Good afternoon or good morning, and thank you all for joining us today. On the call, our Group Treasurer, Richard Stewart, will take us through some fixed income specific topics. For the subsequent Q&A session, we also have our CFO, Raja Akram, with us to answer your questions. The slides that accompany the topics are available for download from our website at db.com.
After the presentation, we will be happy to take your questions. Before we get started, I just want to remind you that the presentation may contain forward-looking statements which may not develop as we currently expect. Therefore, please take note of the precautionary warning at the end of our materials. With that, let me hand over to Richard.
Thank you, Philipp, and welcome from me. We delivered record performance and strong momentum in the first nine months of 2026. We grew revenues to EUR 25.5 billion, well on track to meet our full year ambition of around EUR 33 billion. We have now completed a large portion of this year's investments and we continue to maintain cost discipline. As planned, we have largely self-funded incremental investments with efficiency gains.
This enabled us to deliver a record profit before tax of EUR 8.4 billion for the first nine months of the year, along with a record third quarter. Post-tax return on tangible equity was 11.5% and our cost income ratio was 61.4%. A few words on our progress on scaling our Global Hausbank. We made tangible progress on all three levers of our strategy in the first nine months of the year. We continued to deliver focused growth.
Revenues increased by 5% versus last year, in line with our planned trajectory through 2028. Our focused growth areas contributed nearly 80% of the increase and grew by 6%. Second, we maintained strict capital discipline. Our initiatives included further capital accretive actions on non-performing exposures and progress with our securitization programs. Third, we made further progress on our scalable operating model. We continued to simplify our processes and made targeted investments in upgrading our infrastructure.
Across all three levers, we are driving strong performance across our businesses, investing in growth and efficiency, and reinforcing client connectivity. Turning to slide 3. All divisions delivered a RoTE of 12% or higher for the first nine months of the year, while each division increased profit before tax in every quarter of the year. Private bank net flows reached EUR 17 billion, a record for the private bank, with around two-thirds from wealth management.
Year-to-date inflows have already exceeded the full year 2025 level. Asset management grew AUMs to over EUR 1.2 trillion, with record net flows of EUR 31 billion in the third quarter. The corporate bank delivered record quarterly revenues with sustained growth in loans, deposits, and client activity across every segment. We delivered strong revenue growth in Germany, underlying the strength of our home market franchise.
The investment bank delivered strong results. FICC revenues were close to the record prior year quarter, despite less favorable market conditions. In IBCM, we increased our EMEA market share by 160 basis points year on year. Our franchise business performance and balance sheet have remained resilient despite heightened fiscal uncertainty across Europe in an already challenging global economic backdrop. The path to our 2028 targets and objectives has become clearer as we make progress against our strategic priorities.
This strengthens our view that an RoTE above 13% represents a floor. Turning to treasury specific topics, starting with our net balance sheet on Slide 4. We continue to operate with a strong and conservative balance sheet, underpinned by robust capital and liquidity buffers. Compared to the prior year period, we have demonstrated strong volume growth in both loans and deposits, up by EUR 22 billion and EUR 53 billion respectively.
This resulted in a loan to deposit ratio of 69%. Capital remained robust in the third quarter. Our CET1 capital ratio was 14% at the high end of our operating range. Our leverage ratio was 4.4%, reflecting higher leverage exposure at quarter end. Let us turn to provision for credit losses on Slide 5, for which we recorded EUR 501 million in the quarter.
We continue to take proactive capital accretive actions to further de-risk our CRE portfolio, which is reflected in our provisions for the quarter. In addition, provisions in the corporate bank were impacted by an idiosyncratic event in Asia. Underlying asset quality remains strong, with leading indicators showing a stable or improving picture across the majority of portfolios. As shown in the appendix on page 25, CRE is the primary driver of the elevated group provision run rate.
The run rate reflects the proactive de-risking measures and valuation updates on legacy defaulted positions. Our higher risk CRE portfolio has declined materially since 2022. In the U.S., we have seen a majority of stress. The book is down 42% since 2022 and about 20% year-on-year, reflecting repayments and our proactive de-risking measures.
There is no evidence of broader portfolio weakness with the private bank and corporate bank portfolios remaining stable and resilient. Our medium-term expectations remain unchanged. A gradual but steady decline in CRE provisions in 2027, and in 2028, a further improvement in the group provision run rate normalizing at around 30 basis points. Moving to quarterly capital developments on Slide 6. We ended the quarter at 14%. Risk-weighted assets decreased by EUR 3 billion, excluding FX effects of EUR 1 billion.
