Stephan Engels – Chief Financial Officer

Benjamin Goy – Deutsche Bank Nicholas Herman – Citigroup Britta Schmidt – Autonomous Johannes Thormann – HSBC Riccardo Rovere – Mediobanca Andreas Hakansson – Exane Kiri Vijayarajah – Barclays Anke Reingen – RBC Jochen Schmitt – Metzler Hugo Cruz – KBW

Good morning, ladies and gentlemen. Welcome to Commerzbank's Conference Call for the numbers of the First Quarter 2017. We had a decent start into the year and the execution of our Commerzbank revenue is well on track. Besides the completion of several first milestones, I am pleased to report that our growth path continues. We have gained 300,000 net new German customers in PSBC since last October, which is ahead of plan, and we launched further growth initiatives in our operating segments. I will provide you with more details of this in a moment. Our numbers this quarter reflect the progress we are making. In Q1, we achieved an operating result of EUR314 million and a net result of EUR217 million. The basis for this result is slightly increased reported revenues of EUR2.4 billion, with improved underlying quality, given the significant one-offs and valuation gains in Q1 2016. The net return on tangible equity stands at 3.3%. We continued our strict cost management. Expenses were reduced by EUR28 million year-on-year to EUR1.9 billion. Rigid cost control compensated yet again a higher full year bank levy of EUR171 million to be booked in the first quarter. In particular, due to the new burden in Poland, the European Bank levy increased by EUR28 million year-on-year. Our Q1 LLPs amount to EUR195 million, in line with our full year guidance and include EUR116 million of shipping provisions. Thanks to our German-centric business model, the overall risk profile of Commerzbank remains very healthy, with a benchmark low NPL ratio of only 1.5%. We further strengthened our capital position with a fully loaded Core Tier 1 ratio of 12.5%, without the recognition of the Q1 net result. The 20 basis point improvement compared to year-end increases the buffer against upcoming restructuring charges plus any further regulatory refinements and accounting amendments. The ratio has been driven by lower operational risk and credit risk RWAs, with the latter due to ongoing portfolio efficiency measures. Also on capital, our leverage ratio stands at the comfortable 4.6% and forms no constraints to our growth ambition. As a positive tailwind to our pricing competitiveness, I'd like to highlight that Commerzbank has now received a Single A counterparty risk and deposit rating by all our 4 mandated rating agencies. Moving to Slide 2. Let me provide you with more details on the execution progress of our Commerzbank 4.0. We have committed to a clear plan to make the bank simpler, faster and more efficient, and we have completed the first tangible milestones. Let me highlight a few of them. Growth is an essential part of our strategy. To underpin this, we started further initiatives in both Private and Small Business Customers and Corporate Clients. For Corporate Clients, we launched a EUR6 billion loan initiative to extend our market share with German Mittelstand. As an anchor product for PSBC, the new and 100% digital consumer credit offering is now rolled out in our retail franchise. The digital transformation of Commerzbank is on schedule, with 6 out of the 14 journeys now started. Ahead of schedule is the staffing of the Digital Campus. To date, we have 600 FTEs working on the ground, and we are committed to adding another 400 FTEs. In March, tax – talks with the workers council began in a constructive atmosphere. I'm unable to provide you too many details at this stage, but I can tell you that we reached the first agreement on an early retirement scheme measures in April. Slide 3 provides you with a deep dive of our digital consumer loan offering. Having started with about 80 branches in early April, this digital platform will be established across our branch network by the end of June. Michael Mandel, our board member responsible for PSBC, will present further details, including the planned product evolution, at our workshop in London tomorrow. With all product variance in place, we aim to triple our new business volumes to EUR6 billion by 2020. This is based on a process that takes less than 10 minutes from initiation to approval. To give you some more background on the existing consumer finance business. As you know, we had a joint venture in place that will cease to exist in Q3. Newly generated loans will be for the benefit of Commerzbank balance sheet and profit and loss accounts. Existing