Commercial banking revenue alsodeclined as loan growth was not able to fully offset the ongoing negative effects of the lower interest-rate environment.

The Investment Bank (IB) reported a pretax loss of €71 million compared with €185 million during the same period last year, mainlydriven by €235 million of restructuring and transformation charges in the quarter. Revenue increased 13% year-over-year to €1.5 billion,reflecting higher fixed income sales and trading revenue (+31%) and solid debt origination revenue (+27%), partly offset by weak advisoryrevenues (-70%), the latter in part a reflection of a strong prior-year quarter. DB performed largely in-line with its peers in fixed incomesales and trading, most notably in rates and credit, as well as in emerging markets debt.

The Private Bank (PB) reported a pretax loss of €283 million in the quarter (Q4 2018: €11 million profit), digesting €348 million ofrestructuring and transformation charges. Revenues declined 4% to €2.0 billion as loan growth and improved investment and insuranceproduct revenues only partially offset the impact of persistent net interest margin pressure. Wealth management revenues (excludingspecific items) were up 11%, supported by strong markets.

This publication does not announce a credit rating action. For any credit ratings referenced in this publication, please see the ratings tab on the issuer/entity page onwww.moodys.com for the most updated credit rating action information and rating history.

2 30 January 2020 Deutsche Bank AG: Q4 2019: Persistent execution of strategic revamp gradually moves DB into calmer waters

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Exhibit 2

Restructuring segments continue to consume a large part of DB's profitabilityAdjusted quarterly pretax profits by business line (excluding litigation, impairments, DVA and one-offs)

(1,500)

(1,000)

(500)

-

500

1,000

1,500

Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019

Corporate Bank Investment Bank Private Bank Asset Management Consolidation & Adjustments Capital Release Unit

Source: Company reports, Moody's Investors Service

Asset Management reported a strong pretax profit of €177 million compared to €59 million for the same period last year. Revenuesincreased 31% to €671 million, boosted by strong performance fees (€104 million) but also higher management fees (+6%). Assets undermanagement increased 16% to €768 billion driven by positive market performance and a strong €12 billion of positive net new moneyflows.

The Capital Release Unit (CRU), DB's key wind-down segment, reported negative revenues of -€179 million, following a positive€294 million in the prior-year quarter. More importantly, the downsizing in the segment is ahead of the targets set out in July, inparticular with regard to deleveraging (leverage exposures declined to €127 billion, from €281 billion in Q4 2018, and still include€28 billion of exposures related to the Prime Finance platform being transferred to BNP Paribas) and risk-weighted assets (down 36%to €46 billion, including €26 billion of operational risk-weighted assets). Further reducing the revenue and the profitability drag ofthe CRU - supporting fast and steady progress in achieving the new goals and repositioning DB’s business model - continues to beimportant to maintaining DB's credit strength.

Rating ConsiderationsDeutsche Bank has a BCA of ba1 and is rated A3 for deposits, A3 for senior unsecured debt, Baa3 for junior senior unsecured debt andis assigned a Counterparty Risk Assessment of A3(cr)/Prime-2(cr) and Counterparty Risk Ratings of A3/P-2. The outlook on its depositand senior unsecured ratings is negative.

3 30 January 2020 Deutsche Bank AG: Q4 2019: Persistent execution of strategic revamp gradually moves DB into calmer waters

MOODY'S INVESTORS SERVICE FINANCIAL INSTITUTIONS

Moody's Related ResearchCredit Opinion

» Deutsche Bank AG, December 2019

Issuer In-Depth Reports

» Deutsche Bank AG: Sweeping revamp of business model will be credit positive when and if achieved

» Scenario analysis: Deutsche Bank AG and Commerzbank AG

» Cleaner balance sheet buys time to execute deep reengineering

» Deutsche Bank AG: Capital Raise, Strategic Course Correction Are Credit Positive

Issuer Comments

» Continued strong execution and client retention will help support DB's credit profile

» Q3 2019: Continued execution in a challenging market environment

» CEO change highlights strategic challenges still confronting Deutsche Bank

Latest Rating Action

» Moody's affirms Deutsche Bank AG's ratings, maintains negative outlook, July 2019

Sector In-Depth Report (Global Investment Banks Peer Group)» GIBs heighten readiness against constant cyber threat, October 2019

» Sector stratification will relegate some from top flight of capital markets competition, September 2019

» Outlook for Global Investment Banks revised to stable as global economic slowdown adds to profit pressures, August 2019

» Global Investment Banks - GIBs generally prepared for stress in leveraged lending; degree of impact varies, May 2019

» Global Investment Banks - Readying for Brexit, deal or no deal, January 2019

» Fintech: Most GIBs have means to meet the digital threat, but need agile strategies to respond, November 2018

Banking System Outlook

» Germany, November 2019

Rating Methodology

» Banks Methodology, November 2019

To access any of these reports, click on the entry above. Note that these references are current as of the date of publication of thisreport and that more recent reports may be available. All research may not be available to all clients.

4 30 January 2020 Deutsche Bank AG: Q4 2019: Persistent execution of strategic revamp gradually moves DB into calmer waters

MOODY'S INVESTORS SERVICE FINANCIAL INSTITUTIONS

Endnotes1 The ratings shown in this report are DB’s deposit rating/senior unsecured debt rating, outlook, and Baseline Credit Assessment (BCA).

2 All figures in this report relate to Q4 2019 and comparisons are made to Q4 2018, unless otherwise indicated

3 According to our calculation, this excludes restructuring and transformation charges, impairments, litigation, DVA, as well as one-off gains/losses.

4 Adjusted as per DB disclosures.

5 Excluding specific items.

6 Both numbers adjusted as per DB definitions.

7 CRU = Capital Release Unit, DB's non-core bank.

8 Total charges and effects are expected to come it at €8.0 billion, higher than the previously guided €7.6 billion, the difference largely being due to highersoftware-related charges that will not have an effect on DB's capital.

5 30 January 2020 Deutsche Bank AG: Q4 2019: Persistent execution of strategic revamp gradually moves DB into calmer waters

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6 30 January 2020 Deutsche Bank AG: Q4 2019: Persistent execution of strategic revamp gradually moves DB into calmer waters