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Good morning, ladies and gentlemen, and welcome to the Commerzbank Conference Call. Please note that this call is being transmitted as well as recorded by audio webcast and will subsequently be made available for replay in the Internet. [Operator Instructions]Let me now turn the floor over to Stephan Engels.
Good morning, ladies and gentlemen. Welcome to our conference call on the results of the first quarter of 2019. In Q1, we have maintained our momentum in the implementation of our strategy, Commerzbank 4.0 and have achieved an operating results of EUR 244 million. Firstly, we have continued to progress on our committed growth path. We have added a total of 123,000 net new customers in PSBC Germany, well in line with our goal of 500,000 net new customers in 2019. The economics of new customers are holding up, and their contributions have been important mitigant to the negative interest rate environment, tighter margins and increased regulatory burden in the last years. Helped by the previous acquisitions of new customers, Q1 has been another quarter of strong growth in German loan and deposit volumes. Underpinned by this growth, year-on-year NII has grown by 6% in PSBC Germany. Securities volumes have increased by EUR 15 billion. These developments have led to assets under control exceeding EUR 400 billion, albeit at lower margins than originally expected. Corporate Clients has also maintained its momentum. In the last 3 months, we have further strengthened our position as Germany's #1 bank for the Mittelstand and grown our business with International Corporates. Targeted loan growth with corporates has added around EUR 2 billion loan volume. This has in turn contributed to underlying NII, which has grown by 13% year-on-year. The acquisition of 9,700 net new customers since 2016 has supported this positive development. Combined PSBC and CC increased NII by 9%. Secondly, we have continued our cost management. Q1 operating expenses are EUR 69 million lower than last year. In total, we have operating expenses and compulsory contributions of EUR 1.8 billion in line with our 2019 cost target. At the same time, we have made progress in digitizing our processes. Our digitalization ratio reached 62%, and we have finished the corporate credit Master Journeys and our Digital Campus. Thirdly, we have maintained our strong balance sheet and healthy risk profile based on the sound quality of our loan book with an NPL ratio of only 0.9%, the risk result of EUR 78 million paid at the same level as last year. The Core Tier 1 ratio of 12.7% is our year-end target level and incorporates the 16 basis points impact from the introduction of IFRS 16. As guided, we have accrued for our dividend in line with the 2018 payout ratio. Let me now talk you through our financial results. On Slide 2, we detailed our exceptional revenue items which made the net contribution of minus EUR 34 million while being flat last year. Slide 3 illustrates the seasonal effect of compulsory contribution on operating and net result. The operating result of EUR 244 million is based on improved customer revenue and reduction of operating expenses. In total, the underlying operating performance has improved by EUR 41 million year-on-year, confirming our operational momentum. This compares well to the previous year when considering that compulsory contributions again increased by another EUR 21 million. The negative effect of compulsory contributions has amplified when looking at the net result due to compulsory contributions being largely nontax deductibles with a tax rate of 40% in Q1 2019 and a correspondingly reduced net result of EUR 120 million. In Q1 2018, this effect was mitigated by tax refunds.Slide 4 shows you our key financial figures at a glance, but let me move straight to Slide 5. Underlying revenues have held up in PSBC thanks to NII growth reflecting increased compulsory contributions and minus EUR 20 million exceptional items, the operating profit for this segment amounted to EUR 153 million in Q1. In Corporate Clients between revenues have also been maintained on increased NII growth. The operating profit improved to EUR 121 million, showing first benefit of the new segmental setup. In line with the significantly reduced size of the portfolio, ACR has lower revenues leading to small negative result this quarter.Others and Consolidation has improved its operating result by EUR 36 million to minus EUR 23 million. This is ahead of our guidance of better than minus EUR 75 million per quarter and compensates for the lower contribution from ACR. The improvement is based on EUR 20 million lower operating expenses. It has earlier also been supported by contributions from our strategic investment in fintechs that start to pay off.Let's move to Slide 6 with the group results. The segmental contributions had led to an overall stable business performance reflected in the group operating result of EUR 244 million. Underlying group revenues are almost at the same level as Q1 last year. NII increased by EUR 129 million year-on-year while NCI is EUR 34 million lower. The improvement in our customer business has also more than offset