Good afternoon, everyone. I'm Ioana Patriniche, Head of Investor Relations. I'm pleased to welcome you today to Deutsche Bank's 2025 Investor Deep Dive. You'll shortly hear from our Chief Executive Officer, Christian Sewing, and other management team members, who will give you an update on Deutsche Bank's progress, forward-looking strategy, and financial trajectory for the group and its businesses. Before we get going, let me briefly talk you through some housekeeping items. The presentations are now available on our Investor Relations website. You can access these by scanning the QR code on your passes, which also have the Wi-Fi details, and these are also displayed behind me. We will upload respective speaker notes after each individual presentation has finished. We've made a few visual adjustments of the slides for the screen, so if you're after the details in the footnotes, please refer to the uploaded materials.
We will have a short break of about 20 minutes at 2:50 P.M. Thereafter, the final set of presentations will resume, and we will finish with a question-and-answer session for those in the room and joining us virtually. The Q&A will begin at around 4:20 P.M., and I will give you more details on that at a later point. For those that listen to the very beginning of our quarterly calls on a regular basis, you'll know I also need to remind you that every presentation contains forward-looking statements, which may not develop as we would currently expect. With that done, let's start our event.
There's the geopolitics of the world, which have become much more complicated.
You see the challenges in some of the hotspots around the world. You see the tensions between the U.S. and China.
Pressure in supply chains and fundamental technological transformation driven by artificial intelligence.
What happens when this AI really hits home?
I think it's a huge opportunity, but it's also a huge risk.
In challenging times, we need strong partners more than ever.
Throughout these kind of fairly volatile periods, I always felt that there was somebody there I could talk to about who understood my business.
You look back and you say, "Gosh, that was tough, but we had a great partner, Deutsche Bank.
What was interesting about the relationship that we developed with Deutsche Bank was that it was both a personal banking relationship on the private banking side, but also a business relationship.
When Deutsche Bank takes something on, there's real momentum behind it. I believe it's important for a banker not to stay in their elegant offices, but to actually step into the business itself, whether it's someone leading a major corporation or someone operating a small chocolate manufacturer.
Deutsche Bank played a key role in our $10 billion acquisition of Altair Engineering by helping to finance the transaction.
This relationship with Deutsche Bank has been around for many decades. Deutsche Bank's always been there for us when times were tough. It's about doing the right thing over time.
Support we are getting from Deutsche Bank in all these areas is highly appreciated and extremely professional.
Please welcome Chief Executive Officer, Christian Sewing.
Welcome, everyone, to 21 Moorfields. My colleagues and I are delighted to see you at our London headquarters. Thank you for joining us today for our Investor Deep Dive. Today is a very special milestone for us. We are going to discuss with you our way forward for the next three years, where we are going, how we plan to get there, and how our financial targets look through 2028. Today, we are going deeper than in any previous other Investor Day. We are going to share with you our long-term vision for Deutsche Bank. Two years ago, we defined our purpose, the reason why we exist, dedicated to our clients' lasting success and financial security at home and abroad. That's our North Star. That's the reason why we exist. That guides everything we do.
More so than ever, our clients demand exactly that, like we have just seen it in this small video. We also set our vision to be the Global Hausbank and the European champion. Today, we will show you how we are living our purpose every year, every month, every week, and yes, every day. Everything you hear from us today is actually part of a bigger story, a well-thought and carefully thought-through story which spans for the next three years. You will hear a clear message from us: Deutsche Bank is fully back. Actually, we are going from defense to offense. We see all this in the eyes of our stakeholders. We see it in our daily dealings with our clients across the four businesses. We see it in the capital markets with political leaders or in the communities we serve.
We see it in the way our people are united in Deutsche Bank's purpose and the way we collaborate. We also see it in the world-class talents we now attract to our platform. We hope you will see today how we make this vision a reality and how we go over the next three years as a fully united management team. Today, more than ever, we are ready for what's next. With that, thank you very much, and I hand over to our CFO, James Von Moltke.
Good afternoon. A warm welcome also from me. My name is James Von Moltke, President and Chief Financial Officer of Deutsche Bank. My role today is to talk to you about the journey that we've been on, the bank we've created, and the foundations we've laid for the growth that lies ahead. On a personal level, it's an opportunity to look beyond the incremental quarter-by-quarter progress that we've reported to you and instead show how it's added up to something transformational. I'm immensely proud of what we've collectively accomplished. Our achievements reflect the leadership that Christian's provided, the hard work and partnership of my fellow management board members and group management committee members. Most importantly, it reflects the dedication of our 90,000 employees around the world. It's been a team effort, but I'm also confident that there's more to come.
Let me start by saying this is a transformed bank. We're now well-placed for profitable growth, and we've made the necessary foundational investments. The ambitions we will set out today are, in many respects, a continuation of what we've achieved in recent years, but now with the wind in our backs. From 2018, just after I arrived and Christian was appointed Chief Executive, we initially focused on stabilizing the company. We needed a clear business model to reset our cost structure and to address gaps in our capabilities. We had achieved all of those goals by the last time we spoke to you at our Investor Deep Dive in March of 2022. Since then, we've delivered sustainable and increasing profitability while making targeted investments. We've significantly strengthened our foundations, rebuilt stakeholder confidence, and positioned the bank for sustainable value creation above our cost of capital in the years ahead.
We've embedded operational efficiencies and created a culture of accountability and control. Christian, Claudio, Stefan, Fabrizio, and Raja will tell you where the bank is headed. To set the stage, let me tell you where we are today. We are Germany's leading bank with the four complementary businesses you see on the left. We are dedicated to our clients' lasting success, exemplified by the EUR 1.7 trillion of assets entrusted to us to invest. We are also dedicated to their financial security, holding EUR 660 billion in deposits on their behalf and around EUR 4 trillion of assets under custody we safekeep for them. We have around 19 million private clients in Germany alone and support all our clients as they pursue their ambitions across 60 markets around the world. The Global Hausbank concept is at the heart of our strategy.
As the Global Hausbank, our goal is to build deep and lasting relationships with our clients, leveraging our talented people, advisory capabilities, international network, technology platform, and our strong balance sheet. We have three types of clients under one roof: private individuals, corporations, and institutions. Our franchise has a balanced revenue profile across these three groups, with all of our divisions working closely together to serve them. We have transformed Deutsche Bank into a simpler, more focused business with a significantly improved financial profile. We expect the strong franchise performance momentum across the bank to deliver our revenue ambition of EUR 32 billion for 2025. Our efficiency program has helped to deliver declining expenses and sustainable core operating leverage of 28% since 2021. Our tangible book value per share has increased by 22% to EUR 30 since 2021. We've also improved shareholder reward.
Including the EUR 1 dividend per share we expect to pay next year and additional expected share buybacks, we should comfortably exceed our EUR 8 billion cumulative distribution target. Let's look at how we've done this. First, as shown on the left, we reduced revenue volatility, simplifying our investment bank and focusing on four core divisions. Second, we have a balanced revenue mix, which is helping us to meet our targets in different operating environments and through business cycles. There's been a steady relationship between net interest income and non-interest revenues. Our revenue base is also diversified by region, with around 20% from the Americas and just under 15% coming from Asia. Third, our growth since 2021 reflects broad-based contributions across the businesses. Our compound annual growth rate of around 6% over this period results in revenue growth of around EUR 6.6 billion.
This shows the success of the Global Hausbank strategy in action, with all divisions contributing to our revenue objective. We also significantly improved operational efficiency, raising our target for cumulative cost takeout from EUR 2 billion to EUR 2.5 billion, a level we expect to achieve by year-end. Of this amount, 28% has been delivered through the optimization of our distribution platforms in Germany. Among other projects, we completed the IT migration of Postbank, leading to EUR 300 million of annual savings. We closed around 200 branches in Germany over the past two years and continued to optimize our workforce, particularly in non-client-facing roles. Another 28% comes from front-to-back process redesign, for example, in the corporate bank operations and our Know Your Client platform. 44% of the EUR 2.5 billion was achieved from technology and infrastructure efficiencies, with over 2,000 applications retired and a 30% reduction in office space.
We've made self-funded foundational investments that were absolutely necessary to enhance our technology architecture, control environment, and franchise, while partly offsetting inflation. Our cost base in 2025 is expected to be about EUR 1 billion lower than in 2021, a reduction of over 4% over this period, creating significant positive operating leverage, as I said, as we increased our revenues by nearly EUR 7 billion over the same period. We've also closed out the majority of our legacy items that were unresolved at the time. Together with a diminishing need for restructuring costs, we intend to normalize our reporting of non-interest expenses from the first quarter of next year and no longer focus attention on adjusted costs. Let me touch on the investments made. Some supported our business momentum, shoring up the client and product franchise where there was a need to rebuild or close gaps.
This included strategic hires in wealth management and the revitalization of our corporate and investment banking client coverage. We also invested in our FICC and corporate bank client delivery platforms. We've continued enhancing our compliance and control framework with steady progress towards a business-as-usual environment while recognizing that the anti-financial crime and compliance landscape will continue to evolve. In technology, we have simplified our architecture, migrating business-critical systems to Google Cloud, and we have readied ourselves for scalable AI adoption. These investments have gone hand in hand with prudent balance sheet management. We expect to have increased our CET1 ratio since the end of 2021 to around 14% or by 80 basis points by the end of 2025. Our capital buffer has risen to nearly 300 basis points above our regulatory requirements.
This reflects organic capital generation as well as our capital optimization efforts, where we've achieved the higher end of our target range of EUR 25 billion-EUR 30 billion of RWA efficiencies. We achieved this ratio increase despite higher distributions and in a more conservative measurement regime, including the introduction of CRR3 and significant additions to RWA due to model revisions. A strong, stable liquidity position was maintained throughout, with high-quality liquid assets of around EUR 240 billion and a liquidity coverage ratio of approximately 140% expected at year-end. We increased the funding contribution from lower-cost deposits while reducing outstanding unsecured debt instruments, making our balance sheet more efficient. Our resilient risk profile is supported by well-established risk management and controls. We're navigating macroeconomic uncertainties as we've done throughout our history. Group risk appetite is calibrated to earnings capacity, capital adequacy, and operational stability.
We relentlessly scan the operating landscape to identify and monitor risks, and we conduct regular as well as targeted stress tests to identify vulnerabilities. Compared to before our transformation, our market risk, measured by value at risk, has significantly declined and has been running at an average of EUR 35 million since 2018 when Christian and I took over and remained broadly stable despite a number of volatile periods. We have achieved record-high revenues in our markets businesses. On the credit risk side, our loan book is high quality, well-diversified, and highly secured, and we deploy hedging strategies to manage concentration risks. From this position of strength, we're now embracing our shareholder value add, or SVA, methodology, implementing tools to measure value creation not only by looking at profitability but also by taking into account the resources deployed.
At a divisional level, we've set a 13% hurdle rate to assess contributions. This pivots our capital allocation towards more profitable activity while offsetting the drag from the corporate center. To be clear, 13% is not the ROTE target we aspire to for each of the businesses. Rather, SVA measures in euro terms the shareholder value each activity produces. We've built sophisticated allocation mechanisms and reporting infrastructure to help our businesses understand how to drive value-accreted client engagement, price end-to-end value chains, and create SVA-positive commercial outcomes. We've already seen improvements, with the proportion of business activities meeting the SVA hurdle increasing to around 40% in 2025, up from around 20% in 2021. Going forward, we will manage the bank increasingly under this paradigm, resulting in a sharpened business model generating greater shareholder value. Christian will explain how we think about this later on.
Before I close, I want to say a few words about sustainability, which has been a central element of our management agenda since we launched our Compete to Win strategy in 2019. We've made tangible progress and shown consistent commitment to ESG principles across our businesses and are now a leader within our peer group. Carbon intensity targets are directly tied to long-term compensation for the Management Board. Our culture, controls, risk management, and governance all feed into how our bank can be not only sustainable but also sustainably profitable. Looking at the very detailed submissions to the agencies every year as I do, I believe the numerous ESG rating upgrades since 2021 exemplify the transformation the bank has achieved across all dimensions. This, too, reflects the solid foundations we've built for well-controlled growth. Let me now turn to our financial performance in 2025.
We are on track to deliver on our financial targets, starting with a greater than 10% ROTE. Our diversified complementary business mix is driving strong revenue performance, with an expected compound annual growth rate of approximately 6% since 2021. Increasing cost efficiency and delivery of our critical programs is expected to result in a cost-income ratio of below 65%. Our capital base is stronger than ever, with an expected CET1 ratio of 14% at year-end. We have increased shareholder returns, with distributions of more than EUR 8 billion expected for the years 2021 to 2025. The results of disciplined work across the organization is a transformed bank ready to scale. We have a more balanced and stable revenue profile. We have continued to right-size operating costs while self-funding investments and managing inflationary pressures. The majority of legacy litigation items are now closed, reducing tail risks.
We've strengthened our capital base and launched substantial shareholder distributions. As I said, I'm very proud of what we've collectively achieved. Deutsche Bank can now accelerate value creation through a rigorous SVA-driven approach. The cultural shift across the bank is equally, if not more important, with a strong sense of accountability and purpose, as well as better collaboration across the divisions. I'm proud, too, to be handing the reins as CFO of this company to Raja Akram at a point where we have built solid foundations and we're positioned to succeed. Raja and I have known each other for more than 16 years, and we've worked together closely for eight of those. We've never worked harder or better together than since he joined Deutsche Bank, and he and I have worked to build the strategic and financial plan, which he'll have the job of presenting shortly. Thank you. With that, I'll hand over to Christian.
James put it simply: we have delivered what we promised, and we are a different bank today. We delivered growth from refocused businesses, reduced costs, and built operating leverage. We have a very strong balance sheet and firm control of our risks. Most importantly, our clients have full trust again in Deutsche Bank. As a result, we have put Deutsche Bank on a path to meet or exceed its targets and increase distributions to shareholders. Since we launched our transformation back in 2019, our share price has risen from less than EUR 7 to above EUR 30. We are the strongest we have ever been. As the Global Hausbank, we are uniquely positioned to help our clients steer through a changing environment. We have a clear path to deliver value and elevate returns by scaling our Global Hausbank.
Today, we are going to tell you how we plan to make this happen. Yes, we are proud of what we have achieved, but hitting our 2025 targets is not a destination; it is a milestone on a longer journey. We have built considerable operating momentum, and trends in the environment play to our strengths. Furthermore, AI gives us transformational opportunities right across the entire bank. We are moving from defense to offense. Our way forward is clear. From 2026 to 2028, we will accelerate value creation by scaling our Global Hausbank. This will enable us to reach our long-term goal to become the European champion. A truly global bank domiciled in Germany, the largest economy in Europe, and the number three in the world. A champion for our clients as their trusted partners and a champion for shareholders in the value we create for them.
Today's world, as I said, is playing to our strengths. First, globalization is here to stay, but it is being redefined. Regional blocs are forming, and governments are more assertive of national interests. Let's be clear: trade flows will shift, but global trade overall will continue to grow. Demand for globally connected financial services with local expertise is clearly increasing. Second, Europe is taking steps to boost growth and competitiveness. Not surprisingly, we have already seen that investor interest in Germany picked up, in particular in Q2. Third, populations are aging, driving generational wealth transfers. In Europe, corporate and private retirement provision is far behind the U.S. and other markets. This must change. Fourth, AI is changing the world. Many companies will need to transform and invest significantly to stay competitive. Deutsche Bank is also transforming, and we will talk about that later.
Fifth, geopolitical uncertainties are impacting the global economy and driving volatility. Finally, new risks are emerging and happening more frequently. Regional conflicts, cyberattacks, extreme natural events all make risk management a top priority for our clients. These trends have one common denominator: financial strengths, global reach, local expertise, strong advisory and risk management capabilities are vital to our clients. A reliable partner, a partner you can trust, is more valuable than ever. Deutsche Bank is that partner. What we see increasingly in client meetings all around the world is the demand for a European alternative. In global banking, we are that alternative. Now, let me discuss why our offering is so well aligned to our client needs in the world of today. In Europe, savers are preparing for retirement.
The most recent survey by Deutsche Bank and DWS shows that 83% of Germans do not believe that the state pension on its own will be sufficient or enough. We have a comprehensive offering to address this gap for our 19 million private clients in Germany who will see investments as their key need. In uncertain environments, clients need to deploy liquidity and capital more quickly, but also more safely. Our global payments and servicing capability covers a full range of cash management, payments, and security services. We have invested heavily into these segments. We can provide advisory expertise and capital markets access to help clients execute complex transactions. Our global markets expertise, especially in fixed income and currencies, offers clients ways to manage and hedge emerging risks. At the start of our transformation, we took a very conscious decision to build a focused global debt powerhouse.
Exactly that decision paid off. Also, not everyone would have predicted that foreign exchange would reemerge as a vital capability, but it has. We are the global leader. Our fully integrated financing supports clients in funding the transformation of their businesses. We also plan to build on our momentum in helping clients transition to more sustainable business models like James just outlined. In other words, we do have the complete set of capabilities suited to today's environment and tomorrow's challenges. To scale up, we need to do more. That is exactly what we aim to do. All four of Deutsche Bank's businesses have leadership positions in Germany and Europe, and they have global strengths. To scale up our client offering, we plan to focus on key priorities. First, we are fostering a culture of client-centric accountability and collaboration. Look at our purpose statement.
We have united our business around this common purpose. This is exactly helping us deepen collaboration across business, remove the silos of the past, and deliver the one bank to our clients. Already, the corporate bank and investment bank are teaming up more closely to capture opportunity in growth areas like defense and infrastructure. We are already connecting the outstanding investment product of DWS to our private clients. Now we take it a step further. We are strengthening the collaboration on entire retirement provisioning. My colleagues will discuss far more examples with you today. The way we are offering one Deutsche Bank to clients is improving every day. Second, we are leveraging a key differentiator: a network spanning 60 markets globally. Our global network connects German and European clients with global opportunities. We also offer a gateway into Germany and to Europe for our international clients.