loans taken over from that joint venture will not extend our balance sheet, as they replace the funding line provided by Commerzbank to the entity. We updated Slide 4 to give you an overview of our committed key execution indicators and their development over time. Key growth measures in Private and Small Business Customers are ahead of plan. Assets under control exceed our year-end target of greater than EUR345 billion. Besides growth across products, assets under control benefited from a positive market performance impact on securities. Since the launch of Commerzbank 4.0, net new customers in Germany amount to a favorable 300,000, of which we gained 151,000 in Q1, supported by our partnership programs. For Corporate Clients, we aim for both targeted growth and improving capital efficiency. As we have made clear in the past, joining forces in Corporate Clients is not a quick win. However, we achieved first tangible progress already. Regarding our growth target, we are on track. Since the beginning of the last year, we have acquired 2,000 net new clients, 700 of those year-to-date. The RWA efficiency ratio slightly increased to 3.8%, driven by a traditionally stronger capital markets Q1. Having said that, 3.7% remains our 2017 target. Moving on with our group execution indicators. Due to significant progress on our consumer loan process in particular, the digitalization ratio improved to 36%. In Q1 2017, we spent 55% of our IT budget for digitalization projects to allow for smooth ramp up of our journeys. With this in mind, 55% should not be considered as a sustainable level yet, running the bank projects will gain weight in the course of the year. Let me now present our Q1 financial results. While Slide 5 summarizes the development of the key financials, a segmental breakdown of the operating results is provided on Slide 6. As I will focus on Corporate Clients, PSBC and ACR later in my presentation, let me quickly comment on Others & Consolidation. In a rather flat Q1, Others & Consolidation ended up with an operating result of minus EUR97 million, at the better end of our guidance. On Slide 7, you'll see a summary of exceptional revenue items, knowing that you consider them in your models, we will provide this comprehensive overview as part of our extended disclosure going forward. As already pointed out, at full year results, 2016 was supported by nonrecurring items. Q1 2016 revenues benefited from EUR155 million one-off, including hedging and valuation adjustments. There are no one-offs to flag in Q1 2017, but positive hedging and valuation adjustments that amounted to EUR90 million. Having said that, let's have a look at the development of group P&L in the first quarter on Slide 8. Year-on-year, we managed to improve underlying revenues by EUR116 million despite the ongoing burden from negative interest rates. This leads to slightly higher revenues of EUR2.4 billion. The positive revenue development was mainly driven by net commission income from higher volume in securities. In addition, we reduced funding costs in the ACR unit, which had a positive NII impact. Based on an IFRS tax rate of 25% and minorities of EUR20 million, we achieved a net result of EUR217 million. Slide 9 provides you with a more detailed look on cost transition. Overall, group cost stand at EUR1.9 billion as of Q1, EUR28 million lower than a year ago. What is my assessment on this? Year-on-year investment growth remained almost unchanged. Due to the start of further initiatives over the next month, I expect a higher run rate here for the following quarter. Alongside the implementation of Commerzbank 4.0, depreciation of self-developed software is likely to increase, given the account – amount of new applications created in-house. Cost savings are mainly driven by a gross FTE reduction of 1,650 people year-on-year. These reductions are still due to programs agreed in the past. Thanks to rigorous cost control, we again, successfully overcompensated additional external burdens. In Q1, we booked EUR192 million of bank levies and Polish banking tax. This includes the newly introduced European Bank levy in Poland and a full quarter of the Polish banking tax, adding EUR8 million. Our risk profile remains very sound, as illustrated on Slides 10 and 11. Q1 loan provisions amount to EUR195 million, well in line with our full year guidance. PSBC and Corporate Clients contribute only EUR76 million, reflecting the continuously benign German economy and the high quality of our loan book. The result is lower than 10 basis points cost of risk for the 2 operating segments. Current market