the slightly lower fair value results in Corporate Clients. The risk result was stable. Operating expenses were year-on-year EUR 69 million lower in the quarter, more than covering for EUR 21 million increase of compulsory contributions, which were fully booked in Q1. The net result stood at EUR 120 million reflecting 2 factors: first, a high tax rate of 40%; and second, a EUR 19 million pretax loss from discontinued EMC business in the challenging equity markets environment. This is in contrast to Q1 last year, which benefited from a very low tax rate due to one-off tax refund and a pretax profit of EUR 42 million from EMC. Over the course of 2019, I expect the IFRS tax ratio to return towards a more normalized level. Concerning the EMC business being transferred to its new owner, Societe Generale, is progressing in line with plan. There are costs involved with these transfers as well as benefits. They will not be evenly distributed between quarters. Overall, we expect a lower double-digit million negative operating results from the discontinued business in the financial year 2019. Slide 7 provides you with an overview of our cost development, which is in line with our full year guidance. In order to further improve transparency, we will report operating expenses and compulsory contributions in separate line items going forward. Compulsory contributions consist of bank levies, banking taxes and payment to deposit insurance schemes. In the Appendix, we have provided the chart that details development over the last years. While we have meaningfully reduced operating expenses, compulsory contributions have gone up from less than EUR 300 million in 2015 to EUR 420 million in 2018. With the increase of the European bank levies in Poland, these are likely to again be higher in 2019. Looking at Q1 group expenses, excluding compulsory contributions, stood at less than EUR 1.6 billion. Continuing what we started in the second half of last year, we are increasing the efficiency of our investments by reducing the use of external suppliers and strengthening our internal resources. In Q1, this led to a cost-reduction of EUR 40 million. Our significant investments in compliance has peaked and started to pay off. We have implemented robust policies and procedures, comprehensive training as well as better transaction monitoring and sanction screening systems. All the above ensure the targeted risk-oriented and sound management of compliance and in particular AML risks.While total expenses were EUR 7 million higher, we were able to mitigate general increases in personnel cost by net staff reduction and cost-efficient costing. Over the course of 2019, we will continue our efforts to deliver on our cost guidance of well below -- of below EUR 6.8 billion for the full year on our way to EUR 6.5 billion in 2020. Let's move to the risk result on Slide 8. The German economy has continued to expand. Our economists expect low but positive GDP growth of 0.4% in 2019 after 1.4% in 2018. Based on the stable German economy and our healthy risk profile, we have experienced low default levels in Q1. This is reflected in our low group risk result of EUR 78 million for the first quarter. As was the case last year, ACR and Other -- Others and Consolidation did not materially contribute.Let's continue with the operating segments and start with private and small business customers on the next 2 slides. This segment is continuing its progress in line with our strategy. Based on our consistently high customer satisfaction scores and comprehensive product offering, net new customers growth has continued. We are continuously tracking yearly cohort of newly acquired customers. The economics are holding up well since we intensified our focus on new -- net new customer acquisitions in 2013. New customers continue to become profitable within 18 months and yield around EUR 300 in revenues per year. More details are provided in the Appendix on Page 32. The benefits of our strategy are clear and visible in business volumes. Based on our growing customer base, we have seen net increases of deposits in Germany of EUR 4 billion, loan growth of EUR 2 billion and net new inflows and securities accounts of more than EUR 2 billion in the first quarter. Together with the improvement of market indices, this has led to an overall EUR 15 billion increase of securities volumes and allowed us to reach more than EUR 400 billion of assets under control. Our March business continues to be robust with new sales of more than EUR 4 billion in Q1. The German mortgage book stood at EUR 76.5 billion at the end of March. The consumer loan book is at EUR 3.7 billion. This growth in loans and deposits resulted in increased NII. Year-on-year, in addition to the contribution of new loans, we were also able to increase the amount of stable deposits in our interest rate model. This has added to NII while slightly reducing our P&L sensitivity to a potential increase in interest rates. Our sensitivity to rising interest rates now stands at around EUR 900 million after 4 years and EUR 500 million after 1 year assuming a 100 basis point parallel increase in rates. More details can be found on Page 25 in the Appendix