We are actively covering new trade corridors, such as the growing trade between Asia-Pacific and the Middle East. Third, we are scaling to grow in areas core to our Global Hausbank, such as asset gathering, payments and servicing, and advisory. Where we have leadership positions, we are gearing up to consolidate our market leader advantage. This applies especially to our global markets and financing business. This comes at a very low marginal cost. We have an established scalable platform. In particular, in these times, clients prefer doing business with recognized brand names. Finally, we are actively expanding our digital channels to connect us more closely to our clients. To summarize, the operating environment plays to our strengths. This gives us a unique opportunity to scale our Global Hausbank. This enables us to accelerate value creation for shareholders between 2026 and 2028.
First and foremost, we plan to accelerate from an ROTE of above 10% in 2025 to an ROTE of greater 13% in three years. That will enable us to increase distributions to shareholders also based on an increased payout ratio. We are confident in achieving this as the key levers are firmly in our hands. SVA-driven steering and accountability supports all of these levers. Let me start with focused growth. We have built revenue momentum. Now we are using this momentum to full effect to accelerate further in the most value-accretive areas. The second lever is strict capital discipline. We have built capital strengths. Now we are going further by actively managing this capital for the benefit of our clients and shareholders. We will enforce strict hurdle rates, take balance sheet to the next level, and eliminate inefficiencies. Our third lever is a scalable operating model.
This means further integrating and automating core processes, investing further in technology, AI, and innovation, and, very important, attracting the best talent. This third lever is all about client experience, process efficiencies, and strong controls. All this enables us to turn revenue growth into higher operating leverage. As you can all well imagine, transforming that what James talked about, transforming Deutsche Bank, required a lot of internal focus. We simply needed to fix the core, controls, compliance, and technology. It was a restructuring exercise. Now we are all shifting our focus decisively towards growth, towards clients, and ultimately towards our shareholders. That starts with me and my colleagues on the management board. What will not change, however, is that everything we do is built on very strong foundations. James outlined our diversified business mix and our significantly improved financial resilience.
Later today, we will discuss how this helps us to accelerate value creation and generate strong returns through the cycle. Let me now discuss these three levers in detail: our objectives, the actions we plan to deliver, and the financial impacts, starting with focused growth. Deutsche Bank today is a growth story. We aim to grow revenues by more than 5% per year compound. That would increase annual revenues by around EUR 5 billion by 2028. We see this as highly achievable for several reasons, despite normalizing interest rates. Part of it is already locked in, as Raja will explain later. In addition, we have grown revenues at 6% per year compound since 2021, while fixing the core at the same time. On top of that, the environment is more supportive to our growth than ever before.
Going forward, our objectives are to capitalize on our leading position in our home market, to integrate the Global Hausbank more closely into a seamless experience for clients across the world, and to take full advantage of our strengths and capabilities to help clients navigate a changing environment. In practice, this means scaling up in focused growth areas such as asset gathering, payments, and advisory. We actually expect around 75% of our revenue growth to come from these areas. We are aligning our investments around them. Where we have leadership, we aim to build on and consolidate it. We are determined to remain a debt powerhouse across our world-class franchise, financing, and lending. Here, we will create value by growing scale while optimizing platforms and resource efficiency. We aim to grow these areas across several dimensions.
First, by deepening our share of wallet with existing clients through better connectivities across the businesses. We see considerable, still untapped potential to do more with existing clients. Second, by attracting new clients as we scale up the Global Hausbank, as we just discussed it. Third, by improving client experience through digital interfaces. My colleagues will say more about this. Fourth, through innovative new products to meet clients' needs as they emerge. SVA is also a growth catalyst. It highlights opportunities and focuses our client efforts on the most accretive growth areas. In each focused growth area, we have set ourselves clear milestones for 2028. These enable us, but also you, to track our progress. For example, in asset gathering, we aim to reach EUR 1 trillion in client assets in the private bank, roughly an additional EUR 200 billion from today's level.
In Stefan's business in the asset management, we want to achieve cumulative long-term net flows of more than EUR 160 billion. We aim for deposit growth of around EUR 100 billion across the private bank and the corporate bank. In advisory, we continue to aim for a market share of greater than 3% in the global investment banking fee pools. In sustainable and transition financing, we plan to build our progress since 2020 with a new target of EUR 900 billion in volume by 2030. Let me discuss how we aim to capitalize on our home market leadership. I am fully aware that you are all very interested in our Germany story. Yes, Deutsche Bank's leadership in our home market is a key asset and will always remain a key asset. We already have a high market share and customer penetration across all businesses.
For example, all German companies listed on leading indices do business with Deutsche Bank. However, we cannot rest on our laurels. We can still do better, and Claudio, Fabrizio, and Stefan have already made key changes to gear up. I'm convinced we can, or actually we must, do a lot more to fully leverage the opportunity presented by our home market. We have significant potential to capture additional market share across all businesses. In fact, we expect Germany to account for 2 out of the EUR 5 billion of the total revenue growth we aim to achieve by 2028. By leveraging a strong and scaled-up platform, we have headroom to grow at a low marginal cost. That obviously further boosts operating leverage. We can achieve this by our unique combination of strengths. First, no global competitor can match our deep roots in Germany.
For over 150 years, we have been the trusted advisor to German industry and society, and that will not change. Second, no local competitor can match our global network as a gateway to or from Germany and Europe. By connecting our home market position with this global network, we plan to attract both inbound and outbound business flows. Third, we plan to use our large and stable base of customer deposits to fund further growth at attractive costs. We see opportunities to further improve. We can harvest the benefits of recent investments to integrate the technology behind our core banking platform and client coverage. We also plan to upgrade our client-facing product platforms and interfacing across retail and corporate clients. In addition, we have already strengthened our leadership bench in Germany. All of this is our own work. None of these measures depend on any German stimulus program.
That's all us. However, we also plan to amplify the returns from our own efforts by taking advantage of tailwinds in Germany's policy and macro landscape. Several trends are aligning in our favor. Let me say a few words on these. Germany remains a large and innovative economy. The number of German unicorn companies valued at more than EUR 1 billion has actually tripled in the past five years. You don't read it, but it's fact. In our view, economic momentum will accelerate in 2026 and beyond. Fiscal stimulus is expected to add around EUR 400 billion of investments through 2028. Initiatives such as Made for Germany prove that these measures attract a powerful private sector multiplier effect. Investment commitments from corporate Germany are already above EUR 700 billion to 2028 and rising.
We are convinced we have only seen the beginning of what is possible from the partnership between the public and the private sector. Also in this regard, do not forget, Deutsche Bank has considerable experience of working with institutions like KfW to transmit the benefits of policy measures into the real economy. The government's long-term transformation agenda may also add as much as EUR 1 trillion to Germany's economy over the next decade. All four of our businesses have strategies in place right as we speak to take full advantage. In the private bank with Claudio, we plan to help clients boost retirement savings by accelerating deposit capture, converting deposits into investment and pension solutions. In Stefan's asset management, we plan to accelerate growth in private markets and scale up offering in ETFs.
In Fabrizio's corporate bank, we see opportunities to finance capital and operating expenditure for clients as they gear up to capitalize on the improving economic outlook. This will drive, think about the Global Hausbank, cross-sell right across the franchise. In the investment bank, we grow in sectors which benefit from stimulus measures as defense and infrastructure, but also certain others. We also expect these to boost capital markets' issuance volumes. Altogether, we see the fiscal and policy backdrop in Germany as contributing positively to revenue growth in our home market. Here too, we are planning prudently. We only factor in the financial benefits of measures which are agreed as of today. Hence, our business could accelerate further if stimulus and structural measures gain traction beyond these. Now moving to our second key lever, strict capital discipline.
We are convinced we can further improve capital productivity in the next three years. Today, as James outlined, we are financially stronger and far better positioned with clients who actually understand that we need to deploy capital commercially. This enables us to increase capital productivity more forcefully in this next phase of our strategy. We have identified scope to boost our revenue-to-risk weighted asset ratio by 100 basis points between the end of this year and 2028. This would represent a material improvement from the base of around 11% to around 12%. Our objectives are the following. First, to deploy more capital towards higher return areas. Second, to eliminate capital drag from areas whose returns simply do not meet our criteria. Third, to increase return of capital to shareholders. To boost capital productivity, we plan to apply several levers.
These include applying a more rigorous pricing and clear SVA hurdles when we originate business. Reallocating capital away from sub-portfolios which do not meet our hurdle ratios and criteria in a more disciplined manner than before. Taking balance sheet management to the next level and thus increasing asset and balance sheet velocity. We intend to optimize origination practices to make it easier to move assets off balance sheet and to expand the use of SRTs and cash sectorizations. All four businesses will contribute to this effort, and here is how. In the private bank, we plan to optimize capital efficiency in our mortgage and consumer finance business and actually focus on capital-light Lombard lending. Initial results in Claudio's business and parts of the German mortgage business are very encouraging. In asset management, we plan to deploy seed capital in alternatives and selectively pursue opportunities to grow inorganically.
In the corporate bank, our plan is to optimize capital use in trade finance and lending and reallocate capital into higher return activities. In the investment bank, we are convinced we can redeploy capital into higher return areas within the FIC financing business and increase overall balance sheet velocity. Yes, finally, we will evaluate selected exits of subscale offerings and geographies in a disciplined manner. Now let me come to our third lever, a scalable business-led operating model. What does a scalable operating model mean for Deutsche Bank? It means our processes are integrated and automated. Our organization is lean and adaptable, and the innovative use of AI is a core element of how we operate. In this next phase, we have made a conscious decision to invest further. However, the focus of our investments will shift away from fixing the core towards efficiency and business growth.
We expect this to further boost our operating leverage and improve our cost-income ratio to below 60% in 2028. We plan to roll out targeted programs to drive a further EUR 2 billion in gross annual efficiencies. This comes on top of the EUR 2.5 billion we have delivered through 2025. It also allows us to address the areas where we lag our peers on costs. From benchmarking, we know exactly what these are, and we will tackle them systematically. Last but not least, Deutsche Bank today is attracting world-class talents. We are uniting both new and existing talent around our common purpose, our Global Hausbank vision, and a simpler organization. A scalable operating model benefits our clients, our own people, our capabilities and processes, and our technology.
As you will see today, we will expand digital and self-service offerings across our business to improve client experience. By simplifying our organization, we actually provide our people with clear accountability and faster decision-making. We create development opportunities which make Deutsche Bank an even more attractive place to work for. We are also changing how we deliver capabilities and processing by moving towards a model of enterprise-wide delivery platforms. Our aim is to do everything, but only once. For example, one payment platform in the corporate bank, but servicing all divisions. We aim to apply a unified lending process across the corporate bank, the investment bank, but also parts of wealth management. This enables us to remove duplications and to optimize front to back with a clear business ownership. We are also moving towards an integrated target technology architecture based on a hybrid cloud.
This will give us added flexibility and scalability while further enhancing resilience and security. We aim to reduce costs by around EUR 400 million over time with this improved technology architecture. AI also has a very significant role in our future plans. Based on our experience so far, we are convinced AI offers us a potential step change in cost efficiency and the delivery for our clients. Let's discuss that more in detail. We are already deploying AI at scale and that right across the bank. We have built firm foundations across our technology platforms, our organization and governance, and our control environment. Let me give you a few examples of the concrete benefits which we are already seeing. Deutsche Bank Research has identified potential to use AI to double the number of companies covered without adding additional resources.
In software development, we expect productivity improvements of up to 20% over time just from AI-assisted coding. In the private bank, we identified around EUR 300 million in savings by moving to an AI-enabled operating model. We are using AI to strengthen essential controls while achieving our cost efficiencies. Ladies and gentlemen, this is only the beginning. AI is developing so fast, and I'm convinced that more, much more is actually possible. Our ambition for the next wave is to make Deutsche Bank a truly AI-powered bank. In this regard, I have tasked every member of my executive team to take full accountability and responsibility and lead the next wave of AI transformation in their respective areas. We are rolling out AI training not only for senior leaders, but across the entire workforce. It starts with an AI-first mindset and a clear focus on the greatest opportunities.
We are aiming to deliver hyper-personalization and integrate agentic AI. Additionally, we are preparing for a generational transformation in our workforce, as Raja will explain later. As our people retire, we aim to shift activities to AI while at the same time capturing the knowledge and experience of the departing colleagues. Given the speed at which the opportunities are evolving, the true financial benefits of this next wave to Deutsche Bank could far exceed what is in our plans today. Let me sum up the three levers of our roadmap to an ROTE of greater than 13% over the next three years. We have achieved gross momentum. Now we will drive accelerated growth in our focus areas. We have built capital strengths. Now we will further sharpen capital discipline. We have improved operating efficiency. Now we will implement an integrated, lean, and scalable operating model.
How will this accelerate value creation? In the past few years, and James hinted at that, we have roughly doubled the share deployed in business activities exceeding the hurdle rate to around 40%. By 2028, our ambition is to raise this proportion to above 70%. We see opportunities to increase SVA generation across all businesses. In the private bank, our focus will be on operating efficiencies in retail, scaling up wealth management, and optimizing capital deployment. In asset management, we plan to leverage the position of DWS as the gateway to Europe for international clients and exploiting the potential for digital disruption. In the corporate bank, we will focus on growing our capital-light products and fee-based platforms, optimizing our capital usage and unlocking structural efficiencies. In the investment bank, our priority is twofold. First, to refocus our client management towards advisory and corporate relationships.
Second, to maximize returns from our leading position in FIC and close out remaining gaps in our competitive position. Reinforcing a culture of accountability is essential to our use of SVA. This will include aligning management incentives more closely to value for shareholders and linking SVA directly to the compensation of our senior leaders. Before I conclude, I would like to summarize how we aim to drive ROTE in this next phase of our strategy. This management team is firmly committed to taking Deutsche Bank to an ROTE of greater than 13%. As we have seen, our Global Hausbank is the key differentiator in the changing world of today. We have in our hands all the strategic levers which get us to our target. We are using SVA to drive greater focus on returns.
We aim to distribute more of these returns to shareholders, increasing our payout ratio to 60% from 2026. Our incentive structures are more closely aligned to shareholder value than ever. We consider an ROTE of greater than 13% as a floor, given the upside we see from several tailwinds in our environment. A few words on this. Some external factors are already in our plans, but with very prudent assumptions and could well take us further. The German economy may accelerate faster as stimulus and structural measures take effect. We may capture significant further AI benefits that go beyond our plans. Furthermore, the upside from other factors is not included at all in our plans. EU-wide initiatives are harder to predict for us, but may bring considerable opportunities.
As you know, Deutsche Bank is perfectly positioned to benefit from further harmonization of Europe's capital markets, not in the plan. As the focus of policymakers shifts to growth and competitiveness, we may see a more level playing field in our regulatory environment, not in the plan. This would benefit both Europe's banks and Europe's economy. In short, the upside beyond our target is considerable. Let me conclude with our long-term vision. Scaling our Global Hausbank in the next three years enables us to achieve our long-term vision to be the European champion. What does it mean in practice? It means leadership in key business segments. It means in this world being the partner of choice for our clients. It means leading the market in returns. It means a scaled, deepened global presence and network. Yes, it means becoming a truly innovative and AI-powered bank.
We have everything we need to make this vision a reality. We have the financial strengths. We have the momentum. We have the right team. We have the restored trust of the franchise and society. We have the deep dedication. We have regained pride in Deutsche Bank, which I feel and see in this great organization every day. Today, the world needs a Global Hausbank. I am not shying away. In fact, the world needs Deutsche Bank. With that, let me hand over to Claudio.
Thank you, Christian, and a warm welcome to everyone in the room and online. I am Claudio De Sanctis, and I am the Head of the Private Bank. Over the next 25 minutes, I am going to present you a plan that is clear, predictable, and compelling. One which is based on a strong track record of past execution.
One which is built on a consistent and focused strategy with many of the levers already underway or in our hands to deliver. A plan which will generate EUR 1.2 billion of incremental SVA with further potential upside. In the first part of my presentation, I will show you how we have delivered one of the most compelling operating leverage improvements and how that has laid the foundation for the future growth of our two businesses, personal banking and wealth management. In the main section, I will explain the key levers that will deliver our future incremental SVA. Specifically, in personal banking, we will focus on all three levers: revenue, cost, and capital. In wealth management, on the other hand, we will now invest to accelerate asset gathering to scale up the business.
Finally, I'll close by sharing with you a couple of additional growth drivers which will highlight further potential upside to the plan. Let's look at our track record, and let's start by showing you how we delivered our operating leverage improvement. This was, first of all, the result of a consistent strategy of strict focus on clear segments and geographies where we can compete to win. In personal banking, we are a market leader in our home market with 18 million clients, banking a quarter of Germany through two distinct and complementary propositions: Deutsche Bank as the housebank for financial advice and Postbank for digital-first everyday banking. Internationally, we're focusing on emerging affluent clients as a pipeline for wealth segments.
In wealth segment, our competitive strength lies in delivering our Global Hausbank to ultra-high net worth individuals and their family offices from L.A. to Europe, the Middle East, all the way to Asia. Through our bank for entrepreneurs, we are ideally positioned to advise European family entrepreneurs, offering one-on-one listing approach for both their private and their company needs. Finally, we're focused on providing investment advice to affluent clients in Germany, in Italy, in Spain, and in Belgium. Since 2021, driven by a disciplined execution, we have transformed the private bank into a more focused, efficient, and connected franchise with significant improvement in the cost-income ratio, which has reduced from 96% in 2021 to less than 70% today. This was achieved by growing revenues 18% and reducing costs by 15%.
Looking now more in detail at the two businesses, which, by the way, we created as separate segments in 2023, in personal banking, we're now seeing the benefit of our transformation with a 10 percentage point reduction in cost-income ratio, nine of which just in the last year. This was achieved with a EUR 650 million reduction of cost and with an 18% reduction of staff. To give you an example of this cost initiative, in Germany, we've closed an additional 183 branches, roughly 20%. We did that whilst at the same time making available to our clients 12,000 retailers for cash withdrawals, improving hence a critical service at a significantly lower cost. We've also migrated clients to the DB, the Postbank clients, to the DB platform. We have upgraded all of our German clients to a common cloud-based online and mobile banking app.