The quarter-on-quarter reduction was driven by the investment bank, which carefully contained market and credit risks in a volatile environment. The increase in the other category includes the impact of model simplification efforts. Net income, net of deductions for AT1 coupons, contributed 43 basis points, reflecting strong third quarter earnings, while deductions for distributions of 26 basis points represent the 60% payout ratio.
The 16 basis points reduction in other includes an immaterial impact from recent increases in government bond yields, reflecting improved portfolio positioning and risk management. Note that the majority of our government bond portfolio in the banking book is accounted for at amortized cost, and overall, we remain comfortable with our sovereign bond exposures. Looking toward year-end, we expect our CET1 ratio to remain within our operating range, reflecting ongoing business activity and the annual update of operational risk RWA, including the impact of higher 2026 revenues.
As you have seen, our SREP requirement will be lower from next year, bringing our total capital ratio requirement down by 25 basis points. Our capital ratios remain well above regulatory requirements, as shown on slide seven. The CET1 MDA buffer now stands at 283 basis points, or EUR 10 billion, reflecting the quarter-on-quarter increase in the CET1 capital ratio.
The buffer to total capital requirement is 321 basis points. On the leverage side, we ended the quarter at 4.4%, which is nine basis points lower than in the prior quarter, still with a very comfortable MDA buffer equivalent to EUR 12 billion of Tier 1 capital. We continue to operate with a significant loss absorbing capacity well above all requirements, as shown on slide 8. The TLAC surplus of EUR 19 billion, our most binding constraint, decreased by approximately EUR 3 billion compared to the prior quarter, predominantly from higher leverage exposure.
This surplus provides us with meaningful flexibility to manage eligible liability issuances and, if market conditions or economics warrant, to pause new issuance for at least one year. Moving now to the development of the loan book on slide 9. During the third quarter, loans grew by EUR 6 billion, or 1%, to EUR 497 billion. The underlying quality of the loan book remains strong, reflecting our conservative underwriting standards across all businesses.
Looking at the Private Bank, we are pleased with the strong wealth management growth, which is only partially offset by further strategic reductions in non-SVA accretive retail portfolios. In the Corporate Bank, we saw growth in flow and structured trade finance products, while we also continue to optimize the underlying lending portfolio. In line with our strategy, our loan portfolio in FICC financing has also shown further encouraging growth during the third quarter.
For the remainder of the year, we see further growth opportunities across all businesses, whilst our focus remains on value accretion and capital discipline. On slide 10, we provide details on the quarterly deposit development. Our deposit book grew by EUR 18 billion, or 3%, during the third quarter to EUR 716 billion. Growth has been largely driven by the Corporate Bank, where we saw substantial inflows within corporate cash management. While we expect some normalization until year-end, these inflows demonstrate the underlying strength of the franchise.
Our Private Bank portfolio also grew during the quarter, driven by continued inflows from our campaigns in Germany and slight growth in wealth management. Looking ahead, we remain focused on delivering our strategy and selectively growing the portfolio while maintaining a high quality and diversified funding mix. Moving to net interest income on slide 11. NII was solid at EUR 3.7 billion across the key banking book segments and other funding.
Deposit related NII continued to benefit from underlying volume growth and the contribution from our hedge portfolio, while loan NII benefited from strong volume growth. Looking at divisions in the Private Bank, margins continued to progress steadily, particularly in deposits. In the Corporate Bank, net interest income also went up sequentially, supported by higher business volumes. In FICC financing, the results reflect continued strong demand for lending.
On slide 12, which is based on market implied forward rates as at the end of September, you can see the multi-year NII tailwind from rolling our hedge portfolio. Our hedge strategy stabilizes deposit NII through the rate cycle while enabling gradual repricing and growth in hedge income over time. The total volume of hedges has been stable compared to the prior quarter, with around EUR 210 billion invested longer term.
Over the course of the year, we have also used attractive market opportunities to add forward starting hedges, increasing the proportion of hedge income already locked in to around 90% for 2027 and around 80% for 2028. The yield of hedges maturing in 2026 is around 40 basis points on average, compared with the 10-year euro swap rate of around 3.2%. Looking beyond the numbers shown on the slide, we expect the yield differential in 2029 to increase compared to 2028, reflecting the prevailing interest rate environment in the past.
The sensitivity of our reported NII for 2027 and 2028 to rate moves is further reduced as a result, and you can see that in the usual appendix slide. Turning to Slide 13, our liquidity and funding position remains strong in the third quarter. We managed our liquidity coverage ratio to 143%, reflecting our robust liquidity position, which remains comfortably above the regulatory requirement. We ended the quarter with EUR 242 billion of high-quality liquid assets, an increase of EUR 5 billion. Around 93% of the buffer was held in cash and Level 1 securities.