of the presentation. Year-on-year, these measures compensated for the reduced NII, NCI from the transactional securities business reflecting the MiFID II regime. The resulting operating performance of PSBC was healthy with slightly higher underlying revenues, lower operating expenses and a nearly unchanged result year-on-year and quarter-on-quarter. These positive developments are not fully visible in the operating result of EUR 153 million. This is mainly due to nonrecurring items in mBank. While mBank's underlying performance was strong, there was a one-off gain of EUR 52 million from the disposal of the Polish group insurance business last year and compulsory contribution increase by EUR 23 million this year.Slide 11 and 12 provide an update of corporate clients. In Corporate Clients, we have seen the benefits of the growth strategy based on our new segmental setup with a clear focus on our International and business from Corporate Clients. In the first quarter, we have already reached the growth target of the year, getting customers and increasing corporate loan volumes within our prudent lending standards, confirmed by the risk result of only EUR 28 million. Q1 is proof of the resilience of our Corporate Clients business and an example of what is possible. The challenge now is to build on this progress. Based on the increasing volumes with corporate customers, underlying NII has improved by 13% year-on-year. Loan growth generates NII and is the foundation for establishing long-term and profitable customer relationships. Our aim is clear, to broaden customer relationships and to cover more products and services. With our Mittelstand and large corporate customers, we see this in growth of trade finance, cash management and capital markets solutions. The Financial Institutions franchise is also a vital component of this strategy providing products like trade finance through its network. Additionally benefiting from lower cost and reduced compulsory contribution, the operating profit improved to EUR 121 million in Q1. Finally, on segments, please turn to ACR on Slide 13. The segment has continued its P&L neutral reduction of specific portfolio. On group level, we had an exposure of around EUR 300 million spread over the remaining 38 ships. The Commercial Real Estate portfolio is also gradually running off. In Q1, we have decided to consolidate the management of non-German municipal portfolios in Treasury who will efficiently manage this exposure together with its existing portfolio. The remaining ACR portfolio consists of around EUR 800 million Commercial Real Estate, EUR 200 million ship financing and EUR 3.6 billion hedged public finance exposures. These are ahead of fair value and long dated. The Q1 operating result of minus EUR 7 million reflects the reduced size of the portfolio. However, going forward, we might see some volatility driven by valuation effect. Let me continue with RWAs and Core Tier 1 capital on Slide 14. We started the quarter with Core Tier 1 ratio of around 12.7% reflecting the guided IFRS 16 implementation impact of 16 basis points or around EUR 2 billion of credit RWA. Taking this as a starting point, targeted loan growth in PSBC and CC partially offset by reductions in other areas has led to a net increase in credit RWAs of around EUR 3 billion over the quarter. These RWAs were covered by increased capital mainly from retained earnings, net of dividend accruals, and reduced regulatory deductions. As a result, our Core Tier 1 ratio at the end of the quarter stood at 12.7%. We guided in February that we expect to receive our TRIM results in the first half of this year. This is now anticipated for Q2 and would lead to a temporary reduction of our Core Tier 1 ratio below our year-end target of 12.75%. Ladies and gentlemen, let me wrap up the first quarter. We have maintained our operational momentum in Q1 and continue to move forward with the successful implementation of our strategic Commerzbank 4.0. Overall, we have achieved an improved and underlying business performance in Q1, which has been supported by our customer-centric growth strategy. In Q1, we have achieved good new customer and asset acquisitions in both PSBC and CC. We are on track to reach our cost target, we've maintained our good risk profile and we have accrued full dividend. To conclude, I would like to provide you with our unchanged objectives and expectations for 2019 on Slide 15. We will continue with our growth strategy and expect higher underlying revenues. In our cost management, we will take a further step towards our cost target of EUR 6.5 billion in 2020 and plan for cost of below EUR 6.8 billion in 2019. We expect a risk result not below EUR 550 million for 2019. We aim to maintain a dividend payout ratio at a level comparable to 2018. Finally, we target a Core Tier 1 ratio of 12.75% by year-end. Following our usual internal strategy discussions, we will invite you to Capital Markets Day in the autumn to update you on how we will further evolve this strategy beyond 2020. Thank you very much for your attention, and I'm now happy to take your questions.
[Operator Instructions] And the first questioner is Nicholas Herman from Citigroup.