This has resulted in a saving of around EUR 300 million. In personal banking, it has not been only about cost. We have also delivered strong revenue growth in key areas such as deposits and investments, which grew by 14% in the last two years. We also started optimizing capital, where we have, for example, discontinued the DSL brand in Germany, our white label mortgage business. Turning to wealth management, in this business, we keep executing our focus strategy and have become one of the most efficient in the street. Since 2023, we have improved the cost-income ratio by 13 percentage points to 63%. Focus strategy means that we exited non-strategic areas, such as our DB financial advisory business in Italy and the LATAM business booked in Germany. We have also dramatically simplified businesses like in the U.S.
On the revenue side, we've delivered double-digit growth in APAC, in the Middle East, in the U.K., in those places where most of our strategic hiring took place. At the same time, we've also grown globally our revenues from discretionary portfolio mandates by 70%. Looking at the asset gathering, we have a strong momentum across both our businesses, and this is a solid foundation for the future. Since 2023, we've grown our personal banking AUM by 9% per annum, driven by strong deposits and investment volumes. In the same period in wealth management, we've generated nearly EUR 60 billion of net new assets, a 4% growth rate, which is higher than peer average. Additionally, we launched our flagship strategic asset allocation to great success with around EUR 17 billion inflows into this solution since inception.
In aggregate, this has led to a significant improvement in the private bank's return on tangible equity, rising from 2% in 2021 to 10% today. With this track record in mind, let me now take you through the main levers of our plan. As I mentioned earlier, in personal banking, we're focusing on all three levers: revenue, cost, and capital. Let me start with revenues. We do expect a prolonged period of structurally higher interest rates, which will continue to support higher margin and drive demand for deposit. So far this year, we've attracted EUR 15 billion in fresh deposits, much of which came through low-cost digital channels. For example, the last campaign we did in Postbank, 75% of the new accounts were open digitally.
Looking ahead to 2028, we aim to generate EUR 50 billion of additional gross new deposit, and again, mostly via digital or remote channels. The expected fiscal and pension reform in Germany, as Christian was mentioning, presents a significant opportunity for us, given our competitive position as the leading German bank for investment advice. We will help our clients manage their pension needs through dedicated discretionary and investment solutions. Finally, digitalization and AI are radically transforming how we engage with clients, enabling greater personalization and actionable insights. AI-powered analytics help us anticipate needs, attract clients, and increase the number of multi-product relationships. Clearly, this will require a doubling of investments into digital marketing.
Altogether, we expect the revenues of the private bank to grow at a 5%-6% compound annual growth rate between 2025 and 2028, with personal banking growing slightly below that range but at a steady rate. Turning to cost now, we will continue to get additional run rate benefits from our existing programs. For example, as announced already, we will close a further 100 branches by the end of next year. We will continue to review our sales network in line with customer preference. In fact, around 35%, 35% of the cost savings in the next three years have already been negotiated and started. Of course, we will also launch new programs. Consider operations. Given the issue we faced around the integration of the Postbank platform, we had to actually increase staffing and slow down the pace of digitalization and automation.
Now, with the remediation of the backlogs completed and we restore customer service, we are ready to deploy Agentic AI to fully modernize and automate this critical function, whilst at the same time providing an enhanced client experience. This will entail extending digital onboarding to more clients, increasing self-service in our digital channels, and improving our communication to customers by providing in-app notifications and much more. We will also radically simplify business processes to reduce duplication and drive standardization. For example, we will consolidate our KYC processes from 27 to 2, aligned by client risk type. As a result, by 2028, we expect the cost of operations to reduce by at least EUR 100 million. By far, the largest driver will be the overall transformation of the private bank operating model. Today, globally, we operate 15 different core banking systems.
Going forward, they will be consolidated into two modern cloud-based platforms, one for personal banking and one for wealth management. As you heard from Christian, Agentic AI will play a key role in accelerating the modernization of our technology landscape through discovery, data management, code translation. To further simplify our operating model, we will also redesign our application landscape. We aim to reduce the number of applications we use by around 40%. This will be a multi-year program, leveraging the expertise we've gained from recent transformation programs, starting first in Germany and later being rolled out internationally. The phased approach and the significant experience that we gained in the past three years make us confident that we can deliver this program, mitigating the implementation risk. We are not simply looking to improve today's operating model.
We are building the model for the future, one that fully leverages the best technologies available today. Overall, during the next three years, we will have to invest over EUR 600 million in IT operations, AI, and we expect an overall run rate savings of around EUR 300 million by 2028, and of course, more in the following years. Together, these initiatives will continue to drive positive operating leverage in personal banking, reducing the cost-income ratio to around 60%. Finally, we will continue to free up capital, freeing up from low-returning portfolio in personal banking and redeploying some into wealth management and some in the transformation of operating model. The rest will be used to reduce the shareholder equity required to run the private bank. By 2028, we will decrease the shareholder equity in personal banking by a further 15%.
To achieve this, building on the recent successes in Germany and Italy, we are investing in a true sale platform, which will allow us to launch new types of securitizations. In parallel, we are also continuing to optimize portfolios, portfolios that do not meet our strategic focus or do not generate positive SVA. For example, we will continue to transform tirelessly, or if necessary, de-emphasize our personal banking activities outside of Germany where and when we do not have the skill to compete effectively. Let's turn now to wealth management. Here, we will continue to invest in increasing client assets, expanding the focus we had on assets under management to also include assets under custody, as we see assets under custody as an important feeder for investment. This effort will be underpinned by two key investments.
Since 2023, we successfully attracted 143 ultra-high net worth bankers while systematically managing out low performers, with a net result of a 10% reduction, while at the same time producing the asset gathering growth rates you have seen in the earlier slide. We now plan to hire up to a further 250 bankers focused on Germany, Italy, the U.K., the Middle East, and Asia. While we will always keep enforcing rigorous performance management, given the work we have done in the last three years, the overall number of bankers this time will grow materially. Please note that we have been working on a strong pipeline, and we expect for the majority of the bankers to start in 2026, bringing in assets already in the same year and becoming value accretive since 2027. Second, the European affluent wealth. It is one of the largest pools of uninvested wealth globally.
We are already serving nearly 2 million clients spanning three of the four largest eurozone economies. In order to better capture this opportunity, we are developing a new digital investment solution to support the wealth planning needs of these segments. At the heart of this offering will be a customizable discretionary mandate via goal-based planning interfaces. This will empower clients to save and invest more effectively as their lifespan increases and their private pension needs grow. With this, we expect to at least double our DPM volumes in the next three years. Overall, the asset gathering initiatives will lead to an increase of our annual NNA growth rate to 6%. In addition, we will continue to invest in our product offering to support the growing client base.
For example, we're integrating private markets allocations into our DPM solutions, working with best-in-class strategic partners, such as our recent collaboration with AWS and Partners Group. This will give our clients access to new sources of return and provide further diversification, reinforcing our position as the leading eurozone provider for DPM solutions. Importantly, we will also grow Lombard Lending, which allows our clients to keep their core assets invested while still accessing liquidity for new opportunities. We will embed Lombard Lending in our asset allocation framework across wealth management, including digital proposition. In summary, over the next three years, we will invest in this wealth management business around EUR 300 million in talent, in platforms, and in solutions. As a result, we plan for revenue growth in wealth management that exceeds the 5%-6% CAGR of the overall private bank.
Ultimately, we expect the SVA of wealth management to more than double by 2028. Let's look now at the upside. There are two main areas which are largely in our control but are not yet fully baked into our plans. We have just discussed the impact of Agentic AI as a powerful driver of cost efficiency. Looking ahead, we see a significant opportunity to leverage Agentic AI to open new revenue opportunities. One of the most exciting developments will be the introduction of an AI voice-enabled agent, which will act as a banking butler, the next generation of banking. Let me explain to you how it will work. The banking AI butler will interact through conversational voice as an intelligent, proactive agent that understands the client context and behavior. It will support customer assistance through our mobile app and call centers to over time expand to manage end-to-end transactions.
This unique service will create a fundamental bridge for the large majority of German customers who are not digitally native, changing radically how they interact with us, with the bank. With the power of artificial intelligence, we can democratize access and extend high-end personalized service to every client. It will also collect specific personalized customer feedback, and it will analyze it in real time, reinventing the MPS approach and providing us a real-time roadmap on how to best develop it. Within the next three years, our goal is to extend this AI Banking Butler to provide also advisory and investment solutions. From there, the step to non-banking services is a small one, but an incredibly transformational one. Second, wealth management.
You heard from Christian, you heard from James, you will hear from all of us how distinct and fundamental the global house bank is, how it is our true competitive advantage. Through the fantastic partnership with Fabrizio and the IB team, we have perfected the connectivity which provides our ultra-high net worth clients access to superior fixed income and FX capabilities. This is today the leading benchmark in the wealth management industry. Our partnership with AWS provides our clients with access to institutional investment solutions. It is with Stefan and his team that we will partner to launch the digital investment platform for our affluent clients. We will also jointly develop the pension products. However, there is one area where we have yet to fully realize the true potential of the global house bank. That is with the German Mittelstand and with the European family entrepreneurs.
As the global house bank, we are uniquely positioned to serve family entrepreneurs, and not only in Europe, but also globally whenever European connectivity matters. For that, the corporate bank plays a key role in bringing the bank for entrepreneurs to life with joint client acquisition and providing essential services such as cash management and trade finance. Together with our wealth management capabilities, this creates a single integrated value proposition for our clients, serving both their company and their private needs in one joint approach. I for once could not be more excited to work with Michael and Ole to unleash this potential. I am certain that there is further upside to our plan in this partnership. In conclusion, this is a clear and simple plan. It is rooted in a strong track record, with most of the levers firmly in our control.
It is with this plan that by 2028, we will have EUR 1 trillion of client asset in the private bank. We will grow revenues by 5%-6% per year, and we will maintain positive operating leverage every year, bringing the cost-income ratio to 60%. Finally, it is with this plan that by 2028, we will deliver a return on tangible equity greater than 18%. Personal note. Over the last three years, in the many discussions I had with most of you, I heard several times you referring to the private bank as a hidden gem.
We would have discussions where I would present in my flamboyant way the beauty of the private bank, and at the end, you'd be a bit surprised and say, "Well, this is a hidden gem." I genuinely trust and hope that after this presentation, you understand the value of this business without anything being hidden, and that you can see in your eyes the beauty of this business just as I can. With that, I thank you for listening, and I hand over to my partner, Stefan.
Good afternoon, ladies and gentlemen. My name is Stefan Hoops, and I'm the CEO of DWS, the asset management arm of Deutsche Bank. People say that asset management is a very simple business. All you have to do is get a new asset, keep margins stable, and manage costs with discipline.
Of course, as many of you in the audience know, in reality, it's not that straightforward. Allow me to tell you how our strong ETF platform and the renewed investor interest in Europe have driven above-market net inflows over the last three years, how we are successfully addressing the industry challenge of margin dilution by building our alternatives offering, and finally, how we were able to grow revenues while reducing costs, creating strong operating leverage. These three ingredients have led to a strong share price performance over the last three years, with us ranking at the top of all traditional asset managers. We have fully focused on continuing on this path of delivering significant shareholder value. Let me start with our platform. As you know, DWS is separately listed, with Deutsche Bank owning roughly 80%. What is distinctive about DWS is the breadth of our franchise.
Our EUR 1 trillion in assets can be broken down across asset classes, client types, and regions, and we have scale in each. Starting with asset classes, we are one of only a few global asset managers with more than EUR 100 billion in each of active equity, active fixed income, multi-asset ETFs, and alternatives. That gives us resilience through cycles without relying on any single style or capability. Our global footprint reinforces our strength. We are present in markets where wealth is growing, and partnerships such as our joint venture, Harvest Fund Management in China, provide local depth while keeping us globally connected. Finally, we are well-balanced across retail and institutional clients and not reliant on captive distribution. That independence reduces event risk and gives us greater control and agility.
Our diversification across products, clients, and regions provides stability, optionality, and the ability to allocate resources to the most attractive opportunities. We will continue to operate with a systematic and disciplined approach to resource allocation, which we introduced at our own Capital Markets Day in 2022. We continuously evaluate the components of our franchise, look at our relative strength versus competitors, and the structural growth outlook for each segment. In areas where we have clear strength and where the market is growing, such as ETFs and alternatives, we allocate more resources to scale faster and take share. In businesses with strong capabilities but limited structural growth, for example, in our active franchise, we maintain the level of resources with those areas largely self-funding. We continuously review our businesses, and where we do not have scale or, frankly, the right capabilities, we reallocate resources towards higher return opportunities.
Past examples include exiting our direct retail platform and our private equity secondary business. In areas with clear future potential, we provide targeted seed funding, for example, in digital assets and channels. This approach to resource allocation sounds simple, but few firms execute this with discipline at scale. This discipline has created significant operating leverage for us over the last three years. On asset gathering, we have delivered net new asset growth materially above market for three consecutive years, with around EUR 100 billion in total net flows driven primarily by our great Xtrackers ETF franchise. All of this growth was delivered while reducing costs each year, even during inflationary periods. We separate costs into volume-based good costs like custody or index fees that increase as we do more business, and discipline-based expenses, which is everything else. While volume-based costs rose due to growth, we actually reduced discipline-based expenses.
Overall, costs came down by 1% per annum since 2022, strengthening operating leverage. At less than 60%, our cost-income ratio is comfortably within the top quartile of our peer group and continues to trend lower. Our profits have grown strongly, with profit before tax up 50% since 2022. These decisions build the foundation we have today, and we continue to apply the same discipline as we look ahead. We operate in highly attractive markets with structural growth. Industry assets under management are expected to compound at roughly 8% over the coming years, supported by long-term wealth creation, retirement needs, and the increased adoption of professional investment solutions. Let me break that down across the key market drivers, in particular ETF and alternatives, and the evolving client preferences of both institutional and retail audiences. We see a distinct shift from higher-fee active strategies towards lower-fee passive products, particularly ETFs.
While this has led to overall margin pressure in the industry, we are well-positioned to manage and benefit from this evolution in client demand. We are one of the leading ETF providers in Europe with a market share of approximately 11%, and we have steadily increased our market share over the last few years. In Europe, our broad offering positions us as an ETF supermarket. In the U.S. and APAC, we focus on thematic ETFs rather than competing head-on with the largest index providers. That approach plays to our strength and client demand. At the same time, we are actively building higher margin areas. A core part of that strategy is private markets, where we benefit from well-diversified origination channels and a proven track record across cycles. We have more than 50 years of experience in real estate and over 25 years in infrastructure.
Infrastructure continues to scale, and in real estate, we are seeing renewed momentum. We are expanding our teams and are actively fundraising in both areas. We are also building out private credit in Europe, focused on asset-based finance and real economy lending. We are doing this in partnership with the corporate bank and the investment bank, benefiting from Deutsche Bank's strong underwriting expertise. Let's move to changes in client preferences. Approximately one-third of our ETF AUM now comes through digital platforms, and we continue to broaden digital savings channels and scale higher-margin active ETF solutions. For institutional clients, we are increasingly looking for outcomes, not products. We are expanding our solutions business, supported by our breadth across public and private markets. These capabilities are difficult to build. ETFs demand scale and distribution. Private markets require a proven track record.
Institutional clients value holistic solutions, and retail clients expect a broad and digitally enabled product set. Everyone wants to create a platform like this, but our ability to deliver across all of these fronts is quite rare and not easily replicated. Now, I want to outline how our strategic priorities actually translate into tangible actions. First, we aim to be the gateway to Europe for global investors. As Europe undergoes a major industrial and energy transition, global capital is seeking exposure, driving growing demand for our existing broad product set. Building on this momentum, we are also launching new products and are strengthening our presence in key growth markets, including our recent office opening in Abu Dhabi. Second, we aim to be a top five foreign asset manager in each of the world's top five economies.
Germany remains our anchor, where we are strengthening our leading position and are well-placed to benefit from upcoming pension reforms through scalable long-term retirement solutions. In China, we hold 30% of Harvest Fund Management, the country's fifth-largest asset manager. In India, we recently announced plans to enter a strategic collaboration with Nippon Life India Asset Management, focusing on alternatives, ETFs, and global distribution. In Japan, our long-standing partnership with Nippon Life continues to deepen, and in the U.S., we are already the sixth-largest foreign asset manager with future growth in focus. Third, we are investing for the future of finance. In digital assets, we have translated a bold vision into tangible progress. Our joint venture, All Unity, launched EURAU, the first fully regulated euro-denominated stablecoin out of Germany, a milestone in our approach to digital assets.
Going forward, we will continue to broaden our crypto capabilities, develop further products around All Unity, and prepare to tokenize our first fund. On the client side, we are building embedded investment solutions through an API-driven model, aiming to connect investors seamlessly to products wherever they want to invest. We will apply artificial intelligence across our investment process, leveraging decades of proprietary data and the cumulative decisions of nearly 1,000 portfolio managers. We will also enhance real-time data infrastructure and deploy an AI investment companion to support and challenge portfolio managers, helping to elevate disciplined, insight-driven asset management. Together, these initiatives differentiate DWS and will embed us more deeply into the digital architecture of our clients and the broader financial system. Now, the progress you see in our numbers is not the result of one-off levers.
It reflects a multi-year effort to build a platform that can scale efficiently and support sustainable growth. We have systematically simplified and strengthened the firm. We have made targeted investments in our operating model, streamlined structures, further developed our enabling functions, and built up teams in India and the Philippines, creating scalable, cost-effective hubs. At the same time, we have focused on developing talent from within. On the one hand, we quadrupled our graduate intake and increased our training budget, while on the other, we are limiting external hiring. Together, these measures are deepening our capabilities organically over time. It is worth underscoring that asset management is a talent business. Sustaining performance means investing in people, not cutting compensation. Our portfolio manager retention is strong, and we continue to invest to make DWS a place where the best people want to build their careers.