indicators point to an improved shipping market conditions. The coming quarters will tell whether these observations are sustainable. Nevertheless, we booked EUR116 million Ship Finance LLPs in Q1, in line with our conservative risk policy and our guidance. Our successful effort to run down our ACR shipping exposure continued in Q1 with another EUR300 million of portfolio reduction. This resulted in a remaining performing book of below EUR3.1 billion. As made clear at our Capital Markets Day, we aim to run down our shipping book almost completely by 2020. The group nonperforming loans amount to an unchanged, low EUR6.9 billion. In terms of quarter-on-quarter dynamics, the increase in Ship Finance was compensated by lower Corporate Clients NPL. Let's carry on with the operating segments and start with Private and Small Business Customers on the next 2 slides. PSBC had a successful start to the year, continuing the above-average growth track in a competitive German market. Besides net customer acquisitions ahead of plan, also growth in assets under control continues across products. Based on our strong market position, we again increased loan volumes. New mortgage sales in Germany grew by 17% year-on-year, while keeping our strict origination standards in place. As of Q1, the German mortgage book stands at EUR60 billion. Lending remains a key to stabilizing NII against ongoing weakening of domestic deposit margins. Based on an improved market sentiment, we benefited from further organic volume growth in securities. This has been supported by positive market performance. In this context, I want to highlight the proportion of the securities volume in premium custody and managed accounts has further grown to 59% in Q1. Overall, net commission income increased by 12% year-on-year and is a major contributor to an overall improved revenue quality. Excluding EUR40 million of nonrecurring items in Q1 2016, we managed to improve underlying revenues in a continuously different interest rate environment. Q1 proved mBank's substantial growth track. Thanks to higher net commission and net interest income, revenues are up 9% year-on-year. NII benefited from volume growth of consumer finance products, with record new sales as well as higher volumes and margins from deposits. On a German subsidiary level, contract also had a strong start to the year, with EUR4.3 billion more assets in Q1. Assets under management exceeded EUR80 billion for the first time. This growth path with likely client trading activity helped to mitigate lower interest income. Commerz Real delivered good operating revenues compared to Q1 2016. This quarter has not benefited from meaningful appraisals. The increase in operating expense for the segment can be mainly explained by higher regulatory costs, in particular in Poland, which amount to EUR32 million. Across the business, PSBC achieved an operating result of EUR194 million in the first quarter. Slide 14 and 15 provide you with more details for Corporate Clients. Major current focus of Corporate Clients is the integration of MSB and Corporates & Markets to strengthen our position as the number one bank for corporates in Germany. Amidst the strategic realignment, the operating result of the segment came out at EUR250 million. As a traditionally stronger capital markets quarter, Q1 saw sound primary markets activity in both equity and debt capital markets. DCM across products increased revenue by 16% year-on-year. Commerzbank is a top 3 house in European senior financials, underpinning our leading debt house position. Also the FX business had a strong quarter. A healthy demand for capital market products, in particular, holds true for Mittelstand and helped to offset the continued headwinds from negative interest rates. This demonstrates that an integrated setup of commercial and markets business is paying off. As a result, year-on-year revenues for Mittelstand remained broadly flat. A different situation applies for International Corporates, where revenue were impacted by muted client activity, leading to lower net commission income. The commercial business saw an overall stable development. Please be reminded that in Q1 2016, we decided to refocus the business model for Financial Institutions in order to cope with our tightened compliance and risk framework. This resulted into a significantly lower number of corresponding banks. Whereas quarter-on-quarter revenue developed steadily, the year-on-year comparison is still witnessing this decision. Compared to a challenging Q1 2016, EMC benefited from the pickup in client demand for investment products, this