3 questions if I may, please, 2 on NIM and 1 on costs. So your deposit growth remains incredibly strong, which I guess is a positive -- which is positive, but the full on the yield curve is clearly unhelpful. How do you manage that conflict? And would you expect to model less deposits going forward? Second is part of that as well. NII and PSBC and corporate client -- corporate customers fell quarter-on-quarter. how much of that NII fall is from lower deposit margins? And how much is from lower loan margins? And then thirdly, on costs. Do you expect investment spend to pick up over the rest of the year versus the first quarter levels? The reason I ask is because if I assume that only the bank levy does not recur from the compulsory contributions, then if I annualize the rest, I get to EUR 6.7 billion, which is clearly well below your full year '19 cost target.
Nicholas, as you rightfully said, deposit growth in principle is positive since it reflects basically the inflow of net new customers. Part of the overall strategy is also in parallel to grow loan books, which is what we are doing, albeit, and that partly answers your questions, on slightly depressed margins throughout the market both in the private client segment as well as in the corporate segment. The loan -- the deposit development also is a little bit to do with what is going on under MiFID II, because customers are, let's say, a little bit more hesitant to invest because they find the, let's say, surrounding process somewhat, should I say, complicated. But that is clearly a management task for the team, especially in PSBC. In general, we are not really seeing a negative NII impact just from the interest rate environment. The vast majority of that is well behind us between, let's call it, 13 and somewhere in 17. So the margin compression in the German market is between, so to speak, front book and back book is what drives the development. And again, part of that is trying to be compensated through growth. Cost, again, first quarter, I think, went well on cost. I would nevertheless expect at least to increase invest activity, albeit and that has been part of the also Campus 2.0 setup that we are planning to start and go live somewhere in July. The very aim is doing more with less, so to speak, which means getting -- employing less of the costly external suppliers being basically traded for efficient and less costly internal staff, trying to keep output at somewhere -- at a comparable level while hopefully keeping cost contained. So from that point of view, I would keep my guidance on cost completely unchanged. But as you rightfully found out, probably Q1 was giving us at least a little bit leeway for the following quarters, let me phrase it a bit carefully from today's perspective.
Cool. Got it. [indiscernible] cost data would continue as possible digitalization efforts that you've done, even if you do or are able to increase investments. Just to clarify on the first point. So it sounds like the NII pressure that we saw in the first quarter was because of the loan book and not because of the deposit book -- deposit side. Did I hear that right?
You did hear that right.
The next questioner is Johannes Thormann from HSBC.
3 questions from my side as well. First of all, regarding your net interest income, it seems that we come to a new run rate despite less interest days, less lender days, interest rate was pretty stable -- interest income was pretty stable. Is this now a good run rate for the next quarters as well? Secondly, on your dividend policy. Just for modeling purposes, previously, you had EUR 0.05 step. Is this still a good way of thinking? Or should we rather think about EUR 0.01 step for the future? And the last thing is your fee income, especially in PSBC, continues to disappoint despite all your pricing moves. Have you probably overdone with the current measures like improve -- increasing prices on the one side and on the other side giving a long no-fee campaigns and you have to change your fee model in this respect that you go for a lower general run rate but without the big fee holidays?
NII, your question about run rate, my answer will be, to be a bit precise, I would expect for PSBC and CC, the NII being a good run rate, and we would expect that to be even slightly higher in total than in 2018. On dividend, there's numerous ways to phrase it and probably also numerous ways to put it into a spreadsheet. My simple answer is we aim to maintain the payout ratio that we have seen in 2018. And net commission income, that is mainly, as I said, based on the transactional revenues from securities, which are, let's say, clearly impacted by the MiFID II requirements, topic that you probably also know from your own group.
The next question comes from Giulia Aurora Miotto from Morgan Stanley.
A couple of questions from me as well. The first one on the loan book growth. That's very healthy 9% year-on-year in PSBC, 7% year-on-year on Corporates, and that seems ahead of the market if I look at the Bundesbank data. Now my question is, how do you see the competitive environment? And how do you manage to grow market share there? That's my first question. Then, the second question regards revenues. So these are still expected to be up year-on-year according to your guidance. However, they were down in the first quarter. And also if I read your outlook in the report, it points to a marked deterioration in the mood among German exporters, and of course, growth expectations have been revised down. So I was wondering how come you still keep the guidance for revenues up versus this deteriorated macro environment.And then the third one is just a clarification. Can you please quantify the NIM impact? Perhaps, I just missed it.