Alongside internal developments, we've made targeted strategic hires in areas where we see long-term growth, including critical hires in alternatives, enhancing our Xtrackers ETF platform, expanding our sales force, and investing in our digital capabilities. Importantly, all of this investment has been self-funded. We've now reached a level of maturity where no additional structural investment is needed. From here, the only costs we expect to rise are volume-based, the good costs that naturally increase as assets grow. Of course, we'll continue to invest, but our investments will be self-funded through efficiency gains. We'll focus on the areas in highly attractive parts of the market where we already have clear competitive advantages. Our utmost priority is maintaining our leading German retail franchise. In addition, we are accelerating growth in Xtrackers and alternatives where client demand and our capabilities are both strong. To summarize, our commitment is clear.
Growth investments will be self-funded, which means that the cost base is essentially staying flat, except for the good costs. On this basis, we remain confident in maintaining a cost-income ratio below 60% and delivering 10% CAGR in pre-tax profit through 2028. Now, in addition to our own capabilities, being part of Deutsche Bank Group presents a significant competitive advantage. We have three major divisions of the global house bank as partners, and this gives us access to origination and distribution that most other asset managers simply do not have at scale. The private bank remains our number one distribution partner globally, and together, we are jointly building investment products, including our recent alternatives, ELTIF. For both the corporate bank and the investment bank, we see material upside in cross-selling to clients.
In Germany specifically, that collaboration extends to developing comprehensive pension offerings across all pillars, an area where we see significant long-term need and opportunity, as Christian has outlined. When it comes to private credit, this partnership will give us preferred access to origination. On the corporate bank side, that means asset-backed financing and SME lending. On the investment bank side, it covers a variety of private market assets, from direct lending to more bespoke special situations within FICC financing. Having started my career in FICC and having overseen the corporate bank for a few years, this is a partnership that is very close to my heart. While we are seeing good early momentum, the opportunity remains significantly larger. What will this strategy deliver? By 2028, we will aim to have cumulative long-term net flows of more than EUR 160 billion.
This will translate to compound revenue growth of around 5%. Furthermore, we are confident to achieve 10% CAGR in profit before tax through to 2028. We will deliver a strong return on tangible equity of more than 40%, consistent with our scalable business model. We can deliver on these ambitions because we have a diversified, proven business model underpinned by strong product capabilities, deep distribution reach, and scalable platforms. These strengths have enabled superior earnings growth in recent years, and we intend to build on that momentum as a leading European asset manager with global footprint. Thank you. I will now hand over to Ioana.
Thanks, Stefan. We will now take a short break for about 20 minutes. Please return to your seats at around 3:10 P.M., when we will hear from Fabrizio and Raja, followed by the Q&A session. Thank you. Separation Serenade. Separation Serenade.
Separation Serenade. I remember sweet September, how could the memory fade? Sidewalk café out of the way, the bandoneon played. September's magic now seems tragic, remembering promises you made. Love was near, now all that I hear is our separation serenade. My heart trembles when I assemble memories of those days. I was steady, but you weren't ready. Love was just a passing phase. Fleeting moments of contentment, what was the price that I paid? Love is now gone, but the song lingers on. Separation Serenade. Separation Serenade. Separation Serenade. Separation Serenade. Separation Serenade. It is a day like any other, and he's crying out in waves to pound the shore. My Cocobello's fresh every morning, and the more you taste, the more you long for more. He doesn't mind that he stays in the hands of strangers he's gonna go and meet.
All chasing dreams he will never understand, and no firmer than the sand beneath his feet. Mary Ann. Mary Ann. You catch a sight of Mary Ann. Like in a dream, she calls him over, and he floats in on the music in her words. His Cocobello fresh every morning, and all his newfound Mary Ann has heard. She doesn't mind that her days in the hands of strangers she's gonna go and meet. All chasing dreams she will never understand, and no firmer than the sand beneath her feet. Mary Ann. Mary Ann. Mary Ann. Oh, Mary Ann. Nobody knows he's my San Rox all these days, wandering 'round. Turn off my mind, no sad tomorrow. I know it's time to go. There's a place. There's a place. There's a place where I belong. Grey. The clouds may be rough. Get rough sometimes.
Each day I know it's time to go. There's a place where I belong. There's a place where I belong. There's a place where I belong. There's a place where I belong. There's a place where I belong.
Hello everyone. The meeting will resume very shortly. Please take your seats in the auditorium. Thank you. Hello again everyone. Please take your seats. The event will resume shortly.
[Foreign language]
Please welcome Head of the Corporate Bank and the Investment Bank, Fabrizio Campelli.
Hi everybody, I'm Fabrizio Campelli. I'm the Head of the Corporate Bank and the Investment Bank, and I will start with the Corporate Bank. This is the business that sits at the heart of our global house bank. Today we believe we are the best place to capture the opportunities in Germany. We have a wide global network and a distinctive set of cross-border capabilities, and yet we still have substantial value to unlock through greater scale and bank-wide synergies. With our solid foundations, we can go further, working with our clients to make us an even bigger engine of profitable growth. The Corporate Bank is the clear leader in Germany, Europe's largest economy, and the world's third largest exporter. We are one of the few truly global corporate banks, and we have an attractive business mix.
We offer platform and flow services across multiple client segments, from SMEs to multinational corporates and global institutions to governments. Geographic mix is also a strength, with over half of our revenues generated outside of Germany. As importantly, our five subsegments are divided into four sticky capital-efficient businesses, like business banking, cash management and payments, trust and security services, and one business, trade finance and lending, which, while more capital-intensive, is deeply strategic for our clients. This combination of deep domestic market access, global connectivity, and bank-wide client access is unique amongst peers and highly valued by our clients, as demonstrated by our competitive position in Euro clearing, Global Corporate Trust, across developed and emerging markets.
While the domestic market strengths of the Corporate Bank are easy to understand, sometimes that is something that is perhaps not as well appreciated, is the power of our global network and reach, both in our physical presence around the world, as well as our penetration of cross-border corridors. Today, Deutsche Bank is physically present in around 60 markets around the world and can reach over 140 markets through our correspondent banking network. We provide direct clearing to over 65 countries, giving us a competitive edge in global cash management. We are the top Euro clearer in the world and the top clearer of U.S. dollars amongst Eurozone banks. Our emerging markets credentials are also first-class.
We are the number one non-local provider of cash, trade, or security services across 18 Asia-Pacific and Middle Eastern markets, including a leading position in China, India, and Saudi Arabia, and we continue to gain ground across more emerging markets. Moving to cross-border capabilities, today we are a clear leader in both the German inbound and outbound corridors for trade finance and cash management globally. We execute the equivalent of EUR 250 trillion of cross-border payments across more than 130 currencies every year, and we support institutional client flows with in-depth local custody access to over 30 markets worldwide. As you heard from Christian, we have EUR 4 trillion of assets under custody.
As a result, more than a third of our large corporate and financial institution clients generate cross-border revenues with us, and all this gives us a deep understanding of international trade and payment flows, regional corridors, and the related client needs. With global connectivity being redefined, a corporate bank with these characteristics has a genuine competitive advantage, and as the only non-U.S. bank offering this broad mix of services around the world, you can see why we see ourselves as ideally positioned in today's markets. Under David Lynne's leadership, and before that, Stefan, the Corporate Bank has executed a profound transformation. In 2021, we earned EUR 5.2 billion in revenues.
The business was well positioned to benefit from rising interest rates, and between 2021 and 2024, revenues grew to EUR 7.5 billion on the back of considerably higher net interest income driven by those higher rates, but also a 4% CAGR of underlying growth triggered by actions on volumes, focus on fee income, and active repricing. In 2025, despite headwinds from lower interest rates and a few episodic client perimeter reductions, we expect revenues to be broadly flat compared to 2024, at around EUR 7.4 billion. Thanks to the actions we took, we're going to deliver 8% underlying growth this year, doubling the rate of the previous years and outperforming the market revenue pool by 7 percentage points.
The measures we took included increasing our client-facing bankers by approximately 15%, adding over 3,600 new large corporate and institutional clients, and enhancing our technology and platforms, which led to an increase in deposits, transaction volumes, and assets under custody. We achieved all this with far greater operational resilience than in the past. There is still substantial further uncaptured value in our Corporate Bank, and that upside is the focus of our strategy. Our ambition for 2028 is to cement our position as the European cross-border powerhouse. Our strategy is fully aligned with the three pillars that Christian laid out earlier: growing net interest income and fee income further on the back of our existing strengths, investing in our operating model, and deploying capital more efficiently.
Our growth drivers are focused on going deeper within client segments, where we already enjoy a strong relationship and wallet share, such as large corporate and institutions, and by continuing to invest in consolidating our leadership position in Germany. We will also invest in acquiring new clients across German business banking SMEs, European mid-caps, and in fast-growing segments such as fintechs. We will also collaborate even more closely with the rest of the bank to unlock further value for our clients. Our second lever will focus on investments in technology, keeping the Corporate Bank at the cutting edge of client solutions while continuously improving on costs and controls. Lastly, we'll continue to enhance our capital efficiency and discipline down to the individual client level.
Through these actions, we aim to deliver an 8% revenue CAGR through 2028, at a marginal cost-income ratio of less than 20%, and generate EUR 1 billion of SVA accretion. Let me now share the detail of how we will do all of this. A business as attractive and competitive as corporate and transaction banking requires a strategy that is really closely aligned to where we know we can win. This is why our growth agenda is focused around areas where we believe to have unique advantages, and that is our client footprint, our strengths in Germany, and adding new clients who value our network and product solutions. First, we will deepen product density with our existing multinational corporate clients by increasing the size of our sales and coverage teams.
We will also strengthen our institutional relationships by expanding the highly attractive trust and security services businesses and by growing our clearing penetration, especially for U.S. dollars. Second, as the only German bank with true global reach and an integrated investment bank, you've heard it, we are ideally positioned to leverage the opportunities from fiscal expansion. As global flows in and out of Germany develop, our aim is to act as the natural gateway to the German economy and to be the number one advisor on the fiscal expansion, especially in the infrastructure and defense sectors. Our assumptions on how impactful this may be are quite conservative, and also, as Christian said earlier, there may be additional upside.
This focus on Germany is also one of the reasons for our decisions to realign the Corporate Bank leadership to Germany, with Michael Dieterich, who joined us last summer, and a recently announced co-head, Ole Matthison, who will relocate from Singapore to Frankfurt next year. Thirdly, our growth strategy will focus on acquiring new clients. This will be achieved by broadening our channel access to SME clients, especially in Germany, rolling out our coverage model across Europe to expand our mid-cap clients footprint, and by further aligning our product and coverage teams to more European trade corridors and fast-growing client segments. Another growth lever will be to further unlock the power of the Global House Bank.
Across the Corporate Bank and Investment Bank today, we reach around 850,000 clients globally, 25,000 of which we jointly cover, accompanying them through their entire life cycle, from payments and currency hedging all the way to advisory. Over the past few years, we have significantly improved our cross-divisional capabilities by prioritizing connectivity and collaborating more closely with other divisions of the bank. The business we generate as a result has grown materially, and the improvements are evident across several metrics. In fact, while the total revenues across the Corporate Bank and Investment Bank are expected to grow at a combined CAGR of 6% between 2021 and 2025, revenues generated cross-divisionally will have grown at nearly twice this rate over the same period. Between now and 2028, we will be even more focused on delivering the untapped value of the Global House Bank.
For example, by rolling out a single client relationship management system, by further expanding joint coverage across the Corporate Bank and Investment Bank, and also by broadening joint product development and distribution initiatives with the private bank and DWS. Our success depends on scaling our operating model. There are three elements to delivering this: client experience, continuous innovation, and operating leverage. Our investment into client experience will increase satisfaction and fundamentally change our unit cost to serve. We are implementing fully digital processes and workflows to improve every client touchpoint, simplifying access, reducing operational risk, and allowing our staff to focus even more time on revenue generation. For example, we're building tools to accelerate onboarding and credit decisions with new SMEs and mid-caps in Germany. Moving to innovation, our ambition is to become a cloud-native data-centric platform, embedding artificial intelligence across the entire client value chain.
Enabled by our strategic and scalable technology platforms, we're now investing in expanding tokenization solutions. This is an area in which we have already become a clear thought leader. While we already increased our operating leverage, there is still a considerable opportunity for further cost reductions, and we will continue to simplify, removing a further 20% of legacy applications while continuously rolling out strategic platforms that will enable scale, resilience, and even further innovation. Also, continued focus on strengthening our control environment will ensure that future growth is delivered in a way which continues to be safe and sustainable. We're targeting a cumulative EUR 1.4 billion of technology cash spend by 2028 to continue this business transformation. This is 15% more than we spent over the previous three years and includes shifting a significant portion of our development to in-house talent.
We expect to see material improvement across several core operating metrics, and this spend is expected to deliver approximately EUR 1.1 billion of annual revenue growth, as well as run rate cost efficiencies of more than EUR 180 million by 2028, with further benefits expected in subsequent years. On the topic of continuous innovation, I wanted to provide some real-world examples of how we invest in cutting-edge solutions for clients across the various segments. In our corporate client franchise, we bank clients front to back, helping them from financing new plans, establishing their treasury processes, and even providing staff with retail bank accounts and pension solutions. Some of the largest corporates in the world, like Lufthansa and BMW, they choose our Corporate Bank for their treasury solutions or their strategic client engagement programs.
Many of our mid-cap and smaller businesses' clients too benefit from our efficient automated workflow solutions, and we continue to innovate, for example, by cutting their credit decision times from months to days through Agentic AI, or by providing integration solutions for treasuries to automate their workflows across multiple providers. We also deliver to the largest global custodians and non-bank financial institutions, with seamless treasury custody, fund administration, and risk management services partnering very closely with the Investment Bank, as you have also heard on the video earlier from clients such as Blackstone. We are expanding our capabilities here, investing in full-service and BFI hubs with specialized capabilities, but also by rolling out our digitally native cloud-based custody platform across our 30 domestic markets. This will significantly enhance clients' experience, and it will improve our and our clients' cost structure further.
For fintechs and digital platforms, we bank their entire life cycle, from founding to IPO and beyond. Services range from virtual account to safekeeping and custody, building on our number one position within the digital economy in Europe today. Over the next three years, we will develop both our distributed ledger product suite, as well as our integrated e-commerce acceptance and issuance capabilities to simplify our clients' procurement processes. Our partnership model enables us to co-innovate, partner up, and prepare for the future with our clients, and in so doing, really cementing those relationships over time. Over the past four years, the Corporate Bank has made progress in improving also its return on capital, but the division has an opportunity to further optimize substantially. Today, our capital-light businesses already operate with a high revenue-to-risk-weighted assets ratio.
Trade finance and lending is the primary capital consumer in the division, and it acts as the anchor for our broader corporate treasury services business. As we seek to continue to improve our return on capital and grow client shareholder value add, optimizing the trade finance and lending business remains a key priority. Our first step will be to use client-level SVA analytics to efficiently allocate capital, enhance collateral management and funding, and, where necessary, exit non-SVA accretive relationships. Next, we will reallocate more than 15% of the Corporate Bank's risk-weighted assets towards a more SVA accretive portfolio, including those that are linked to the German fiscal expansion opportunity. We will also refocus our trade finance business more towards structuring, with an eye on fees and increased distribution benefits, especially in project finance and structured export credit agency finance.
Lastly, we will keep improving our balance sheet velocity, and here we will lean on our distribution-led structuring and broader loan syndication, leveraging also our Investment Bank's world-class SRT franchise. We are demonstrating clear progress with our revenue-to-risk-weighted assets ratio, rising from 9% in 2021 to 12% by the end of 2025, and that reflects both stronger capital efficiency and portfolio quality. These levers will enable us to go further, and it will propel our return on tangible equity from today's 15% to an ambition of over 20%, delivering the EUR 1 billion SVA accretion by 2028, which I referred to earlier. Let me conclude on the Corporate Bank by saying we have fundamentally transformed this business, unlocking operational leverage and positioning us for future growth.
We will build on our unique global network capabilities, and we will provide our clients with an integrated and modernized offering, focusing on where we know we can win. We are ideally positioned to capture the Germany and European fiscal expansion opportunity. We're using technology to lead our transformation, and we'll be disciplined with capital allocation. For 2028, our ambitions for the Corporate Bank are clear: an 8% revenue compounded annual growth rate, a less than 55% cost-income ratio, and over 20% return on tangible equity. If we remain focused on the needs of our clients and ensure they benefit from our full range of solutions, we have absolute confidence that we can achieve all this and more. Thank you. Last but not least, I will now introduce the Investment Bank. This is the largest of Deutsche Bank's businesses and a cornerstone of our Global House Bank strategy.
It is a formidable business. It has been repositioned since 2021, and it is a true fully global European investment bank powerhouse. The Investment Bank comprises two aligned businesses, which have delivered roughly one and a half percentage points of return on tangible equity increase since 2021. Our origination and advisory business has been repositioned and will be renamed Investment Banking and Capital Markets, or IBCM, to reflect more closely the segments it will focus on. Alongside it, we have our world-class FICC franchise, which has been delivering efficient, diversified growth with material market share gains since 2019. This is made of FICC markets, which includes the traditional sales and trading businesses across developed and emerging markets, and FICC financing, which provides clients with asset-backed financing and risk solutions across all credit asset classes.
These businesses together are the number one investment bank in Germany, the number one European FICC franchise in the world, and the best FX bank in the world according to Euromoney. It has grown significantly since 2021 and now contributes over a third of group revenues. Over the past few years, the Investment Bank has been transformed. In 2021, the business delivered EUR 9.6 billion of revenues, and in 2025, we're forecasted to close at EUR 11.5 billion. From 2021 to 2022, IBCM saw revenues fall as the FIPO declined 34% from its record level in 2021. Since 2022, IBCM has focused on building its position with the existing institutional client franchise and the debt platform, while deepening corporate relationships and strengthening our advisory business. We did this by concentrating on our strengths.