Our net stable funding ratio increased to 120%, with available stable funding rising to EUR 678 billion. This reflects the strong funding contribution from deposits and issuances during the quarter, which was partially offset by higher required stable funding from business growth. Taking together these metrics demonstrate the strength and diversification of our liquidity and funding profile. Let us now turn to our issuance activity on Slide 14.
Despite ongoing geopolitical uncertainty, credit market sentiment remained resilient for most of the quarter, before spreads widened amid macro headwinds from late September onwards. Taking advantage of the predominantly supportive market conditions, we issued EUR 6 billion since the last fixed income call, taking our year-to-date total to EUR 15 billion. This effectively completes our issuance plan of EUR 10 to 15 billion.
Issuance highlights in this quarter included a series of successful transactions across AT1, Tier 2, senior non-preferred, and senior preferred in euros, US dollars, pound sterling, and Swiss francs. Particularly noteworthy was a EUR 1.25 billion AT1 transaction, which achieved the tightest ever reset spread for Deutsche Bank for this asset class. For the remainder of the year, we will focus on opportunities to pre-fund our 2027 requirements, which we expect to be a little higher compared to this year.
As usual, we will present further details on next year's funding plan in the Q4 fixed income call. To conclude on Slide 15, we are on track to deliver revenues above EUR 33 billion, assuming markets remain constructive. We continue to expect total expenses of around EUR 21.3 billion, reflecting continued investment discipline, operating efficiencies, and any one-off items.
Excluding the impact of proactive de-risking actions and the idiosyncratic event, we expect provision for credit loss to be broadly in line with our earlier guidance, slightly lower in 2026 compared to the prior year. We will provide an update on progress of our strategy when we report our full year 2026 results. As we discussed in the previous slide, we have effectively completed our funding requirements for the year. With that, let us turn to your questions.
Ladies and gentlemen, we will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their telephone. You will hear a tone to confirm that you have entered the queue. If you wish to remove yourself from the question queue, you may press star and two.
Questioners on the phone are requested to disable the loudspeaker mode and eventually turn off the volume from the webcast while asking a question. Anyone who has a question may press star and one at this time. One moment for the first question, please. The first question comes from Lee Street from Citigroup. Please go ahead.
Hello. Good afternoon. Thank you for taking the questions. I have two questions, please. Firstly, are you able to give any detail on what drove the reduction in your SREP ratio that you announced earlier this week? Quite a significant move. Secondly, a bigger picture level, strategically, obviously you have done really well and your performance has improved a lot year on year for many years.
But I guess at the same time, I look at most other banks and recognize that G-SIB, we have seen their performance improve as much, if not more. Do you care or does that put any pressure on you to look at bolt-on opportunities or inorganic growth? That is basically my question. Thank you.
Yeah. Richard, I can take the first one. Apologies, we are having a little bit of hard time hearing fully, so hopefully Richard got the second question. I think it was about the G-SIB add-on. I think your first question was about what drove the SREP reduction. Is that correct?
That is correct. Yes, that is correct.
Okay. Yeah. So look, I think this follows actually a smaller SREP reduction in 2025. I think we went down by 5 basis points, which I would say was probably more of a model technical tweak than anything fundamental. But I think, as you know, we have been very clear about changing and shifting our business model towards more sustainable revenue stream businesses. We have built, obviously, a capital that is higher and sustainably.
We have operated within a higher operating range. Profitability has improved, especially from our non-capital intensive businesses. We have obviously taken active de-risking actions, in terms of our commercial real estate portfolio and gotten some of the other, I would say, overhangs out of the way. So obviously we get some level of visibility through qualitative conversations. We obviously don't have a view into their actual model.
But I would say the feedback is reflective of actually the pivot that the bank has made towards a more stable, less risky, structurally and sustainably profitable bank. And I know we are happy about this one, but honestly, I would hope and expect that as we continue this pivot, that we have more SREP reductions to come. Richard, do you want to take the G-SIB one?
Yeah, I mean I will start, but I think you might want to hop in at some point because I think it is a wider strategy question anyway.
Yeah.
Hi Lee. How are you?
Yeah. Good, thanks.
Thanks for joining. How I think about it is, we've been rebuilding the bank since 2019, building these foundations, and now we're kind of moving more to offense from defense. I think Raj, just for your benefit, Lee's question was more, we have sequential PBT growth. We continue to do well, but peers are also doing well, arguably a little bit better, and therefore, how we see ourselves evolving from there. I think it's kind of rebuilding the bank and moving on from there.
I think the next move is really around us controlling our own destiny, because there's a lot of things that we can do to generate excess profits. We're very comfortable with that kind of overall strategic trajectory. I don't largely want to add anything to that, but that's how I think about the bank.