Giulia, the loan book in general, I think that is, at the end of the day, why are we growing ahead of Bundesbank statistics. First of all, you need to make -- you need to understand that in the Bundesbank statistics, there are all kinds of bits and pieces in there, including Commercial Real Estate, which we are only doing in a very limited and customer-centric way. So somehow movement in this parts of the statistic probably needs to be filtered out to get a clearer growth. And nevertheless, the second probably more important part of the answer is that customers like us. You have seen that we have some -- won some of the more important contests in the PSBC segment in Germany. And also feedback from our Corporate Clients even through the discussions, which we had over the last 10 weeks here in the market, has been phenomenon and that is something which we plan to build on. So competitive environment, I would say, in general is unchanged. The basic dynamics of the German markets that we have basically a deposit overflow, which is seeking proper employment or at least a better employment than minus 40 at the ECB, as I put it very simple, is obviously in general putting pressure on new business margins and that is across the board. And I think in comparison, we're having a relatively shorter back book, especially in the Corporate segment. So I think going forward, the P&L impact should kind of flatten out. But in general, the market is more or less unchanged. With respect to the guidance, the revenue outlook with increase is valid, although Q1 versus Q1 is not a tailwind, so to speak. If I just look at the NII in the quarters in 2018 versus Q1 2019, and then I think we are feeling comfortable to keeping our guidance there despite and that is also true despite the somewhat more, let's say, moderate or dampened macro outlook that we obviously are facing currently.
And the TRIM impact?
TRIM? NIM, as I said, from the -- TRIM? There's a bit of confusion here. So we are talking TRIM?
Yes.
As I said, TRIM, we expected it to be in H1. Since it hasn't happened in Q1, it probably will happen in Q2. That's obviously our expectation. We are in discussions, so I'm a bit hesitant to play with numbers. But our capital guidance for the year is unchanged at the 12.75%. And as I've already said -- or we've already said on the annual press conference, we would probably expect it to be below the 12.75% in the first half of the year considering the TRIM impact.
Next up is Riccardo Rovere from Mediobanca.
Just wanted to get back 1 second in on the loan growth, especially in the corporate book. Do you see anything, any temporary transactions that has pushed up the loan book in this quarter and might eventually revert in the coming quarters? This is the first question. The second question I had is on deposit growth. As a colleague of mine was pointing out before correctly, it's pretty impressive the one that you showed this quarter. I was wondering whether there was a switch from assets under management in the quarter that bumped up deposits and maybe depressed assets under management? And if that is the case, do you see the possibility of switching back into AUM and eventually supporting seen in the coming quarters? Very final question from my side is on the EUR 550 million credit book guidance. You've reported EUR 78 million. You don't need to be a rocket scientist to understand that in the EUR 550 million for the full year, the receivable 3 quarters would be -- should be much, much worse than what we have seen so far. So I was wondering whether you see any recent macro IFRS 9, whatever, that might bring you to kind of EUR 550 million? Or is the EUR 550 million is maintained just because it's the first set of numbers of the year and you prefer to keep it unchanged and waiting for to have a little bit more visibility over the course of the receivable quarters?
Yes. Riccardo, the first question was, would -- is there anything in the loan book that is so transitory that I would expect it to reverse directly in Q2 or Q3. The answer is no. I don't know of anything that is of that kind. As I said before, general sentiment is good, and I think we are getting the first fruits out of what has been a somewhat slower-than-expected but still successful setup of the new segment. And in that sense, as I said in my little speech, the task going forward now is to make sure that the progresses that we have both on the customer view as well as improving product view can be maintained and hopefully even improved over the upcoming quarters. Deposit growth and securities, first of all, within the growth in securities of EUR 15 billion, there is EUR 2 billion of net new inflows, so that is definitely a positive. And on the other hand, a big deposit base always needs employment, so to speak. And in that sense, that is obviously a task for the upcoming quarters both in securities volumes hopefully as well as in loan book growth. Then, about rocket science around risk cost. My simple way of calculation is if I take the run rate of H2 of last year, then keep in mind that the first quarter normally is incredibly short while the fourth quarter is substantially longer, and then you take around EUR 280 million as the run rate from last year, take the EUR 80 million that we have in quarter 1 this year, assume that the last quarter will be a bit longer and a bit more costly, more than EUR 200 million number, then you finally get up to a level like this, albeit given that the Q1 was indeed extremely low even if you compare it to last year when we had the same number but including some substantial write-backs. So in that sense, maintaining a guidance until you really know better obviously is also prudent way of dealing with it.