A great example is where we've seen a 10 percentage point increase in cross-border M&A as a proportion of our overall activity. We have also invested in improving our position in Europe beyond Germany, for example, by hiring advisory and coverage teams in Italy, the Netherlands, and across industry sectors, as well as through the acquisition of Numis, right here in the U.K. Across the key countries I'm showing there, the investments have led to a 1 percentage point growth in market share since the end of 2022, something that we will continue to develop as the investments we have already made and the bankers we have already hired will further establish themselves. As a result, our revenue growth has outperformed the FIPO over this period by 26 percentage points, and we believe there is still a lot of value that we can unlock.
For FICC, we have seen a truly outstanding performance. Going back to 2020, our market share growth has been over 2 percentage points, and since 2021, there has been a focus on steady diversification with the development of the global macro businesses, leading to a growth in market share here of over 1.5 percentage points. We have a best-in-class client franchise with products spanning from flow credit through to structured credit. Our workflow solutions help our clients achieve more accurate and better-priced FX execution, as well as a more consistent, sticky, repeatable revenue base for us. We operate across the entirety of Deutsche Bank, from a dedicated and increasingly productive FICC coverage group within the Corporate Bank to targeted initiatives with the Private Bank. Importantly, this has been achieved with very, very disciplined cost, risk, and capital deployment.
Our vision for the Investment Bank is to continue on the path that we have set to date. Our strategy here is, again, fully aligned with the three levers we laid out before: grow in areas of competitive advantage, scale our operating model in an innovative and efficient way, and continue to apply strict capital discipline. For IBCM, this means focusing on our core strengths: Europe, cross-border advisory to build M&A and ECM, while maintaining our world-class debt franchise. In FICC, it will be by enhancing the already outstanding business we have, by leveraging existing platforms and adjacencies, and deepening our position in the U.S. Importantly, additional growth here too will come from further unlocking the full potential of the Global House Bank with our divisions of the bank.
We will also direct investments into our operating model, looking at technology and innovation to support our clients, but also continuous front-to-back automation and process redesign to capture further cost efficiencies. Here too, relentless focus on the control environment will also ensure that future growth remains sustainable. A feature of this business has been its disciplined use of capital, and we will continue to concentrate on the marginal return at which we deploy new resources by reallocating capital to high-yielding parts of the portfolio, leveraging our leading capabilities and investor network to redistribute risk and increase balance sheet velocity, and here too, focusing on SVA at a client level. We will keep improving with new analytical tools and strict discipline on how our capital is deployed all the way down with every client relationship.
Through these measures, we intend to achieve a 5% revenue kicker between 2025 and 2028 with broadly linear growth, a marginal cost income ratio of under 30%, and like for the Corporate Bank, generate approximately EUR 1 billion of incremental shareholder value add over this period. Focusing on growth, I will start with IBCM. We want to develop this business into the leading European investment banking business globally. Since 2022, we have built momentum into a growing FIPO via the investments that I described, and our strategy is to continue exactly in this direction. Under the leadership of Alison Harding Jones, we are developing a business that will be more relevant and more balanced with growth across all businesses, but especially in M&A and ECM. By 2028, we expect these two product areas to contribute as much revenue as our debt capital market franchise.
We expect the FIPO to grow, and we intend to increase our market share on top by concentrating on three levers, again, focusing on those areas where we have a competitive advantage. First, delivering to clients our truly global capabilities. Outside of the U.S., our ambition is to have a leading franchise in all of our core markets. In Germany, we will build on our clear leadership. We are best placed to advise clients in our home market, where we have privileged access to the significant inbound and outbound capital flows expected from the fiscal expansion. In other markets too, across the U.K., EMEA, and Asia-Pacific, we will target a strong position, a top five position, building on the investments I highlighted earlier. The U.S. is a core part of our offering and the largest FIPO, but it is also a very well-banked market.
We will not aim to compete across the board, but instead focus on investments into sectors which are critical for our existing clients and drive more cross-border activity. Next, we will sharpen our sector strategy by building strength in four core global areas. First is industrials. Industrials and infrastructure are in our DNA. Here we are already a leading investment bank, especially in defense, infrastructure, and aerospace in Europe. Then financial services. Here we will develop our strong position as the go-to advisor across several subsectors. Then healthcare. We will further align with our large global pharma clients and invest in biotech and health services. Fourth, technology. This sector is critical to every other sector, and we will focus here on core verticals.
To support our ECM business, we will also selectively expand our equity distribution and leading research capabilities, building on our strength in Germany, in core EMEA markets, as well as our presence in the U.S. and increasingly in Hong Kong. I want to be clear, we're doing this to round out our existing equity distribution capabilities, which have already been bolstered with the acquisition of Numis, but this is not a move to re-enter equities. This will enable us to more effectively promote our excellent research products, as well as further strengthening our ECM and the wider investment banking franchise. The third lever will be to deepen existing corporate client relationships around advisory while covering a larger portion of the FIPO to acquire new clients. We aim to grow our coverage of the FIPO to around 40%. That's a 5 percentage point rise from where we are today.
As a result of that, we aim for a more than 3% market share by 2028 for the overall business, with roughly 1.5 percentage point of M&A and ECM market share growth, something that we see as conservative but still quite consequential for this business. We will do so by hiring over 60 senior bankers across all the regions and the target sectors that I just outlined. In FICC, the strategy is one of continuity, building on the journey that Ram Nayak and his team have navigated so successfully in making the franchise what it is today, a global powerhouse with a client-led, diversified, disciplined, and truly client-psycho-resilient business. From a EUR 7 billion franchise more concentrated in credit trading and financing in 2021, FICC is expected to close 2025 at EUR 9.5 billion in revenue, well-diversified regionally and across all businesses.
Our value at risk has declined 30% since 2021. Yet, thanks to relentless focus on risk management, our revenue return per unit of value at risk by the end of 2025 will be nearly double. Capital efficiency has been key, with revenues growing seven times faster than risk-weighted assets since 2021, leading to a return on tangible equity, which is 5 percentage points higher than back then. In FICC, we aim to deliver a 3% revenue kicker by 2028 by targeting investments in selective areas. We will increase the numbers of products we deliver to clients and have a dynamic and targeted coverage structure in place to achieve exactly that. New products and continuous investment in technology will help make this happen. In Europe, this will make us the out-and-out number one.
In Asia-Pacific, we want to remain a number three bank with our onshore network continuing to operate as a clear differentiator versus other international peers. We see the largest growth opportunities in the Americas, where we will target closing the gap to a number five position by investing in areas such as U.S. flow credit, securitized products, and in LATAM. Financing is a foundation of our business, and it will remain a key point of focus. We expect to achieve a high marginal return on revenues on the capital we deploy across the business, offsetting spread compression across the industry and helping counter the impact of risk-weighted assets inflation expected from regulation.
Our intention is to improve our product ranking in the U.S. and then, from a franchise perspective, increase our Corporate Bank originated client revenues by around 15% by 2028 and raise our institutional client wallet share by another percentage point over the same period. We have done this in Europe since 2021, and now we will invest to achieve the same in the Americas by 2028. This will cement our position as one of the leading FICC franchises worldwide and the only truly global alternative to U.S. banks in this business. In the Investment Bank too, the opportunity to leverage the power of the Global House Bank model is substantial. Closer ties with the Investment Bank will provide great upside to the Corporate Bank, but the reverse is also true.
The depth of our Corporate Bank relationships and the coverage across the entire value chain will allow us to expand our advisory, risk management, trading, and financing revenues in the Investment Bank as well. Furthermore, joint development can lead to further growth of successful workflow products such as FX for Cash. These opportunities span well beyond the Corporate Bank, as you have heard from Claudio and Stefan before me. There are many opportunities for an even stronger partnership between all of our businesses. For example, our close proximity with the Private Bank will enable further growth both from deeper access to entrepreneurs, but also for distribution and issuance of structured notes where volumes have more than doubled since 2021. You heard Claudio make a reference to it.
As our direct lending cooperation agreement proves, collaboration between the Investment Bank and DWS enables opportunities across asset origination, distribution, and joint product development. A key point of difference is how we use technology to scale our operating model. Technology and AI are reshaping our product across e-trading with enhanced capabilities in algo trading and API connectivity, but also in new and emerging product areas. We are seeking to use artificial intelligence to benefit our client directly, with enhanced data analytics and the development of specific client insights helping us identify new opportunities with them and for them. AI will also enable banker and trade workflow automation, creating the efficiency required also to dedicate more time to clients. Efficiency will remain a core priority. As you can see, we are seeking to maintain a very competitive cost income ratio.
We can do more by simplifying our architecture and through front-to-back processor engineering, reducing costs and materially improving our clients' experience. Decommissioning legacy applications will simplify and modernize our tech environment further. Combined with a higher reliance on cloud solutions, we will develop new software on cloud-native architecture from the outset, which will lower cost of production. As I outlined for the Corporate Bank, ensuring that we do this while continuously embedding controls will give us confidence that we can continue to scale this business at pace, safely and sustainably. Overall, we intend to spend roughly EUR 1 billion in cash terms on technology, evenly split over the years, with 50% of this spend driving revenue growth, 25% enabling efficiency, and the remaining 25% ensuring that we remain compliant with our regulatory obligation and enhancing controls.
We aim to improve against a clear set of performance indicators as shown, but also to enable an annual revenue growth of over EUR 1 billion and over EUR 120 million of cost efficiencies by 2028, with further savings to be expected beyond this. In the Investment Bank, just for the Corporate Bank, we have developed innovative platforms and solutions which give us an edge. This includes Autobahn, our flagship platform providing clients with direct electronic access to FX markets for over 30 years. Haus FX, it is our proprietary FX automation service, which is fully integrated in clients' workflows. And DB Syndicate, which provides debt-issuing clients with improved transaction efficiency while reducing risk and execution time frames. These are prime examples of how our Investment Bank delivers embedded, scalable, and innovative solutions that integrate seamlessly into the work of our clients. The third lever, Capital.
What has made this franchise so successful has been a resolute focus on capital discipline. Our risk-weighted assets are expected to grow to 28, driven by business growth and regulatory inflation. However, these numbers are net of considerable optimization that we will continue to take place, resulting in us being able to maintain approximately the same level of revenue per unit of risk-weighted assets across the entire business over the next three years. We will plan to do so by delivering a marginal revenue-to-risk-weighted assets ratio of 13% on the new business that we generate until 2028. This will be achieved through a series of targeted measures, including reallocating capital both to and within FIC financing. As I highlighted earlier, growing our capital-light businesses such as M&A and ECM will continue to improve the efficiency of the overall portfolio.
We will enhance shareholder value-add in every aspect of the business with dedicated analytical tools, giving us much deeper client-level insight. This will help us make better decisions on new business for every product and every relationship. It will also make us more deliberate about how we allocate resources to our relationship lending book. Finally, we will continue leveraging our leading capabilities to distribute risk in our investor network. This will enable us to continue to improve the return on tangible equity of our Investment Bank to an ambition of greater than 14% by 2028 and generate incremental shareholder value-add of approximately EUR 1 billion over that period. In conclusion, we expect Investment Bank to contribute around 5% revenue kicker, operate at a lower than 55% cost income ratio, and deliver a return on tangible equity of over 14% by 2028.
This is a truly global, well-diversified, and cycle-resilient business, and it is the alternative to U.S. investment banks. The IBCM franchise has been repositioned, and it will build on its corporate client relationships and capital-light strategic advisory capability without losing the heritage of our debt capital markets franchises. Selective investments in FICC will make our world-class franchise even better, with an undisputed number one position in a top five in Europe and a top five position in the Americas. We will continue to free up resources to invest in innovation, to drive competitiveness, efficiency, and better control. Continued disciplined capital deployment and significant shareholder value-add improvements will underpin the great return of these franchises. This concludes my overview of the Corporate Bank and Investment Bank.
These are two distinct but deeply aligned divisions, truly committed to a common set of clients and truly demonstrating our Global House Bank in action. Thank you very much, and with that, I will hand over to Raja.
Howdy, and good afternoon. I'm Raja Akram, and I'm thrilled to be here presenting as the next Chief Financial Officer of Deutsche Bank. When I initially evaluated the opportunity to join Deutsche Bank, I did my homework, as you would expect. I spent several years at Morgan Stanley, another bank that had successfully transformed itself to be a world-leading institution. I've been really lucky to see firsthand what it takes to be a growth-oriented, shareholder value-creating organization. My initial outside-in assessment of Deutsche Bank was that this was a bank that had successfully stabilized itself but was still transforming itself under the leadership of Christian and James.
I have to say I was very pleased with what I found. Deutsche Bank is now a bank that is now ready to be bold and be the European champion. The extent of our capabilities here and the upside potential exceeded my expectations. We are strategically placed to be the global house bank. From my own perspective, there is no reason why we should not be punching above our weight in the years to come based on the solid foundation that we have laid. I have spent the last several weeks stress-testing all the assumptions and the scenarios that I will be presenting to you today. Before I lay out the path ahead, I just wanted to share some thoughts with you as I come new into this organization. These thoughts are my guiding principles, and I'll have a relentless focus on these. What are they?
Number one, we're going to have complete and clear business position discipline. We'll only invest in those businesses and markets where we can win and can be amongst the leaders. Number two, they must fit our strategic profile. Number three, we must have strategic patience. We're setting long-term objectives. We must stick to them with conviction and measure our progress with rigor. Lastly, we must be ready to take advantage of artificial intelligence, the German fiscal stimulus, the changing demographic of our workforce, and the need for retirement savings. It is with these principles that we'll chart a path ahead. Now, I'm actually super excited to work with this entire management team to deliver on each one of these goals, and I look forward to sharing the progress with you all on a regular basis.
From my perspective, what this team has accomplished over the last few years should give us all a lot of confidence in our ability to deliver. This is the way we think about our path forward. In the near term, we intend to accelerate growth by focusing on those businesses with high earnings potential and the ability to capture market share. Now is the absolute right time to prudently invest if you want to harness the full power of our franchise and to take advantage of the macro trends. We have aligned all our investment plans to our strategy and developed success criteria and milestones. In the medium term, we will be driving towards higher return on tangible equity and earnings, as well as an improved balance sheet productivity. All of this will be done on the back of the positioning we have and the investments we're making.
While we're investing with extreme discipline, we will continue our utmost focus on our resource consumption, both expenses and capital. In the long term, our ambition is to become the undisputed European champion with market-leading returns. Christian has set out three levers to our strategy: focused growth, strict capital discipline, and a scalable operating model. Let me now lay out our financial targets relating to these with absolute clarity and conviction. Our baseline target is a greater than 13% return on tangible equity by 2028. This will be accompanied by our ambition to deliver a revenue kicker above 5%, as well as a greater than 100 basis points improvement in revenues over RWA. We target a gradual and consistent reduction in the cost income ratio, reaching below 60% in 2028.
Now, it goes without saying that all of this will be done while maintaining complete financial resilience around capital and liquidity. Our CET1 operating level of 13.5%-14% remains unchanged. You have already heard from all four of our divisions about how they will unlock shareholder value in line with the guiding principles I laid out at the beginning. In fact, the shareholder value we aim to create over the next three years is expected to be around EUR 1 billion each from the Private Bank, Corporate Bank, and the Investment Bank, with meaningful contribution from asset management. I want to reiterate another important data point. By 2028, we expect more than 70% of our tangible shareholders' equity to be allocated to business units exceeding our internal hurdle rate.
My three partners, Claudio, Stefan, and Fabrizio, have set out detailed plans, and the progress towards these objectives will be tracked via a set of performance indicators. As you can see on the right-hand side, all divisions are aiming for double-digit returns on tangible equity. This will support our greater than 13% return on tangible equity target at a group level, despite excess capital we hold at Corp and Other. Let me now turn to group financials. We are aiming for two things: one, growth; and two, consistent improvement in financial performance over the medium term. The focused growth area, as Christian introduced, should drive continued momentum. Combining this with our cost discipline, we aim to deliver significant positive operating leverage.
As a result, profitability should improve, and we intend to deliver a higher return on tangible equity and unlock shareholder value every year, not just at the end of 2028. I want you all to take away three key messages from this page. First, and on the left, you can see how we expect our focused growth areas to make an outsized contribution to our kicker of around 8%. This should deliver EUR 5 billion of incremental revenues by 2028, taking overall revenues from EUR 32 billion to around EUR 37 billion over the three-year period. Now, as a leading bank in Germany, around EUR 2 billion of this growth should be generated via our home market, with around half of this stemming from the German fiscal stimulus. Second, divisional growth should also be balanced.
As you can see in the pie chart in the center, with around 70% from the Private Bank, Corporate Bank, and Asset Management. The remaining 30% from the Investment Bank includes our powerhouse FICC franchise, which will be a continuing strength for us. Third, as you can see from the smaller pie charts on the right-hand side, we expect that approximately EUR 2.6 billion will stem from net commission and fee income. We also expect around EUR 2.3 billion from net interest income across key banking book segments and other funding. The remaining income includes revenue from our trading activities, which is expected to be broadly stable. Now, let me turn to NII, which is a key component of our conviction on future revenue growth. Our structural hedge will continue to provide a long-term tailwind to our interest income.
As we replace the hedges entered into at low historical rates, we expect around EUR 1.2 billion of NII growth between 2025 and 2028. We anticipate further interest income growth from the expansion in our balance sheet. We expect a majority of this NII growth to come from deposits as we take full advantage of our market-leading franchise in Germany. Loan growth should also contribute a meaningful share, but we make some allowance for margin compression, especially in FICC financing. In the Private Bank, you should expect to see some shifts from retail lending in personal banking towards wealth management. In the Corporate Bank, we are very well positioned to benefit from the fiscal expansion in Germany and expect increased lending opportunities, particularly in infrastructure and defense. Now, let's focus on our cost trajectory over the next three years.
Our ultimate goal is to create a scalable operating model and deliver an operating leverage of around 6% in 2028. The investments we have talked about will provide the forward-looking capabilities needed for accelerated revenue growth and the structural cost takeout. The operating efficiency was of at least EUR 2 billion should offset the incremental investments of EUR 1.5 billion and some of the volume-related and inflation costs. These efficiencies will be an output of both new investments and those we have made in the prior years. We also intend to execute additional targeted efficiency programs where we believe we see a path to being best in class. As a result, we aim to deliver a material improvement in cost income ratio targeting below 60% in 2028. Let me add one more important detail, which will form part of our journey.