led to revenues returning to the historic average in this area. Let me round up the operating segments by moving to Slide 16, which provides a consolidated view on the loan and deposit volume dynamics. Since the beginning of the year, loan volumes in PSBC has grown – have grown by EUR2 billion, whereas volumes are overall stable in Corporate Clients. The increase in deposit volumes can be explained by successful current account acquisitions in PSBC. As pointed out in the past, we remained very committed to actively mitigating the negative interest rate environment as the key measure is Corporate Clients who successfully reduced EUR18 billion of deposits since December 2015. In addition, we continued to negotiate deposit fees on a bilateral basis. Our guided interest rate sensitivity remains unchanged, as you can see on Slide 30 in the Appendix. Finally on segments, please turn to Page 17 to have a look at ACR. The Q1 operating results stands at minus EUR33 million, better than in previous quarters. Let me put this result into context. Q1 clean revenues came out at an underlying run rate of around EUR20 million, which forms a good proxy also for clean quarterly revenues going forward. Only to guide, valuation effects amount to EUR91 million in the first quarter and are again a main driver of reported revenues. EUR68 million of those stemmed from the recovery of a fully written-off hedging counterparty exposure in public finance. Besides valuation effects, ACR revenues benefited from the reduction of funding. On a positive note, we managed to reduce Commercial Real Estate and shipping exposures quarter-on-quarter by EUR300 million each, thereby offsetting the increase in public finance. The recovery of the above-mentioned hedging counterparty exposure caused an increase in both Public Finance EaD and RWAs. LLPs have been predominantly booked for Ship Finance exposures, while there are only small provisions for Commercial Real Estate loans. Let's continue with RWAs and capital. Slide 18 highlights the RWA development over time. At the end of March, group RWAs stood at EUR168 billion (sic) [EUR186 billion], a bit less than EUR4 billion below end of 2016. Quarter-on-quarter, OpRisk RWAs decreased by EUR2.2 billion, mainly due to the roll-off of external loss events reflected in the industry-wide database. Thanks to our active portfolio management, credit risk RWAs has been reduced by net EUR1.7 billion. As highlighted, the management of RWA efficiency is at the heart of our Corporate Client strategy. The decrease in Corporate Client RWA has been partially offset by higher RWAs in Public Finance, due to the recovery of a hedged counterparty, as explained. On Slide 19, we show the increase of our fully loaded Core Tier 1 ratio. Quarter-on-quarter, the ratio improved 20 basis points to 12.5%. This is solely driven by lower RWA. OCI capital items moved in different directions, pretty much offsetting each other. Positive quarter-on-quarter development of the currency translation reserve can be primarily explained by a strength in Polish zloty and helped to net minor movements of the revaluation reserve. Negative effects from the actuarial gains and losses mainly stemmed from losses on plan assets. The discount sector remained unchanged at 1.8%. As we expect restructuring charges over the remainder of the year, we haven't recognized the Q1 net profit in Core Tier 1 capital. Ladies and gentlemen, let me wrap up the quarter with decent starts to 2017 and our numbers reflect the progress we are making. The execution of Commerzbank strategy is well on track, as shown by some execution indicators being ahead and others being in line with our plan. The growth path continues, and so does our stringent cost management. The Core Tier 1 ratio improved to 12.5%, gives us leeway for the upcoming restructuring charges and investments in our strategy. To conclude, I would like to provide you with our unchanged objectives and expectations for 2017 on Page 20. Besides further strengthening of our market position, we are fully committed to the swift execution of Commerzbank 4.0 in order to further improve underlying profitability. We keep our fully loaded Core Tier 1 ratio stable at or greater than 12%, balancing out investments, restructuring costs, capital and RWA. We keep our cost base stable and book the first part of restructuring charges for Commerzbank 4.0. Finally, we expect LLPs for PSBC and Corporate Clients on the level of 2016, Ship Finance will be between EUR450 million to EUR600 million. Thank you very much for your attention. I'm now happy to take your questions.