Okay. I understand. Just to get back 1 second on the second question on assets under management and deposits. My understanding from your answer is that you have not -- you have not seen any particular switch from the securities into the deposits in the quarter because of market conditions -- the shocking market conditions in Q4. Did I get it right?
You did definitely get it right on the net basis, because there we have net new inflows. Whether some of the deposits held on our clients' accounts, is money that's been flowing off from the deposits and in the somewhat turbulent context of Q1, did not necessarily go into reinvestment is hard to tell from here. But in the broader sense, I'd say I'm not seeing any specific to that extent.
And the next question comes from Anke Reingen from RBC.
First, please, a follow-up on the German impact. I just wonder in terms of rebuilding the capital ratio to the 12.75%, I mean, given you stress the emphasis on volume growth, should we assume risk-weighted assets ex the TRIM impact will be flat so most of this is coming from capital generation? Or do you think you have more room for money on the risk-weighted assets to offset the impact? Or is it just so small that the target is in reach? And then on the NII and Corporates. There's obviously quite a high increase in volume. Is there something that -- could there be some syndicated lending or something which would go out next quarter and NII goes down and respond? And just lastly, on the dividend guidance, why do you change it at this stage?
Again, on your first question on the capital ratio and trying to narrowing down a little bit the TRIM impact, I expect, I'm sure that it's disinteresting, I'm sure that it's not something I will get totally excited about, neither way, let me call it this way. And in general, keeping the RWA development and capital growth in balance is what we will need to do going forward, and the rate of 12.75% remains unchanged. NII, as I said before, there is no single super transactional or transitional anything in that, that would indicate to me that we see an artificial blip in Q1. And third, we didn't change the dividend outlook. What we said is we aim to pay a dividend according to the same payout ratio or broadly the same payout ratio that we've seen in 2018.
But why did you change to a payout ratio at this stage? It is a -- is it a sign you're being more confident? Or...
No, it has a little bit to do with how ECB treats different models of how you phrase certain things and the going onto this payout ratio model basically makes on accrual more or less equally over the quarters. If you name a fixed dividend in cents, and again we haven't fixed a cent amount, you accrue the full amount before you're allowed to attribute your net income onto capital build. It makes just a somewhat more evenly distribution of the dividend impact through the quarters in capital.
The next question comes from Andrew Stimpson from Bank of America Merrill Lynch.
Similar question to Anke's first question. I know, maybe going over the same thing, so apologies if I am. But your lending has been good, and that's been helping net interest income. But you -- I mean we've had the expected impact of IFRS 16. Then we've got TRIM to come. Is it fair to say that you're going to have to slow the growth in lending? Obviously, it's been very positive so far, so 9% up in mortgages and the EUR 9 billion year-on-year that you show on Slide 11. Is it that you've got to slow that lending down now in order to manage that ratio? Or can you -- do you think there's other impact that I am not taking into account that will allow you to continue growing those loans at the same pace?
Yes, in simple terms, resource management is also -- is always something that you need to do with the bank. And in that sense, there's many ways to look at this. Slowing the growth is not the message we are currently giving to our segment. You can always debate clever growth, but growth is what we want to see. And again, as I said in my speech, investing into a loan relationship by allocating RWA and thereby capital needs to be the starting point for cross-selling and coming and making the relationship a very profitable one. That is a little bit, let's say, the skillful game you need to play. If you grow, make sure that the invest -- and again, if you go into a loan relationship, you have the RWAs in full of day 1. You need to make sure that you can catch up on all the other elements. But I don't see a reason to grow -- to slow loan growth. And as I said before, as always, careful RWA management and smart and clever moves is always on the agenda.
