Corinne Cunningham

Corinne Cunningham from Autonomous asked for an update on commercial real estate (CRE) provisions, specifically what new factors are causing continued higher provisions despite previous guidance that the problem was nearing its end. She also asked if there were any signs of improvement.

Answer

James von Moltke (CFO) explained that provisions are driven by new facts such as lower appraisals, impaired cash flows from tenant departures, and visible market valuations. He noted that the focal point remains West Coast office (Seattle and LA) and that a larger single-name event outside of office also contributed. He expressed caution about calling a floor, having seen 'false dawns' before, but hoped they were at the tail end of the cycle.

Corinne Cunningham from Autonomous questioned Deutsche Bank's recurring higher provisions for commercial real estate (CRE), particularly given previous guidance suggesting the problem was nearing its end. She sought to understand what unforeseen issues were contributing to the continued need for increased provisions.

Answer

James von Moltke, CFO, clarified that provisions are driven by new facts such as lower appraisals, impaired cash flows from tenant departures, and visible market valuations. He noted that while a larger single-name event outside office CRE occurred, the primary focus of challenges remains West Coast office properties (Seattle and LA). He expressed caution about calling a definitive floor but hoped the bank was nearing the tail end of the cycle.