The first question comes from Mr. Benjamin Goy from Deutsche Bank.

Two questions please. The first one on net interest income in the retail division. Could you let us know what performance was on underlying basis Q-on-Q? I think Q4 might have been distorted by property sales. And the second question is on Others & Consolidation. Considering the cost base is seasonally high, and had a reasonably strong performance, just a bit better than the more positive end of your loss guidance. Do you concerned EUR100 million to EUR150 million quarterly loss for 2017? Or should we expect a slightly more positive run rate here?

Yes, indeed on Others & Consolidation, maybe as being – as quick start. Yes, it was a quarter which, again, was a little bit better than our guided range, but the guided range will stay unchanged. NII retail, indeed, especially if you compare year-over-year, I can see – you can see the positive one-offs, for example, EKS in Q1 2016 is also something reflected in NII, at least partly on a more interesting note, if you look at the interest rate environment comparing again year-over-year, the interest rate sensitivity, which is unchanged as guided, if you compare the 3-month Euribor, nothing happened, so there is no positive impact from that one. And on the long end, we still suffer from the comparatively lower rate 2 years ago from the models, so there's a net negative impact, roughly in the dimension of EUR40 million year-over-year, partly compared by growth in loans roughly compensating half of that. The Q-on-Q comparison, as you rightfully mentioned, is also including one-offs and other items. I think you're better off with comparing it on the year-on-year level.

Okay. And the loss guidance would only change with higher rates basically for Others & Consolidation, is that fair to say?

Others & Consolidation consist of several parts, let's put it this way. A part is Treasury, a part is also a corporate center, corporate cost. As I said, the Q1, especially on the IT investment, started very nicely on the digitalization initiatives, where we are fully on plan, maybe slightly ahead, but then let's say, normal corporate projects will probably pick up a bit, which may also influence the Others & Consolidation part. So in general, I'd say we'll stick to the guidance and then see how the year develops.

Okay, thank you.

The next question comes from Mr. Nicholas Herman from Citigroup.

Yes, good morning. Thank for taking my questions. I have three questions, please. So on margins, cost and capital. So on margins, can you talk a little bit about Mittelstand's margins? And when you expect them to stabilize. Secondly, on cost, I appreciate that you cannot say too much on your works council discussions, but could you just talk a little bit about the impact you expect from the agreed – agreements on early retirement scheme? And then also, what the next steps are to the discussions with the works council. And finally, on capital, just quickly, are there any other historic loss events that you expect to roll off from your model in the next couple of quarters?

Yes. You asked margins in our Mittelstand's business, that is a pretty stable, even with a little positive notch, if you compare year-over-year. And going forward, with the growth initiative that we have out in the market, our aim definitely has to be to keep the margins at that level while still going for growth. On the cost side, the instrument that we have, which is not the pure early retirement, it's partly early retirement, so it is not a very easy model, so to speak. We believe that we will definitely book something for that instrument in Q2. Whether we book anything additionally, obviously, depends on the progress of the negotiations, which we should leave alone for the moment, and then we will see what that book – the instrument – the booking of the instrument depends very much on how many people will sign off for that. The tailor-made letters, to the extent, are going out in the next weeks, and then they will assess at the end of the quarter how much of them really have agreed or signed on for that one, and that will then drive the effect. The capital, you asked for whether there are any further OpRisk events running – rolling out of the model?

That's correct, yes.

To be honest, this whole OpRisk RWA modeling with this database is somewhat not very intuitive instrument, let's put it this way, so currently, I'm not aware of any real big jump coming up, which unfortunately doesn't necessarily exclude, but it still may happen. But given – at the – let's put it this way, given the view at the overall industry, I would say, if anything happens, it should rather be to the slightly positive side rather than to the negative side.

Understood. Thank you.

The next question comes from Ms. Britta Schmidt from Autonomous.

Hi, there good morning. I have got three questions, please. Previously you gave a bit of guidance on the net interest income headwind, that you expect, given the lower rates, it was around EUR200 million per annum, where you were trying to offset EUR100 million with higher growth. You talked a little bit about the retail impacts, but maybe you can give us an idea on this guidance for the whole bank. The second question will be on the RWA management in Corporate Clients, can you give us a bit of color as to what you've undertaken there in Q1? And how much more there is still to come for this year? And then the third question, which is the quick update on your views regarding IFRS 9, as well as 10.