Okay. And just maybe put -- to give us an idea around how far below the year-end target would you be willing to push the capital ratio during the year?
As the CFO, I have this very lousy attitude that I want to meet the target as I have told the market. So currently, I don't see room to further discussion on that topic.
And next up is Tobias Lukesch from Kepler Cheuvreux.
3 ones from my side as well. First, can we touch on the capital? So you mentioned the IFRS 16 effect the minus 16 bps. However, you did not really touch on the positive effects you had in the capital base, which add up to around EUR 0.4 billion and which kind of mitigated the 31 basis points effect you had from the credit RWA growth in Q1. So again, touching on the topic of how you balance, and you said it yourself, how you balance your growth going forward, and so far, you could push for volumes, and I think now it's becoming more and more constrained. How is that balance? Will there be a shift in products? Are you more targeting or still targeting the mortgages due to the low RWAs? Will you try to make a push in the consumer credit? And is there a change for maybe some corporate lending planned? That's the first one. And secondly, on the cost side. If I look at your top line, also year-on-year, I would agree that the group level, you even increased your clean revenues slightly as I would adjust for one of the ACR effects in Q1 '18. However, on the core segments, it's basically flattish. Here, you more benefited from the cost effect that you mentioned. And I'm just wondering if that is not coming from a kind of underinvestment in Q1, which might help you for reaching the EUR 6.8 billion cost target for '19; however, may jeopardize the kind of the 80% digitalization ratio in 2020. Maybe you can weigh that cost considerations with regards to the digitalization ratio bid. And thirdly, with regards to the compulsory contributions. Have you any number, any hard number you expect in 2020 that you have in your calculations?
Yes. I would say a broad set of questions which almost sound like as we're already in the middle of the strategic discussions. Let me try to answer at least parts and bits of it. Capital, yes, we had some positive effects from net result from smaller capital deductions, which is all kinds of movements that you kind of have, including FX and other stuff. So I think there is nothing too specific on that part. And in general, on your question, will capital be a restraining factor for growth? And there, I must say you have probably the right set of questions. The problem is I'm not necessarily prepared to put the complete toolbox of what we are able to do and manage on financial resource management here on a conference call. But as I said before, yes, we need to do clever RWA management as always, and we need to do clever capital management. But we are not discussing stopping growth initiatives or anything of the like. Then, what was the second question?
It was on the cost side and digitalization.
Yes. First of all, that was on the cost side. As I said, there is lower investments and I gave you, I think, one important hint in that our compliance investments probably have peaked last year. So there is areas where we will invest less for good reasons. And the second part is that and that is always something that we said in earlier years, our peak investment was expected also on the digitalization wave in second half of '17 and first half of '18. So we are on our track there to go where we want to go with the digitalization. And then there is obviously -- there is also explicitly portrayed effect. But doing better management starting as of already last year, let's say, employing less costly externals and more cost-effective internals also adds to this development. And as I also said, the setup of Campus 2.0 in mid of this year, which could probably reshuffle big parts of the corporate headquarter here in Frankfurt, should be another positive contribution -- contributor. Compulsory contributions, I think, we have roughly seen 420 -- 240 -- sorry, EUR 420 million last year. Given that we have already EUR 20 million more in the first quarter, you can safely assume that EUR 440 million is a good guess. And there is discussions here and there and everywhere, so I don't really know, as no clear expectations, but it's at least EUR 440 million, probably can also be EUR 460 million or something like that.
Into '19, so it could be even higher than same run rate for adjusted for mBank probably for 2020, right?
Yes. Again, all we can currently do is try to anticipate the numbers as good as we can. And then as you get the final numbers at times you are surprised, which is partly what has happened in Poland, albeit maybe from a regulatory perspective for a good reason, but it is -- and we have put a little slide into the Appendix as well if you see how that has developed over the years. It is something that I cannot manage really. It is something that I have to accept, but it puts definitely additional pressure on the cost base.
And very last one, if I may, on comdirect. I mean since you win 2 out of 3 customers with comdirect, has there been any change to your approach to managing that subsidiary? Are there different targets? Is the structure you progress and process things, is that different compared to 2, 3 years ago? Or are you rather, yes, collecting a lot of clients, first winning deposits and in a second step try to win them over for so-called power plans, because they're not the usual traders, I guess? How much of a lending or lending fees can you generate by channeling these customers to your products or third-party products? Could you give us a bit of a sense how you manage these clients, since basically 2/3 of the new customers are with comdirect?