We expect approximately 20% of our global workforce to reach their retirement age over the next 10 years, ramping up from about 1% per year in the coming years to more than 2% in the early years of the next decade. Of this, nearly three-quarters are in Germany and are naturally more senior and more highly compensated. While we need to be mindful of the skills and the experience leaving the bank, this also represents an enormous opportunity to deploy technology and AI and have a new workforce strategy. This should achieve a meaningful reduction in costs over time without the need for expensive restructuring. Let me now zoom into 2026 before I move into divisional details.
What I want you to take away from this slide is that the targeted and incremental investments we are making over the next 12 months should unlock growth and efficiencies as early as next year. These include both technology and AI, which are future-proofing the bank, and business-led investments. We are doing this without compromising our overall cost income efficiency ratio, which we expect to remain below 65%. Excluding business-led investments, our year-on-year expense base should only increase by 1%. You have heard from the various businesses about their plans, and this page brings it all together. On the left, you can see the breakdown of the EUR 1.5 billion of incremental investments by division, with 70% of non-tech investments geared towards the Private and the Corporate Bank. We will also make targeted investments in fixed income and selected sectors in investment banking, as Fabrizio laid out earlier.
We are incrementally investing starting in 2026, and we aim to offset this with EUR 2 billion of operational efficiencies. These come from front-to-back optimization, process re-engineering, and an improved IT infrastructure. As you can also see, a large proportion is geared at initiatives across our infrastructure functions. On the right-hand side, the potential revenue benefit in 2028 over 2025 is greater than EUR 3 billion. This entire management team has high conviction in this plan that we need to invest now to take advantage of the market opportunities we see. We have talked a lot about shareholder value add today. One key aspect of this is our capital consumption. Let's discuss resource deployment. Our balance sheet management will focus on redeploying financial resources from areas that do not fit our strategic agenda and instead grow capital-accretive businesses.
We intend to complement these efforts with the additional asset distribution, synthetic, and cash sales. Now, as you know, discussions are ongoing on changing the FRTB implementation timeline to ensure European banks can compete on a level playing field. For now, we continue to plan for an impact of EUR 7 billion of RWA in 2027, or around 25 basis points in CET1 ratio terms. Let's not forget that an optimal capital usage also includes the supply side, where capital deductions will be carefully managed. We expect our CET1 ratio to remain strong throughout, providing the basis for increasing shareholder distributions, and we continue to expect no impact from the CRR output floor until 2030. Our plans are intended to at least boost and improve capital and balance sheet productivity. First, we aim to redirect RWA deployment to SVA-accretive areas, including capital release from potentially inorganic measures.
Second, we aim to translate the higher return on aspiration into higher return on equity hurdle rates for products across divisions. Third, we plan to expand our originate-to-distribute capabilities beyond current platforms. We expect at least 25% of additional capital relief from risk transfers and securitization programs for assets which are capital-intensive for banks but very attractive for investors. Linking it back to our divisional ambitions and our strategy, the focused growth areas are expected to improve by 400 basis points on revenues over RWA, significantly contributing to the expected 100 basis points uplift at the group level. As Christian has said, the actions we're taking in our new plan mean that you can expect a materially improved franchise.
A substantial majority of our business units should exceed internal hurdle rates by 2028, with more than 70% of our equity allocated to shareholder value-creating activities, up from 40% in 2025. The charts show the transitions from below to above hurdle rates from 2025 to 2028 for the various businesses. We believe that over time, this proportion will increase. This will support our path to our return on tangible equity target of 13% at a group level by 2028. Maintaining financial discipline is another theme you have heard about today. Let me be crystal clear. Maintaining a strong capital position, strong liquidity profile, and a robust balance sheet is completely non-negotiable. The past has shown these provide our clients and broader stakeholders with comfort and confidence in engaging with us.
As far as provision for credit losses are concerned, the improving German macroeconomic backdrop, normalized CRE-related losses, along with our portfolio, supports a lower CLP run rate of 30 basis points through 2028. Robust and targeted loan growth will be supported by absolute underwriting discipline, and we want a strong, diversified loan book. We aim to continue to protect ourselves from the downside, having built up hedges in the past, and with plans to continue to do so. Let me now turn to our principles of capital deployment. We will cautiously monitor all our capital and liquidity buffers to withstand adverse macroeconomic developments in a world where uncertainty has become the norm rather than the exception. With this strong foundation, we want to carefully balance and increase shareholder distribution, both in dividends and share buybacks.
Only where we have high conviction and a clear opportunity, we will invest organically in targeted businesses with strong market positions and scalable and predictable earnings potential. If we do decide to pursue inorganic opportunities, it will only be done if they make sense strategically, financially, and culturally. Our capital deployment plans have dual objectives: safety and soundness while maximizing shareholder returns. Now to my favorite slide. With the renewed confidence we have in our plans, we intend to increase our payout ratio, raising it significantly from 50% of net income to shareholders to 60% in 2026. Also, we want to deliver modest but continuous growth in dividends per share, with buybacks achieving the balance of distributions. In aggregate, this means that investors should see a 10% increase and a more predictable stream of ordinary distributions earlier.
This positions Deutsche Bank amongst best in class in peers in Europe. When the CET1 ratio is sustainably above 14%, in line with the capital deployment framework I just laid out, we aim to deliver either additional shareholder distributions or deploy excess capital to support value-accretive growth opportunities. Ultimately, our earnings and distribution plan should also continuously grow tangible book value per share, and we expect a double-digit % growth by the end of 2028. Before I move to our targets, I wanted to reiterate some points which Christian made about certain trends that are not entirely within our control but are beneficial to us. It was a deliberate choice not to incorporate these in our base plans because we want to deliver our targets regardless of the eventual outcomes here.
First, the pace and the scale of German fiscal stimulus and the structural reforms where accelerated loan growth in defense and infrastructure would particularly benefit us. I could foresee our revenue growth rate being in excess of 6% if that happens. Second, if you can learn anything from history, it is that technology grows exponentially. The benefits of tech and AI could well exceed what we have modeled, having a direct impact on the cost base and the EUR 2 billion of savings we are targeting. Third, the Savings and Investment Union offers immense potential to ease capital flows and capital rotation. We could therefore see higher fee income. Finally, we're already seeing European regulators and politicians in Germany acknowledging the need for reforms to spur growth and level the playing field with the U.S. peers.
For example, recalibrated capital buffers or administrative requirements could improve capital efficiency. However, when comparing us to U.S. peers, one should also consider other regulatory differences, such as the capital treatment of software. Let me add one more point from my heart and experience that is actually not on any of these pages. For many years, this management team's attention has been on resolving legacy items and foundational capabilities, which also impacted where they directed investment spend in the past. Now, we find ourselves with an opportunity to have a full focus on growth and competitiveness while staying resilient. Based on my prior experience, this in itself is a massive tailwind. We have the conviction to target a greater than 13% return without the benefit of any of these developments, but we are ready to capitalize on all of them.
Let me conclude with the two clear financial targets we have set. One, a more than 13% return on tangible equity, and second, a cost income ratio of below 60%. At the same time, we are steadfast in our capital objectives, maintaining a strong operating CET1 ratio of 13.5%-14% and delivering attractive shareholder returns with an increased payout of 60%. We are confident in these targets and objectives because of the strong and stable platform we have built over the last few years. The divisions have shown how they intend to build on that at scale with greater efficiencies and an absolute focus on those areas where we can best add value. All of this adds up to a very attractive plan for the future.
It is an achievable plan and one with immense discipline at its core, but it is also a plan with potential for considerable upside. The foundational work has been done. With a plan for focused growth, strict capital discipline, and a scalable operating model, we are well positioned to take advantage of the macroeconomic backdrop and the AI revolution. On a personal level, I'm very excited to become part of this exceptional team, and I want to thank my partner, James, for such a smooth transition. This is our collective path. Together, we plan to deliver lasting success for Deutsche Bank's clients and shareholders. Thank you, and we look forward to starting the Q&A shortly.
Drinking today, he's drinking, drinking. Taco Babe, wearing charcoal gray, drifting away. He's drifting, he's drifting. It's been hard work, it's been hard work, such a troublesome way.
Been living harder, living harder, forever and a day. They won't hear them, yeah, or what they have to say. He said so long, long, long, long. There'll be no last call for this absentee. Save your comfort now, Salvation Tennessee. It's coming around a quarter to three. He said so long, long, long, long, long, long, long, long, lo ng, long, the Taco Babe.
We will now start the Q&A session. We will take questions both from the room and virtually. If you'd like to ask questions in the room, please press the button with the arrow pointing towards you on your armrest. It will turn solid blue to indicate that you are in the question queue. It will then flash blue when you are next in line. When the button turns green, your microphone will be live, and you may ask your question.
Please remain seated, otherwise the mic may struggle to pick up sound, and please introduce yourself by name and organization when it's your turn. One quick tip: watch your elbows. It's easy to accidentally press those buttons for either yourself or your neighbor, so only press it if you really mean it and if you'd like to ask a question. If you'd like to leave the queue, then press the button again, and it will turn red. Finally, for those participating via the investor stream, please raise your hand if you would like to ask a question. We will then call your name once we begin to take questions virtually. We will start with questions in the room and then follow virtually. To make sure we get through everyone's questions in the time we have, we would ask you to limit yourself to just two questions.
Any follow-ups can be addressed through investor relations and the management team after the event. Just in case, instructions on how to ask questions in the room will remain shown on screen behind me. With that, let me invite our speakers back on stage, and let's get started. I think we've got our first question from roughly the fourth row. Your mic should be green if you're live.
Okay, Chris Hallam from Goldman Sachs, thank you for taking my questions. First and foremost, I guess as a team, you've got to this target of greater than 13% for 2028. Perhaps you could just run through some of the puts and takes, some of the challenges and opportunities you see embedded within that target, and the scope for outperformance, if indeed there is some.
I guess sort of what's the bull bear debate been behind the scenes for the past few months in getting to that above 13% target? And then secondly, on costs in 2026, it looks as though the plan obviously envisages an initial step up to maybe just above EUR 21 billion next year. Why was it the right decision to sort of front-load the costs? Why is 2026 the right time to invest in OpEx?
Thank you, Chris. Let me start with the first question, then Raja, potentially you take question number two on the cost side. Look, first of all, I have to say that everything what we have planned now going forward for the next three years is really based on the foundation which we have built over the last five years.
More and more, since we actually determined that the Global Hausbank is the right strategy for us, we have felt year by year with the client feedback that this is exactly what our clients want. In particular, in the times where we are right now with this geopolitical environment, also actually the franchise feedback from outside Europe to have a European alternative being a global banking partner has confirmed to us this is the right strategy. Therefore, it was all about in the last three or four months that we started to look at the external environment, growth risks, and then we said, where is actually our opportunity to further grow or where we are not yet in a leading market position that we can get into this leading market position? That we have done business by business.
Now, I can also tell you, Chris, that for the first time, given that we have been in a completely different situation three years ago and in particular five years ago or six years ago, we have now a plan where I would say it's not only that this is a plan which is fully bottom-up validated, but where we said, look, we even believe that there is more to get. Given where this world is and given that we only wanted to plan that where we feel we have that in our hands and we have actually measures which already have been taken either by us or by the external environment, which is put into the plan.
Therefore, I feel that also compared to the past, we have a plan which is actually, whether you talk revenues, whether you talk costs, and also actually capital deployment, is a prudent one. That is something where I have to say, it's where I can now with all confidence say, Chris, we are now really in the position to play offense. We can really focus on that what is needed and where people want us. That is on client growth, that is on client meetings. At the end of the day, this will come out for the shareholders. I have to say, compared to everything I've seen over the last seven years since I've taken over as CEO at Deutsche Bank, this is a plan where I think, yes, of course, we want to grow and we have increases, but overall very prudent.
I can see the one or the other potential where we will outperform.
Thanks, Christian. Chris, I think you would appreciate that I actually had the exact same question as I was looking at the plan myself coming from the outside. Where are the puts and takes? Where's the bull? What's the base? What would I do? I'll tell you what I found was given the strong foundation and the opportunity, I think if you go to my third principle, which was that we will be ready to take advantage of the upside and the macro environment that we are facing, whether it's investments in AI, it's the upcoming German stimulus, it's the change in the German savings environment or workforce. From my perspective, once you're ready and your organization is ready culturally as well as from the previous decisions, you want to execute.
We do not want to be an organization that continues to play defense and let other people take the lead even further. If you take Christian's opening slide from defense to offense, I think we're starting in 2026. It's a three-year investment. By the way, this is an incremental investment because we obviously have investments in our baseline. We've been very, very selective. The other criteria was a lot of these investments are paying off in a year. That made our business case a lot more simple. One, I'm getting $2 billion in return for investing $1.6 billion over three years. Two, the upside is coming from both revenues and expenses. Three, we're getting ready for potentially the upside scenario. If we do not make these investments, we potentially lose out on the upside scenario.
Thank you. Next question is to my left at the top.
Hi, good afternoon. Tarik El Mejjad from Bank of America. Staying on the thematic of offense versus defense. On the revenue side, clearly you are betting on momentum, continued momentum on deposit growth and also on the FIC business. On the FIC first, it's unaffordable to see it to grow the business with volatility potentially coming down a bit. I'm interested to hear with you on this. On the deposits, you've been delivering similar kind of magnitude, but this is based on quite a cautious environment from corporates and households. If you expect that to grow, would that just go to lending growth and then all in all is same targets or you have to rethink a bit your targets?
Second question on capital, discipline, RWA growth, 2.5% CAGR earnings growth, quite healthy. Does that mean you will be overshooting your 14% CET1 quite rapidly? I mean, should we be aware of any headwinds coming in terms of capital? And Raja, you'll get the question from all of us every quarter. You are above 14. Should we expect more distribution and what shape or form? Thank you.
Why do not Fabrizio start on FIC, then on the deposit side, Claudio, and then capital, James and Raja, please.
Thank you. I think the effectiveness of the FIC plan we laid out rests on one aspect, which I tried to highlight in our presentation, and that is diversification. We have a very diversified franchise, which is actually no longer as reliant as it used to be on volatility to succeed. I spoke about product diversification.
There was a chart in which I broke down how the product composition of FIC is now much more diversified than it used to be. It is geographical diversification. It is segment diversification. One aspect that is not properly coming across yet clearly enough is the product, the underlying type of revenue diversification we have. Financing is a business that makes money on NIM, carry, so very much non-volatility dependent. Workflow solutions, which I highlighted multiple times, FX for cash and so on, are generating FX volumes and revenues on the back of corporate client activity, an asset manager looking to hedge, same for rates. The investments we are making are actually going deeper into gaining market share in a market that even if we were to have a decline in volatility by virtue of gaining more market share, it gives us confidence on the growth of rates we have outlined.
Maybe on deposits, over the last few years, we did not put much emphasis on it. We have increased the emphasis this year together with James and Raja. We laid out a long-term approach to the deposit raising. We tested it in the market this year. We tested it specifically when competitors were coming into the market with aggressive rates to make sure that we had a good sense that the market for them was there before putting so much emphasis on them going forward. The results were beyond our expectations. Also, as I was saying, we are collecting so much of those deposits from new clients on a digital basis. It has also a multiplier effect in other areas of revenue. We remain very confident.
Let me take the question on capital. As I mentioned in my prepared remarks, it is our goal to operate between 13.5%-14%. That is our operating range. Now, with the strong organic earnings generation that we just laid out, we are going to generate capital that potentially will get us in excess of that in the cycle. Depending on the bull scenario, that may actually happen sooner than later. It is our absolute intention to be disciplined. The hierarchy that I laid out for capital distribution absolutely sticks, which is that unless we see a very, very compelling case for reinvestment, that capital should be returned to the shareholders. As you know, our cadence is that we typically return capital in the following year after earning it. Depending on where we are at that point in time, we can revisit that. It is absolutely the intention that anything above 14% should be returned to the shareholders.
I think we're back in the middle. Your mic should be green.
It's Andrew Coombs from Citi. Firstly, I thank you to you all for the slides today. I appreciate all the hard work that goes into these. I just say a particular thank you to James for giving us a bit of a handover event here. The bank's come a long way in the last few years. Two questions. The first one, and I hate to ask this, but slide six of Raja's presentation, I do not want to get a ruler out and measure the bars in terms of the revenues, the ROT, the cost development per year. It does look like this is a slightly backwards-looking trajectory. I do not know if that's fair.
Is more revenue growth baked into 2027, particularly 2028, given the incremental hedge that is in the appendix and also given when the timing of the rate hikes are expected to come through. Perhaps you can just confirm the trajectory and whether it is the same every year or whether it is backloaded. Presentation. I do not want to get a ruler out and measure the bars in terms of the revenues, the ROTE, the cost development per year. It does look like this is a slightly backwards-looking trajectory. I do not know if that is fair. There is more revenue growth baked into 2027, particularly 2028, given the incremental hedge that is in the appendix and also given when the timing of the rate hikes are expected to come through. Perhaps you can just confirm the trajectory and whether it is the same every year or whether it is backloaded.
Sure. Sorry. Go ahead.
Second question, just a very broad question for you all, but competition. If I look at the NII growth relative to the loan deposit growth expectation, it does not look like you are assuming much for NIM contraction, whereas we obviously did see quite a bit this year. Similarly, in the investment bank, it looks like you have actually assumed market share gains across the piece. Interested in your thoughts on the industry fee pool and competition dy namics there as well.
Sure. Let me take the first question. I think I want to just reiterate that we expect to show improvement in all of our targets over the next three years, which means that we expect to show improvement in ROTE. We do not expect to deteriorate our cost income ratio despite the investments we are making. Obviously, we indicated a 5+% revenue CAGR.
Now, that's a three-year CAGR, but we expect revenue growth accelerating over the cycle as we see expenses also coming down over the cycles because the impact of the investments obviously will start paying off exponentially. What I can reiterate is that we expect to show progress on every front every year, not just in 2028 and 2027. It could be that the progress is sooner if some of these tailwinds materialize or our assumption around artificial intelligence is different than what reality is. Just to give you an example, we have embedded a 10%-20% productivity over the period for software developers and coders. I've seen surveys that say it could be as much as 50%. Once we start on that journey, it could be that my assumption.