Yes. I think the overall NII view remains unchanged since our view on the interest rate environment also remains unchanged. So the EUR100 million net for the full year on the group level is the number you can still and should still work with. We have roughly a net effect in PSBC of EUR20 million, and effect in a similar size in our corporate segment, and I think we can disregard ACR and Others & Consolidation for the moment. RWA management, that has a lot to do with working on DVA hedges as well as on derivatives netting and decreasing volumes of derivatives due to a reduced correspondent banking business. And that is on the group level, partly offset by the counterparty RWAs that I've mentioned earlier. IFRS 9, nothing – no spectacular news, let's put it this way. I think we have seen a general unchanged view of the market that seems to indicate that it is somewhere around the 50 basis points. In general, it's a charge to capital, I expect that we will come up with somewhat more specific guidance on Q2.

And on 10, any update on that guidelines?

No, not really. I have no indication that we should be any kind of outlier or anything like that there.

Okay. Thank you.

The next question comes from Mr. Johannes Thormann from HSBC.

Good morning everybody, Johannes from HSBC. First of all, a follow-up question on your net interest income. You've guide on – Q1 reached another low. Would you expect that the overall level could still decline? Or is this now a low point? And then also in respect to the loan-to-deposit ratios you showed on Slide 16, which declined despite all your countermeasures. The ratio declined in both segments by 1%, again. Is this a trend you're still willing to accept? Or will you increase your countermeasures? Secondly, on your EUR1.1 billion restructuring charge, is it still fair to assume that you will book half of it in 2017 and 2018? Or can you at least give an update if more is booked in one of the years? And, last but not least, is the usual question on tax rate, you're a lower one in Q1, what is your run rate for 2017?

Yes. In general, NII is still burdened by the interest rate environment, as I've mentioned, before. So for the full year, we expect basically EUR200 million gross impact, and that will be compensated by growth on loans and other positions so that it nets out to EUR100 million. Loan to deposit, yes, we have again started another wave of countermeasures, especially around our Corporate Clients. In general, growth in customers, in PSBC as well as in Corporate Clients will go along with a certain growth in deposits. It is obviously one of the focus points, especially in PSBC, to turn those into securities or other products over time. The EUR1.1 billion guidance on restructuring remains unchanged. And due to the lack of any more, how should I say, specific results from the negotiations, the assumptions given on the Capital Markets Day are still the best ones we have. Tax rate was roughly 25% in Q1. I'd say, in general, in line with our long-term, mid-term expectation, which should be somewhere between 20% and 25%.

Okay, thank you.

The next question comes from Mr. Riccardo Rovere from Mediobanca.

Yes, good morning to everybody. Three questions, if I may. The first one on shipping and shipping losses that you are keeping your guidance unchanged for 2017. For what you see in the market, if I have not understood it on correctly, you mentioned that something is moving in the ship financing. Do you think that the kind – the shipping losses could materially be different in 2018 in respect of the EUR450 million, EUR600 million guidance you provide – you're guiding for 2017? This is my first question. The second question I have is still on credit losses. If we assume rates will not move, the kind of loan losses that we've seen in personal – in PSBC and corporate division, is there any reason why this should materially change from what we have seen so far? And then on IFRS 9, if I may, I understand you don't want to provide a guidance, but is it something the – from your first evidence, is it something for which you do not sleep at night?

Traditionally, I sleep very well at night, and IFRS 9 is not changing that currently, as I've said before. LLPs, you are right, given the interest rate environment, and our expectation that it will not change immediately, it is – I think it's pretty obvious that, that definitely will not have an adverse impact on the LLP assumptions. Nevertheless, you should keep in mind that we will add the consumer finance business in the second half of the year, which then will also positively reflected in the P&L, which means that we'll change LLPs a little bit, but it will also change revenue. So in total, it should be a positive. Shipping loans, we have seen definitely some very positive movements in the market, if you compare, let's say, the last 10, 12 weeks, with what we've seen, especially in Q3 and Q4 of last year. There's a clear pickup of charter rates and other stuff. Again, our guidance and our assumptions remain unchanged since the structural issues of the industry are still not solved. And again, I'd see – I'd like to see another quarter of real sustainable improvement before I would want to discuss my guidance on this topic.