Let me try to be very simple and short on the answer. The mix between comdirect and private clients customer is probably closer like 60-40 and it has been moving over the quarters. It depends a little bit. In general, it is reflecting obviously the more digital moves that you can see in bits and pieces of the group. But in general, the strategy is unchanged. You want to and you will and we do make more revenues with these customers that we pay for getting them on board.
The next question comes from Jeremy Sigee from Exane BNP Paribas.
Just a couple of follow-ups, please. First question links a bit to the volume discussion we've already been having, but I wanted to refer specifically to the leverage ratio and leverage exposure. Leverage exposure has increased quite a lot in the quarter. And I was just sort of wondered if you could talk a bit more about that? And what level of leverage ratio you view as comfortable for the medium term? The second question I have, I think you mentioned earlier in the call front book, back book margin pressure has an influence on net interest income. And I just wondered if you could give us any sense of quantification of how big an effect that can be going forward either overall or using some specific product examples?
On the leverage exposure, I think what we see in Q1 is what we always see as the whole market kind of goes into a repo Christmas season and then the repo business mainly is picking up again. That including the assets under control, including deposits and other stuff that we won in the first quarter made for the move in the total balance sheet and leverage exposure. The ratio is at 4.5%, which I feel comfortable with. And from that point of view, that is no longer to be -- not really in my core focus part.The front book, back book, again, I'm not really keen on disclosing this on product-by-product. I think, the general trend is pretty clear that back books tended to be a bit better than the front books are currently. It depends a little bit on how long your back book is and how fast you kind of go through the averaging out between the 2. I think I'm pretty, pretty unexcited about the back book, front book relationship in the corporate loan book definitely. And on the other loan books, I'm even more relaxed, let me put it this way.
And now we are coming to the last question, and it comes from Daniele Brupbacher from UBS.
Just 2 technical follow-up questions, please. You mentioned the deposit modeling and I was just wondering whether you could tell us what assumptions exactly changed and why you changed those? What made you feel comfortable changing these? And then going to Slide 25, can you just remind us what the assumptions are there regarding deposit fees and management action? And then it's a bit similar to Jeremy's questions before. The front book, back book, I mean it's probably if we lift it up to a higher level, not product-by-product, Corporate Clients segments. Would it be possible to just give an indication what NII would do if rates stay here where they are forever or, let's say, for the next 3 years? How significantly more negative would that be given that you said most of the headwinds were taken in '13 and '17? That will be helpful.
Yes. Daniele, what are we thinking on the deposit modeling, I think there are 2 things coming together. One is that we are seeing deposit growth as well as loan growth. So given that we haven't deposit overhang in general, it is worth trying to find out whether you can deploy the deposits in modeling and thereby fund your book. Second is probably around the interest rates expectation slide you have. Following the latest official statements of the ECB, what most economists think and as well as the upcoming, let's call it, lower for a longer discussion about what to do with the inflation target, our view was that instead of keeping the sensitivity to more or less not immediately upcoming changes in interest rates environment, is probably better to take some of that off the table, so to speak, and make it work and employ it in model deposits. The slide on Page 25 and we can heavily discuss, but separately also with the IR guys. But in simple terms, the only question has been 1/3 of the deposits is non-interest sensitive, 1/3 short-term modeled and another 1/3 is long-term modeled. The mix between long term and short term has a bit of change in that sense that we have taken some of the short-term money and modeled it now, which means short-term sensitivity is a little bit changed as well as the long-term at the very end of all periods, probably still the same number, and EUR 900 million, I think, is just something nice.This NIM modeling -- P&L and NIM modeling interest rate environment persisting forever, Japanese scenario thing is clearly something that we have on watch and focus and which is one of the key topics, which also needs to be of the many key topics that -- which needs to be discussed within our strategy process. So in that sense, before I jump to any conclusion, I would hope you -- to see you on our autumn Capital Markets Day.Ladies and gentlemen, thanks for your questions and the discussion. I would like to say goodbye.