What we are committed to is absolutely delivering 13% plus by 2028 and absolutely showing improvement on every metric each year going from there. Now, the pace and the acceleration, we will see how it plays out. Our plan is not a plan which basically is flat first year and then a hockey stick in 2028.
Maybe on the comment on competition, how to win market share. We've spent a lot of time really thinking about how will we do it. In FIC, the big market share gain where our target is in the U.S., we said from number seven to number five. We have done that exact path before. We started in Asia in flow credit in 2022 and 2023. There was a big investment target in that space where we have grown to, as I said, number three position.
In Europe, we were really not very established in flow credit. In 2023, there was a targeted investment that brought us to that very unstable number one, number two position in Europe where we really want to firm up our position as number one in FIC in Europe firmly. In the U.S., now we have rolled out those investments. We hired at Baileys last year. We have made targeted investments in Latin America earlier this year. We have conviction behind that strategy. In investment banking and capital markets, there will be some fee pool growth that will drag everybody else up. How are we going to gain more share there? There are a few dimensions. One is we have made investments in the last few years. As I mentioned in my presentation, not all of those investments have yet monetized to their full potential.
There is still upside in the productivity of bankers, in the productivity of some of the assets we've invested in. Second, we want to play where we can win, the cross-border potential, Germany. The advantages we have in the sectors I've highlighted we want to invest in are anchored to the fact that those are sectors which happen to be quite large. The four sectors I highlighted represent about 60% of the global investment banking people. They also have two other characteristics. One is they're very cross-border intensive. Those are the sectors in which clients tend to look more across the Atlantic and across the Pacific and so need banks that have that capability. Two, in the corporate bank, we already lend a substantial amount of balance sheet to those companies. We have already an access and an entry point to those companies.
We're not starting to try to gain access to them. Lastly, I mentioned investments in equity capital markets and equity distribution. We have a potential that is anchored to research where we can extract more upside in ways that our peers do not have today, upside potential to. That's an underexploited platform. We have a great platform in research that we can monetize more effectively, and we can gain better market share if we round out the distribution piece, which is the piece that is missing. These are all measures that are really specific to us, play to our strengths, and that's why we believe both in FIC and in investment banking and capital markets, there is market share potential to be gained for us.
Maybe to add, and try not to repeat actually, the current geopolitical situation, for example, in wealth management, I'm referring to specifically, it is actually playing fundamentally to our strength. There's always been the need for ultra-high net worth family for proper diversification. They always wanted to have more than one bank. Now there is a clear, I would say, almost universal need to have, of course, one U.S. provider, potentially one Swiss provider, but definitely have one European provider. When you're talking about, back to the point that Fabrizio was making that we made, I think all of us across the presentation focus, when you're focused in this case, I think about really the top end of the ultra-high net worth, more sophisticated segment, these are counterparties that want the European financial institution as a partner, but it also needs to be global.
It needs to have an investment bank. If it comes also with a corporate bank and they are well connected, that is a party. If you put those conditions one after the other, you will quickly find only one name at the end of that equation, and that is Deutsche Bank. On the retail side, on the deposit side, I said already something, so I will not, but I would say in the past years, we have done less. What we are doing now is, I would say what we aim to do is reasonably conservative and is based on evidence. We took a number, we tested it, we got a better number out, and we kept originally the number that we had in mind. We are quite confident.
I will just add one thing quickly. In both CB and PB, there are some long-dated low-margin assets that run off over time. That just helps the NIM.
Perfect. I think the next question is from that side.
Yeah, thank you for taking my questions. The first is coming back to slide six, please. You show the ROE path gradually. Is your ambition that the ROE gradually increases every year? In terms of if the 5% revenue goal does not come in, are you cutting back on your investments in order to deliver the 13% ROT? The second question is more, you talk a lot about collaboration across the different divisions. If you can talk about why has not it worked in the past, how do you incentivize people, and do you have KPIs to measure that? Thank you.
Yeah. Why don't I start with regard to your first question, and then you can get more details from Raja or James. Number one, we have a gradual improvement. It is not that we are operating with a hockey stick in the year 2028. We see clear opportunities in all the businesses as the colleagues have presented, and we want to take these opportunities. Therefore, we invest more in 2026, but nevertheless, we will have an operating leverage in 2026. We will also show a higher ROT in 2026 than in 2025. Clearly, we want to improve year by year, and we see now the opportunities, and therefore, we are investing. Number two, with regard to the cross-collaboration, look, this is a long-term journey. We have to be clear, this bank had a past of silos.
The more actually we see the strengths of this global house bank, the more we see that we can connect clients, the more actually we see this collaboration. There are great examples, which is still defined by people in certain regions, and that is what we are now rolling out globally. I think since we have given us this purpose two years ago, that we are saying that we want to deliver in each and every client meeting, the whole of Deutsche Bank to the clients, I can see a considerable change. I think this is one of our biggest untapped potential for the future. It still happens, to be honest, if I talk sort of say from my day-to-day experience that I am seeing clients, I am trying to see 200 clients plus in the year.
Now, it still happens that I get a visit preparation for a corporate client where actually there is no connection made to asset management or the investment bank. This needs to go into the mindset of the people, and this is what we are forcing in. Therefore, actually, we have said that the first big lever of raising our revenues is to deepen the relationship with existing clients. Fabrizio has corporate clients where our cross-seller ratio is at six or even seven. You have seen a slide that out of 850,000 clients, we have 25,000 clients where we have, sort of say, a deep collaboration. This is actually what more and more we will make use of.
In this regard, last but not least, the external environment is obviously playing into our favor because the most asked question I get with each and every client, whether it's a mid-cap client in Bielefeld or a DAX 40 client in Frankfurt or Munich, it's all about risk management. It's all about risk management. When you have the risk management question, there are only a few banks who can deliver on that. You need the day-to-day banking needs, which we clearly have in the corporate bank, but when it comes to risk management, you immediately need the investment bank. That together makes us so strong. Therefore, I think this collaboration, also with the change mindset in this bank, I think is the biggest potential we have.
Thanks, Christian. I'm just going to add one 30-second on this one. I think the power of an integrated firm from my own background is immense. That is why the global house bank concept that when I came here and I saw that, that was the first thing that struck me is how does this house work together? I think we are on it. I think we can expect to see that growing. Now, to your other question, I'll take you back to my guiding principles. I did not set up too many, but one was strategic patience. Strategic patience means that we are setting long-term objectives. We got to stick with them some conviction. Obviously, we build this plan with prudent assumptions. We did not build this plan that at the first sign of crisis, we throw away our entire plan and start all over again. What we will be doing will be monitoring the external environment.
We'll be monitoring the revenue trajectory. More importantly, what we will be monitoring is the performance indicators that I've asked each one of my partners to lay out to make sure that the investments are paying off and setting up us for the revenue growth that we will see when it is done. What we will do, we'll have absolute discipline around every incremental spend of dollars so that if we need to revisit that, we have all the data to do that. My hope and my aspiration is that we will actually stick with them in conviction and deliver the targets of 13+% because that's the end game. The end game is not just delivering 26 by starving ourselves.
Allow me to add a couple of things on cross-sell.
Go ahead. Okay.
Otherwise, it wouldn't be a good demonstration of collaboration. Look, having been at Deutsche for 23 years, I think I've been part of at least 23 cross-sell initiatives. Typically, if it's like a forced top-down, you got to work together, it typically doesn't work. It needs to come down to culture. You do need accountability on who's actually educating whom. There will be specific situations when you do have revenue share. If you start with culture, I actually enjoy spending time with Fabrizio, with Claudio. Our management team spends a lot of time. Sometimes just with familiarity and understanding each other's challenges, you do find new ways of working together. Secondly, in asset management, we actually have people that are tasked to make sure that the other divisions stay on top of what's important to us and vice versa.
You need to even good people, you need to have some accountability on who's educating whom. Obviously, we have very formal engagements. Claudio has open architecture, so I do not benefit from any captive distribution. However, it is a very formalized relationship in which we do have revenue share. The same when it comes to private credit origination. Ram Nayak and other people would like to help. However, we also have a very formalized revenue share. Really, that combination of culture, some accountability on teachings, and then some formalized revenue share, I think that is what is working very well. Again, there is plenty of upside left.
Maybe just to do one thing that I should not do, which is correct you. You had the assumption in your question, it was not working. Why will it work? I think let's not leave you with the impression it's not working because in multiple areas, it's actually working better than anywhere else. When I started six years ago, the collaboration with asset management was already very, very well established. It's a natural one. The collaboration with Ram and his team in the distribution of his products and of his capabilities was good, but was nowhere near leading. We sat down and worked on a monthly basis for the last five years. Today, we are ahead apart from any other competitors, at least from a wealth management point of view. I think Ram can say the same from a FIC point of view. We have a level of integration and distribution to clients that is being copied by others. Now, we'll do the same in corporate banking. Again, we're not at zero in corporate banking.
If you aim for excellence, you will always have space to improve. There, I think we definitely can do much better. I think coming also from six years ago from outside to say that there is no collaboration or cooperation does not work would be incorrect.
The next question is just from the row behind, Anke.
[Foreign language] Thank you very much for the presentation. You show a very interesting graph regarding capital allocation versus return on tangible equity. One of those large rectangles, one of the largest businesses, is actually not meeting the hurdle. You expect it to meet it in 2028. Just a question, what happens if you do not actually meet that hurdle? You mentioned strategic patience, and you also mentioned the fact that you will be ready to exit any business that does not meet actually this hurdle.
How long is the strategic patience? The first question. Then regarding your NII trajectory and the structural hedge rollover, I think you have EUR 1.2 billion of additional NII revenues from the structural hedge rollover, and you expect to keep the full amounts by 2028. I am just wondering, what is your beta assumption and basically what is your deposits competition assumption regarding this? Thank you.
Yeah, let me start on the SVA again. That is what I said at the very start of today's presentation. We are on a journey. Do not believe that with 70% of SVA positive, we will end the game. There is a clear determination to go beyond. I think we, again, show here that we have a prudent plan and that we take it, sort of say, step by step into the right direction. Will we do better than 70% after 2028?
Can we even do better in 2028 than 70%? Yeah, we can. It is a prudent plan. Thereafter, clearly, we want to go higher. Now, let me also clearly say that there may always be, in a universal bank, if you think about divisions, there may be divisions which are not SVA positive, but for the overall client franchise and for the overall client, it is a super important product and it is a super important capability which we should offer. I think, again, this is a long-term strategy for the bank. We want to establish Deutsche Bank as the partner for our clients long-term. Of course, we need to earn our cost of capital. There may be the one or the other leading product, for instance, in the corporate bank, partially also in the investment bank, where we actually are saying we can further optimize.
It is not a must, must, must that at the end of the day, you have a 100% hit ratio. This is actually also where we are now looking at each client, which is actually covered by the management board. We have a transparency of client SVA where we know exactly where we are not earning. We discuss, what are we going to do with resetting the pricing? What are we going to do with the message to the client? Or is there in the long term, over three or four years' time, there is a clear repayment, and therefore we lead with this program? I think hopefully you see it is a very balanced answer, but clearly 70% is not the end of the road.
I think I have nothing more to add. We obviously applied internal hurdle rates to this calculation. In fact, one of the businesses that we actually showed on the page was borderline. If you were having this conversation, maybe at the end of next year, we would have moved over. We wanted to be honest with ourselves and show the picture the way it is. As Christian said, it will continue to evolve and we'll continue to give our progress update. To your other question, I think there's a page in the back that kind of shows our evolution of our deposits and loans over the period. Obviously, we are showing a pretty healthy deposit growth, and we are very comfortable with that because that growth is coming from all businesses. It's corporate bank driven. It's private bank driven.
Based on the success that we've had, we have really high conviction that that growth actually is in our hands, and that makes us really comfortable. The loan growth, as you will see, if you look at it on a nominal perspective, looks at around 3%. That also incorporates a lot of the portfolio level work that we're doing in exiting certain portfolios, for example, in mortgages, that makes it look a little bit less aggressive. I think the assumption of deposits growing 6% and loans growing 3% across the franchise and with a structural hedge in place, that's when Christian said, we have really high conviction on this 5% CAGR because a lot of the NII, we feel really, really strong conviction about. Do you want to say something or?
I was going to just say the product area that you were asking the question about is one of those strategic product areas that are necessary. Even if they absorb a lot of capital, they open the door to everything else. However, and this is the very important part of the discipline we want to embrace on SVA, there is not a single product in our portfolio that will not have an objective of growing SVA, regardless of whether they make the hurdle or not, the pressure is only upwards. There is plenty we can do to achieve that.
Just briefly asked about the betas. Look, we have gone through this period where we were outperforming the betas in both of the big deposit bases considerably. This year, we have in essence converged to what our model beta assumptions are. Going forward, we expect the same to be the case in the rate environment that we anticipate. We use implied forward rates both for euro and for dollar. As you'd expect, the euro betas are lower and the PB betas are lower, dollars and CB higher, all built into the models that we shared with you.
The next question comes from my left.
Yes, good afternoon. Mahdani from UBS. Two questions, please. The first one would be on slide 11. You've been flagging EUR 1.5 billion in investments apart from EUR 2 billion in cost-efficient increases. I think you mentioned a EUR 3 billion increase in revenues by 2028 as a result. I was wondering if you could talk about the flexibility both on the investment side and the resulting EUR 3 billion of revenues. What happens if there is disappointment coming through in revenues?
To what extent can you actually pull back perhaps some of the investments on increased cost efficiency? The other question would be a follow-up on that slide showing the loan growth and the deposit growth. Clearly mentioned that 2% CAGR in loans is really partly the reflection of the repricing in SVA, in the personal bank, in mortgages. If perhaps each of you could talk about where you see upside in other areas, be it in the corporate bank, FIC financing, or in wealth management on the lending side that is not captured perhaps in those ratios.
Yeah, I start in general on the investment side because obviously, I think we have shown in the past that, A, there is flexibility, and B, there is extreme discipline in the management team if things are not coming through as we expect that we will do something about it.
However, I also would really like to stress that what Raja said, and that is this is a long-term plan. We also have a strategic view. It does not mean that, so say, if the first two weeks in January are not running in the direction where potentially we wanted to have it, that we immediately cut all the investments. Now, can we do this? Of course. I think we have, in a very disciplined way and also in a very successful way, shown it over the last three or four years that if it is needed, this management team will do it. We do believe, actually, that now with this foundation which we have, with the growth areas which we are targeting in all the three businesses, that it is really worth to invest.
Nevertheless, despite these investments, have a gradual improvement from 2025 into 2026 and then even more returns in 2027 and 2028. Rest assured that this management team will not change its discipline on showing results, improvements. We gave you our commitment that we see a year-by-year improvement. That would also mean that if we have to cut, yeah, then we will talk about that.
I think the other thing that gives us a little bit more comfort and conviction is that the savings of $2 billion, as I mentioned, these are incremental investments. We already have investments in our baseline, which are being repurposed now to growth and operating efficiencies. Previously, they were doing risk and controls. The saves of $2 billion, we feel very comfortable with because a lot of those are also in work in process.
Claudio talked about 35% of his initiatives that are already in place. It is not that we are only going to get these efficiencies if we spend this money in this period of time. The pacing may change, as Christian mentioned, if we have to replace them. That gives us conviction. On the $3 billion revenue, I think you have probably heard from each one of us that we were pretty prudent in our aspiration around the revenue growth, around 5%, because we felt that it was important to have the revenue come from where we wanted it to come from. We felt comfortable that these investments, incremental investments, are needed now because they really give us the upsiding of what we ordinarily would not have. The efficiency initiatives are going to be delivered based on the back of also the investments that have already been made. These are just a multiplier effect of that.
Maybe on the point on upside on the loan books, in FIC financing, we see substantial upside potential should a couple of assumptions we have made not play out to the way we have done it, which is quite conservative. I refer to spread compression. If we see a correction to the spread compression, there could be the opportunity for us doing more in that space at attractive return on tangible equity. Equally, Raja made reference to the fact that FRTB has a conservative assumption that it will happen. Should there be a correction, an alignment of competitiveness between U.S. and European authorities, that is a several billion worth of RWA that in FIC financing, for example, we could redeploy at a very attractive marginal return. In CB, the biggest opportunities, again, we highlighted it.
If the German fiscal stimulus plays out to a higher potential than what we have assumed, which is only what has been announced to date, we could actually see a material pickup in OpEx, CapEx measures, in export credit agency measures, right in the areas where we are making capability and technology investments. There is potential for upside. The plan you see is based on conservative assumptions. Within those conservative assumptions is promising pretty attractive marginal returns. We intend to keep those should those opportunities open up.
I think if you ask me where the upside was overall from a revenue point of view, it would not necessarily be on lending. There is some upside. I mean, there is definitely growth in there. I think we are pretty sure what we are doing in that space. I would point anyways to Lombard.
Lombard is something where we are making IT investments together with Marcus to have a system that allows us to scale it up. That definitely is not fully priced in. The potential for that Lombard. You combine that with the higher focus on asset under custody. It can become actually incremental because asset under custody is something we have not focused as much. When you start having large positions under custody, those lend themselves to Lombard lending for diversification. Some material upside in that space, in the Lombard space overall. I think we are happy with the ambitions we have. We think that they are solid.
Back in the middle of the room.
Hi, Julia for Morgan Stanley. Thank you for taking my questions. I have two. Can you hear me?
Yes.
Oh, it is good.
Let me start with capital. On slide 16, you mentioned inorganic growth opportunities. How are you thinking about this? Is something very remote? Or actually, are you looking more closely at potential M&A? If you are, in what area? Would it be wealth management? Would it be, I don't know, German? Any comment? Secondly, again on capital, did I understand it correctly that the decision around the excess capital distribution above 14% comes once a year? Or shall we expect a biannual path? Yeah, thank you.