Thank you very much. Very clear.

The next question comes from Mr. Andreas Hakansson from Exane.

Yes, good morning. Thanks for taking the questions. Two questions. First one, on capital, I mean you're now at 12.5%, so firmly above the 12% that had been discussed in the past. And given that we do not expect very strong RWA growth, and we still expect profits for the rest of the year, do you really see any reason why you should now be able to say that you're going to be comfortably above 12% for the year rather than at or 12%? Second question, just coming back to the NII in the retail division, you talked – I think you said in your presentation that it's a competitive market, so we know what's happening on the deposit side, but could you tell us a little bit about pricing? So asset margins, how are they developing in Germany at the moment?

On capital, as in general, I don't see any reason why I should change my guidance after one quarter, even though that the quarter had some promising bits and pieces in it. And keep in mind, if we book restructuring charges, that will also burden our capital ratio. And at the end of the year, there is IFRS 9, where we also want to have a certain buffer available. NII, indeed the market in Germany is not only competitive, it is currently also – that has a lot of moving bits and pieces, so for the first time in quite a longer period, we see really dynamics, people changing banks and willing to leave the banks at a higher rate than we have seen before. Asset pricing on margins are pretty stable. And in that sense, not a cause of concern or anything like it.

But given this increased dynamic done, do you see a risk that asset margins might start to fall? And is it also an effect that more banks are willing to lend as they become better capitalized?

Yes, let's put it this way. I think what we currently see is a lot of people trying to establish whether they want to stay with a certain bank or not. And if you have a proper product offering, proper processes and really a product offering that appeals to the customers, that is more driving the dynamics right now than just pure margins. Yes? There is a competitive – competition in Germany but it always has been competitive. And as I said, the margins are stable. And my expectation is that we'll keep them stable. Again, on the reported group level, it will improve as we add consumer finance directly to our books as of Q3, because they tend to have higher margins.

Okay, thank you.

The next question comes from Kiri Vijayarajah from Barclays.

Yes, good morning. Just a couple of questions on capital. Firstly, how often the initial readout reevaluation reserve to say 100 basis point parallel shift in the yield? Have you given this quite detailed information on the NII, but the impact on capital would be quite helpful, it looks like it's kind of moved against you this quarter on Slide 33. And then also, just a quick follow-up on the OpRisk question, so if I understand rightly, if your peer group makes some big settlements, would your OpRisk go up, even if you yourself don't see much change in your litigation exposures in a given quarter?

Let's start with the OpRisk model. The OpRisk model is an industry-wide database, where all operational risk events are put into, so to speak. And that, obviously, then includes settlements, litigation events and whatever is, and they are sorted into several buckets, be it regional or be it line item, so to speak. And that then is translated into our own business model. So yes, in general, bigger events in the industry do have a certain impact. Unfortunately, it is not very easy to forecast. As I said before, currently, I wouldn't see any bigger shift there in the upcoming future, and in simple terms, the tendency should rather to the positive rather than to the negative. Reevaluation results is based on credit spreads and not interest rates. The interest rate sensitivity is with the pension liabilities and the real revaluation reserves in that sense always seems to move a little bit with the Italian credit spreads. And we have – give a little sensitivity chart in the backup in the appendix. Unfortunately, since it is exposed that also have very different durations, a simple 100 basis point sensitivity is not really available.

Okay. Thank you very much.

The next question comes from Anke Reingen from RBC.