Yeah, and I appreciate it. Thanks. I understand a little bit better now. Yes. Look, I think as we laid out at the investor day, our primary path for the time being is certainly an organic one, because we feel like we have work to do ourselves on capital and also on business model, also on costs. That said, I think we were also clear that it was one of the things that was on my list about uses of capital.
We certainly think that in certain businesses, scale could be helpful, assuming that it's the right fit for us. I would say, down the line, if there was an opportunity to look at something that was meaningful in the asset or wealth management space, it would certainly be something that would be interesting to us. But that's just not on top of mind right now.
Absolutely, the positioning for us is important. The relative positioning for us is important. We are trying to close the return gap first on our own. If I was to look down the line, then obviously it's not just important for us to be closing the return gap, but at some point our ambition is to actually be in the front. For that, obviously down the line, something like an inorganic move would be important. But right now, honestly, there's enough work for us to keep us busy with what we have to do in-house.
Okay. That's very clear. Thank you.
Then the next question comes from Sushil Deo from Bernstein Autonomous. Please go ahead.
Hi. Thanks for all the details. I have a couple of questions. The first one being your P2R has reduced by 25 basis points. Can you provide any details as to if there are any specific risks which have been mitigated, and will this change or reduce your CET1 in the longer term? Secondly, you have two AT1 calls coming late next year, so how early will you consider refinancing them? Is an LME alongside a new deal on the table for the first of the calls? Thank you.
Yeah. I'll let Richard take the second one. I think I just, in some ways, answered the P2R question as a response to the first question. I don't think it's just a matter of risk mitigation. I think it's essentially a matter of us basically making our business model more predictable, more structurally profitable, and along with the de-risking that we've been doing on our commercial real estate portfolio, just one example.
Obviously, if you look at our litigation risks and our contingent liabilities that we disclosed, they have come down year-over-year. But I would say it's a totality of better governance, better risk management, better business model, and as I said, the work there is not done. It's actually continuing. So I hope that we are going to be seeing more and more of these reductions as the years go by.
I would say it is all about profitability and obviously overall risk mitigation. If you can see, ours was the largest P2R reduction year-over-year amongst all of our peers. We may have also had a slightly higher starting point, but it is still very fulfilling to see that we got a 25 basis point reduction in just one go. That is on the back of 5 basis points from last year. Richard, I do not know if you want to talk about AT1s.
Yeah, sure. Thanks for the question. Yes, you are right, we have a couple of calls, AT1 in Q4 of next year, so the actual assessment around the economics we will assess close to the date. As I said in my earlier remarks, we are still working through the issuance plan for next year. Typically, there is always some AT1 or Tier 2 issuance, so whether we call or replace, it is still to be decided depending on our balance sheet needs at the time.
Makes sense. Thank you. If I can fit in one more, please, on the MREL SNP supply. Is it expected to be lower next year as a result of requirement reduction last quarter? Thank you.
Yeah. Same sort of a response in general. Still working through that issuance plan. Like you say, I think in previous years, we typically issue between EUR 15 billion and EUR 20 billion. This year is a little bit less than that. I would say we have not finalized that plan, but I would imagine it would be very comparable to previous years. Within that, there will be an SNP component as there has been in the last few years. That will be the guidance I can give at this stage.
Got it. Thank you so much.
As a reminder, anyone who wishes to ask a question may press star and one at this time. The next question comes from Ravi Pragria from Yuto. Please go ahead.
Hi there. Thank you very much. One quick question on deposits. Very strong growth this quarter, I think led by Corporate Bank. Maybe you could just share the character or the operational, the stability of those deposits. And I think Richard mentioned he expects that to normalize into year-end. Do you mean that you expect deposits to shrink from here, from this strong starting point? Thank you.
So in terms of Q3 in the Corporate Bank, the growth is really coming more from sight deposits, which is coming in line with our wider strategy. And I would say a decent chunk of that is also coming out of our German deposit base. So two-thirds to three-quarters of the increase in the quarter is coming from there. One thing, I guess what we're trying to say, there were some quarter end temporary balances that came into the Corporate Bank.
We're just saying that those are unlikely to stay with the company, and we expect a more normalized level in Q4. But the overall trajectory remains one of growth across all of our product ranges and segments globally. But in particular in Q3, it was coming from Germany.
Thank you.
Ladies and gentlemen, this was the last question. I would now like to turn the conference back over to Philipp Teuchner for any closing remarks.
Thank you, Moritz, and just to finish up, thank you all for joining us today. You know where the IR team is if you have any further questions, and we look forward to talking to you soon again. Goodbye, and have a nice day.