Let me start with your M&A question. Look, a couple of answers to that. Number one, look at the slide of Raja where he also put a ranking what we are focusing on. I think on the lowest rank, so to say, it was, if at all, if it fits from a strategic, from a cultural, from a financial point of view, potentially in asset management or in wealth management, we would look at this. It is number five of five rankings. There you can see this conviction of this management team that we can grow organically to either the larger 13% or the EUR 37 billion of revenues with actually doing further our homework. Everything we presented today, we do not need an external lever.
It is all in our levers and in our hands. Therefore, our focus is on ourselves. Therefore, M&A is not something which is at the core of our strategy. Again, of course, in a business like asset management, if there is an opportunity, we need to look at it. The real focus is on organic growth. Everything we have shown today on the $5 billion of revenues has nothing to do with inorganic.
Julia, thanks for the question. I think I just wanted to reiterate that when we get to a capital that's sustainably over 14%, that's when we start considering the return versus invest. I just wanted to make sure that point that it's not that if it hits 14% for one day and we get there, that's our commitment. Secondly, typically our practice has been annual, but it can be done more frequently. You can do a semi-annual cycle. I think our view would be that that's a decision we will make when we are at that point. There's no prohibition for that.
Thank you. In the same room, a few seats across.
Yes, thank you for taking my question, Flore Bocahut from Barclays. The first question I wanted to ask you is on the cost savings of EUR 2 billion that you discussed for this plan. I do not think you talked about any restructuring costs that would be associated with that.
Can you say that again? The last one, restructuring costs.
Just checking if there is any plan with those savings. I think you talked about the natural attrition in the group. Do you have maybe a number you can give us, either gross or net of hirings, but how much of your workforce basically you lose every year to help us understand the savings?
The second question is more specifically on the investment bank, where I see the mix is going to go towards more banking fees, which normally I would assume come with a higher cost income ratio. Yet you target that the cost income ratio for the whole IB is going to go down. I wanted to ask you how this is achievable, basically.
I would defer the first questions to my two CFOs. It's actually great to have each one too. One thing I can tell you, if we give you a plan for the next three years, which obviously is talking about reduction in costs, we will also consider restructuring costs.
Now, do not forget what, for instance, Claudio said, that a good part actually of what he is seeing in particular in 2026 is already, so to say, in the books, not only agreed, but certain restructuring costs have been taken. Therefore, it is also in this regard a very clean and a very prudent plan. Why do you not want to give more details?
Yeah, I agree, look, when we are laying out the plans and we are talking about the investments, we are already contemplating if and when restructuring dollars would be needed. I think from my perspective, they probably will be closer to the level that we had in 2025. As James said, it is not our intention starting January 1 to have just a cost base or have a discussion. I think as a mature, profitable, successful bank, this is par for the course. As you go along, you pay for restructuring and you reinvest. That is the way I would think about it.
Yeah, completely agree. That was one of the reasons behind moving away from adjusted cost base disclosure, given that restructuring costs should be a much smaller level, but a normal part of the operating cadence. On attrition, I do not have the numbers right in front of me. We have run around 5% of the group for some time after things normalized after COVID. In that 5%, there is a range of certain geographies where we have much higher, but also normal for those markets, attrition that takes place. Others, like Germany, are much lower. All of that is built in. In fact, it is one of the levers we have for managing the expense base.
I think one of the slides talked to it as a managed attrition strategy, meaning that we can, I think we feel better positioned now to flex the workforce using attrition as a lever. As Raja said in his remarks, also the retirement wave that is building over the years. Those are levers that I think we can use more flexibly in the years to come.
On your question on the investment bank cost-income ratio, there are multiple elements to keep into account. One is, as I said, that there are past investments we've already made that we'll monetize. There will be zero incremental cost, but the revenues that will bring bankers we've already hired to a full productivity level. A number of the investments we highlighted are actually going to be self-funded by actually rotating our own bankers towards the higher productivity levels.
Thirdly, we will have cost reductions that are coming from investments we're making. I highlight EUR 120 million of cost reductions across the investment bank by 2028, which will offset and improve the cost income ratio of the division overall. It will offset some of the investments we're making. The last point, because we are focusing so much also on cross-divisional opportunities, there is incremental value that we can extract there because it would be revenues we can generate with the same products, the same clients, the same bankers, just by collaborating more closely with them. When you add it all up, actually the opportunity to improve our cost income ratio across the investment bank is very tangible. It will more than cover the investment that we plan to make, both on technology and on people.
Straight ahead.
Kian A bouhossein from JP Morgan. First of all, thanks, James, for all your support over the last few years. My first question is regarding SVA. I get very excited about these SVA charts. And the numbers to me look quite small, EUR 5 billion when I start to add numbers up. Clearly, there's a lot of overlap. But the SVA alone, that's EUR 3 billion of change to 100 basis points. Of that, you have about EUR 1.2 billion of refinancing on the structural hedge. Then there's some growth in wells, so some corporate growth. The IB fees are going to go up based on your guidance. Can you just talk about EUR 5 billion looks like a minimum number? Is that kind of the way am I looking at this right? What is actually the potential in the five? The second question is regarding the staff numbers.
Can you just talk a little bit about how staff numbers on a net basis are changing and in what area, considering there's a lot of adjustments, it looks like, on the staff of turnover, better people for poor people?
Let me start with the staff number so the two CFOs can decide who takes the SVA, right? Look, sometimes in life, you also need to learn. You remember that I gave a staff number out in 2018. And up to now, some media outlets are still chasing me on this one. We did the right thing for Deutsche Bank because, Kian, you know that we, for instance, in Burns Business, where Burns Business is over there, we internalized rightly so. That was not in our plan in 2018. But we actually took externals out, internalized in technology. It was exactly the right strategy. We brought costs down.
Obviously, the workforce did not go there where we set it in 2018. Secondly, growth was much, much higher than we thought. I think Stefan said it so nicely, there are good costs and there are bad costs. That is clearly good costs. Then you invest. Now, what do I want to tell you? We are not handing out a staff number. Clearly, we see that in areas where we have fixed the core, where we have done a lot of remediation, where so much technology is now going into our processes, I clearly expect that FTE and staff numbers will come down. I do believe with all the work Fabrizio has done with the operations team in KYC, the way we are doing it over time now, staff numbers come down.
If I talk to Burns, then yes, on the one hand, Kian, we will further internalize because there are still externals. We think it is actually a good move to further internalize. However, you have also seen my quote, what actually AI means and how we can do coding in the future with far less coders. Therefore, overall, you see actually Claudio's business in the way he is reducing also in Germany on the operation side, but also in the retail branch side, further people, because it is also a different way how the clients want to be served. Net net, clearly, it is one direction. It goes down. I would not give you a number. The most important is actually the overall costs which we manage, the EUR 2 billion of efficiencies. There, I think we have a good track record.
I should have said that to your question before. It's not only about can we cut investments if growth is not coming. I'm really proud what the team around Rebecca has achieved over the last two or three years because we had, if you remember, two years ago, a cost goal of EUR 2 billion. We upsized it to EUR 2.5 billion. We did it. This is exactly where you actually move ahead from year to year. That's what I also expect. Therefore, yes, workforce is of course important. It will go down. I think I would do a material mistake when I give you a detailed number.
Kian , I'll take the question. This is my third stop at a global bank. I cannot count on one hand. Somebody said revenue assumption was conservative, but I'll take it. Look, I think I will take you back to my slide where I was trying to make three points. I've actually tried to make three points in many slides. It is really important for me as much as what the composition of the revenue growth is versus the top line number. I think as we highlighted on that slide, 70% of our revenue growth is coming from the focus areas that we wanted to come from: asset gathering, payments and services, advisory, all high quality revenue with this capital light on the back of the investments we're making. To me, I think the composition is almost as important as the actual headline number. I think you heard from every single person. We see upside. We built a plan which was prudent, which gave us the cushion to make sure that we can stick with our investment strategy.
We can build for the long term. From my perspective, Christian laid out four factors. I laid out four factors that businesses. These guys are working harder to get to us to more than 5%. Our plan's based on 5%. The aspiration of every single person on this podium is to have a higher revenue growth tha n that.
Yeah, maybe I can just add to that because of the history that we've been through together. Chris asked the question at the beginning, sort of what's the over/under. Let me just say one thing. As we began this planning process, we around the table made a deliberate choice not to overstretch. I think you've seen us over the years, I think, correctly for the company. We have built ambitious plans in the past, worked hard to achieve them.
By and large, we have achieved them. We made a conscious choice to give ourselves a little bit more breathing room in this case. I think that's the right thing. Kian, I'm also very excited about the potential that the SVA discipline, a lot of the things that we've talked to you about today, can deliver. By the way, the controls that Rebecca and I have built together over the years over things like expenses, internal, external expenses, hiring, and so on and so forth. I think there's a lot in those charts in terms of the opportunity from the SVA management, the continuation of the disciplined way we've learned to run the company, and if you like, some leverage. The last thing is just the scale.
We can see that in many of our businesses, Fabrizio talked about the marginal RWA, marginal cost income ratio. A lot of us with responsibility for functions can see that we've reached sort of the inflection point where more revenue on the platform doesn't entail necessarily proportionally more expenses. That's exciting. I think there's real opportunity for us to sort of manage the business in a very different way to the past five, eight years.
We have about 10 minutes left, just under. It's been quiet on the Zoom. I'll stick to the room from my left.
Hi, Joe Dickerson from Jefferies. Just a question on DWS. What's the plan with DWS? Is there an opportunity to bring that into part of the bigger house and perhaps do larger M&A? Any comment there? There was much discussion on the velocity of capital, notably around SRTs. I was wondering, I think I can back into kind of an answer, but do you have a nominal amount of SRTs you're looking to do over this plan based on, I think it was the 25% contribution to capital? Thanks.
I'll take the first and let Raja take the second. Look, when we took DWS public back in 2018, one of the elements of the rationale was to give it the strategic flexibility to pursue transactions. It's a great structure. DWS obviously has a listing, can use that stock as a currency. It's relatively efficient for the group in terms of how we carry it from a capital perspective and how new acquisitions would play in. It also has debt capacity and an A2 external rating.
That flexibility exists and is valuable even if we haven't used it so far. I think it's been more discipline on the part of the DWS management team. The right opportunities haven't necessarily arisen yet. The structure gives it the potential to do that in the ways I described. At least for now, we think that optionality is very valuable.
Thanks. Look, on the SRTs, that's actually a very exciting story for us because we are trying to increase that by 25%. What we have identified is that we can do that by increasing our current issuance, but also there are asset classes that we haven't previously used. It's not a matter of going to the last and going really deep in what we already have, but actually diversifying that base. That also takes away some of the maturity risk. We are targeting around 25% by 2028. Actually, it is across the asset classes in IB, PB, and CB.
I think Stefan wants to add something on DWS.
How are you going to use it?
Now that the majority shareholders asked me. Let me say, I love this business. M&A should. I think the point that everyone has made is that we are incredibly disciplined in how we obviously look after capital. We also feel we have a pretty exciting organic growth path. There are certain things that you would not be able to build organically. Some capabilities are quite difficult to build. Sometimes getting access to certain client types is difficult to build organically. Probably most relevantly, certain regions, certain countries are very difficult to enter organically.
The announcement last week of us having a proper strategic partnership or signed an MOU, but with Nippon Life in India, that's such an example. We spent quite a bit of time over the last couple of years to see whether this exciting market we could enter organically, just very difficult because of distribution and so on. Having a partner locally to team up with was simply the prudent, like inorganic path. That's how we're thinking about it.
The last question comes from the very top of the house.
Yes, good afternoon. Stefan Stalmann from Autonomous. You've talked quite a lot about artificial intelligence. Raja, you called it AI revolution. That's probably true. It affects your clients as well. It affects your competitors. My question is, how do you think about the potential implications of that for margins, competitive intensity in your industry, but maybe also change in demand for certain products from your clients as they also go down this route of revolutionizing the use of AI? The second question goes back to the question on the trajectory to get from 2025 to 2028. Can you already share with us what is the RTE level that you will be measured against at the Exco board for your compensation next year?
Nice try. Look, on the AI side, I really would like to ask my three business partners to give a little bit of an outline because, as you rightly say, it will affect each and every business. Let me only add one thing to this because I always see AI in terms of client experience, cost efficiencies, and controls.
It's a massive opportunity for a global bank. The most important is actually how we as a management team are implementing this mindset into the bank because everybody will tell you he and she is already using AI. What you really need to do is understand what kind of impact it has and that you then also do the follow-up changes. It's a leadership task. It's a management task. Everybody will tell you about great AI. If you don't get to the potential behind that, then you will fail. Therefore, I think as much as it is a technology question, it's a leadership question for all of us. Therefore, I ask each one in the executive team to really also not only think about the next great product, but about the leadership responsibility we have with deploying AI.
Number two on the ROTE, look, no, I'm not giving you anything. I can only tell you I would be very disappointed if we are not having a gradual increase year over year. This bank is set to grow not only in terms of revenues, but also in terms of profitability. Fabrizio, you want to start?
Sure. I think on AI, you said it because the three categories of client experience, cost efficiency, control enhancement are really what we have been focusing on. Our clients are thinking about it a bit differently, but they're not thinking about it as AI replacing the necessity for a banking partner in many of their interactions with us. We actually see an optimization potential. I'll give you just one example on client experience.
In the corporate bank, the way we think about client experience is often focused on time to yes, time to transact, time to settle, and automation and self-servicing. Time to yes means the client stops shopping around for a bank telling them that they're ready to transact. Time to transact cuts down the cost and the time it takes for a client to do what they need to do. Time to settle reduces risk on both sides. If you can automate the workflows, then it takes a lot of cost and commitments required across currencies, jurisdictions out of the client organizations. AI can help tremendously on each of these four ways of thinking about improving the client experience and the way we face off against them.
On risk management, we have a number of examples, both on the financial risk side where Marcus and I are partnering up to take down the time it takes, as I said earlier, to onboard a new lending client in the SME space or in the biz banking space from weeks to hours. With Laura Padovani, we have partnered up over the deployment at scale of AI for the improvement of our non-financial risk monitoring to make sure that we actually have more artificial agents looking at our ongoing risks. That way, we can cover a lot more of the spectrum of interactions.
This will also help our clients because they will have a higher reliability in dealing with a bank that has that capability than one that manually may realize T plus two, T plus three, that there is an issue with trades that we had done with them that may have already been settled.
Thank you. Stefan, then Laura?
Look, there are, I guess, many asset management colleagues here in the audience. It seems that the essence of what we do could be disrupted by AI. The art of picking and choosing stocks and bonds based on public information seems like something that I should be able to do reasonably well. Now, obviously, we spend a lot of time in experimenting. So far, it seems we're all safe because so far, it seems that there's plenty of efficiency cases.
We're experimenting, and I mentioned that briefly earlier, on AI companions. Somebody who's challenging you on, let's say, portfolio construction. If you have been right five times in a row, maybe you're overly optimistic and so on. Again, so far, it's more like human plus machine. At our last quarterly earnings call last week, two weeks ago, we did an AI deep dive, and we'd love to get feedback from people because we feel long-term, what we are spending time on is the following. AI is really focusing on what's the most likely next word. If something happens, what's the most likely reaction? However, the best portfolio managers are those with very unconventional thinking. Asking the one question nobody has thought of, which is almost like the inverse of AI.
What we are trying long-term is to see what synthesis of information, like what combination of skills leads to those unconventional, but then really difference-making questions. Again, so far, we have been able to do it, but lots of focus on AI.
Look, I think the colleagues spoke about all of the benefits, and you heard it in multiple presentations, all of the benefits from an efficiency point of view, from a cost reduction point of view. That holds true 100% for the private bank as well. Personally, what I find most exciting is the way it will allow us to interact with clients.
If you think about retail, it is probably the area where that will have more of a dramatic impact in the sense that today, most of the interaction with our clients, and this is not so much not only because of the way we are set up, this is part of European society and certainly on German society, people still like to interact, if possible, verbally or personally. Clearly, in a business like retail, the quality and the added value you can bring in a sustainable, in a cost-sustainable, in a profitable way is limited. AI and the development, the latest development of AI, that is why I was talking about an AI voice-enabled butler, assistant, call it however you want, are really transformational for the relationship we have with clients.
It will allow all 19 million customers, hopefully a larger portion of the society in Germany, to really come much closer to us and allow us to give them a service, a personalized service, an exclusive service that was before just for a few to a much, much larger number of people, actually to everybody at a very sustainable cost. I think that is inevitably going to create huge opportunities for us to satisfy them better and for us to provide them services that go also beyond banking in all fairness. I think that's the most exciting part of the journey over the next few years.
Thank you. That takes us to time. Before I hand back to Christian for his closing remarks, I would like to thank everyone who has listened and participated today. If you have any remaining questions, the IR team is available to help through the usual channels. With that, let me hand back to Christian.
Thank you, Ioana, and to everybody here in the room, thank you for coming. It means a lot for us that you have stayed with us for the last four and a half hours. I know that there is a lot going on. I know that there are some other deep dives tomorrow and the week later. Thank you for coming. Thank you also for your questions. It was a very interesting interaction with you. We hope you now have a clear view of Deutsche Bank's path for the next three years, i.e., the financial roadmap through 2028. We also hope you take away some impressions that go beyond our financial path.
That is number one, that we are convinced that today's environment is actually playing to the strengths of Deutsche Bank. Second, all the three levers and what is behind our plan is completely in our hands. It is under our control. Thirdly, this management team, and hopefully you got the similar impression, is firmly committed to deliver on these targets, but also to build Deutsche Bank for the next decade. We are determined, actually, to be the global house bank. We want to be the global house bank and the European champion. On behalf of all my colleagues, thank you very much. A special thank you, Ioana, to you and your team. I think you have prepared it over the last seven, ten days in detail. We only have been here since Thursday.
A special thank you for all the Deutsche Bank teams working since three to six months for this day. It has been a pleasure. It was a privilege. Now, all of you think that I'm thinking, James, I'm not doing this. He needs to deliver Q4, and we will deliver Q4. Thank you very much. See you in the reception area. It was a pleasure. Thank you.