Thank you very much. I have some follow-up questions. Firstly, on the provisions, is it correct in understanding your comments at the current stage it will be right to – you could see Q1 has a run rate for the year, but you just rather would wait for a bit more visibility or clarity in the remaining quarters, but it wouldn't be overly optimistic to analyze Q1? Then, on Slide 16, where you show the volume growth, I just am curious about the loan volume trend, how this would look year-over-year in the Private client segment. And how sensitive you think that loan volume growth is to the interest rate level or the rates you're basically offering these loans. And then, lastly, in your comments about capital, you are saying it gives you flexibility with respect to restructuring and investments, and I just wondered what you mean with investment. Is it organic growth? Or would you look at add-on deals?

Yes, your question regarding Q1, I would simply say despite the fact that some of the key execution indicators are ahead of plan and the rest is in line with plan, we keep the guidance unchanged for the full year. Or in other words, I would like to see Q2 before I start discussing anything around guidance. My expectation on loan volumes is that they should grow during the year, both in PSBC as well as in Corporate Clients, where we have, as I mentioned, also the EUR6 billion loan initiative in the market and private clients should both grow on consumer finance as well as all on private mortgages. Capital – sorry, what's the question?

You mentioned...

The investment part. Investment, that is mainly around our strategy. That's not on organic growth. We would do that in a limited fashion, but the focus here is execution of the strategy.

Okay, thank you.

The next question comes from Jochen Schmitt from Metzler.

Good morning. I have one question on your German mortgage loan portfolio. On Slide 38, you state that the repayment rates in your portfolio remained on a very high level. And my question is, could you provide an average initial annual repayment rate for new mortgage loans granted by you in Germany?

Yes, I'm not sure whether I want to disclose that level of also competitive information, but let's put it that way, the current interest – the current low interest rate is something which we actively discuss with our customers in converting that into substantially above historic averages in terms of repayment rates. So after the first interest rate or the first – after the refix for the first interest rate period, we normally do see very, let's say, convincing LTVs that let me sleep again very well, so we have pretty strict standards there.

Thank you.

The next question comes from Mr. Hugo Cruz from KBW.

Hi, thank you. I just wanted to know if you already have any plans to issue AT1s.

As I've said in previous calls, we are watching the AT1 situation, but currently, I'm still not a – I'm not very convinced that it will happen too soon, let's put it this way.

All right, thank you.

And the final question comes from Giulia Aurora Miotto from Morgan Stanley.

Hi, good morning. Thank you for the presentation. Three questions from me. So on EMC, do you have any progress on the planned disposal? Would be the first question, and secondly, in PSBC, so I understand the higher liquidity costs, but even if we strip that out, costs were actually up 1.5% year-on-year. I was wondering whether that's a trend to continue or ultimately the restructuring should show through the cost line in the division as well? And then finally, on the Corporate Clients division, can you perhaps give a bit more color on your EUR6 billion loan initiative? And the new customers that you acquired, who are you taking this from? How do you think your market share development is going here? And any update on other players, how they're responding to your initiative?

Yes, Giulia, thank you. EMC, we have said that we want to have the setup in such a fashion towards the end of the year that we can apply for the necessary licenses, and so far, we are still well and fine on track in achieving of that goal and the discussion and the actions towards the – either IPO our whatever else may happen at the disposal process will not start before 2018. PSBC cost year-over-year is mainly driven by additional Polish banking taxes of roughly EUR30 million, which is the main driver on the cost year-over-year difference. Corporate Clients, the EUR6 billion loan initiative is focusing on core SMEs, with a tendency to the smaller SMEs, where we're also trying to gain most of our new clients and new customers. So far, the feedback from the market has been very positive. And in that sense, I would think that we can see quite some progress throughout Q2 and Q3.

Thank you.

Yes, ladies and gentlemen, many thanks for your questions and the interesting discussions. I would like to say goodbye for today. And I'm looking forward for future discussions with you, and hope to see some of you tomorrow. Goodbye, and have a nice day. Thank you.