You know, you've been a banker for over 30 years now and you've dealt with volatility. And in many conversations that I've had over the past few weeks, people say that it's different this time around. You know, what do you believe is different? When you look at how volatile things are and what's also been surprising is the remarkable resilience of the global stock markets. I mean, unfazed by geopolitical strife, unfazed by actual military conflict. So how do you explain the resilience of the markets as well?
Well, I think first of all that the resilience is partially explained by a much better preparation of the players in the market. Simply look at the financial institutions. If you think about how financial institutions, the robustness of financial institutions, be it in the US or in Europe, if you compare it between the last global financial crisis and now, it's night and day. To be honest, I think we are as robust and as rock solid as we have never been before, and that's not only for Deutsche Bank, that's also for other banks. Therefore, the market has a different level of trust that even if there is volatility, we can absorb it, be it from a liquidity point of view, be it from a capital point of view. The same, I can tell you from a lot of corporates. If I look at the equity ratio of German middle clients, it is nowadays higher than 15 years ago. Corporates actually improved their own balance sheet in terms of liquidity, in terms of capital ratio. Corporates learned through the COVID crisis to work on their supply chains to make sure that they are more diversified. Therefore, I do believe one needs to take that into account that we simply have, in my view, more robust players in the market. Now, I think you are touching on a really important point. I am also amazed that the markets are so solid. We see some volatility in the markets, but then you are at all-time highs back very, very soon. And look, with a 35-year background in banking and very long in credit risk, I hope that people are nevertheless always prepared that there could be the one or the other event which really brings the market more severely down. Therefore, you need to be daily prepared, and that is in my view the task obviously of a management of a bank to do that for your own balance, but more importantly that we advise our clients on risk management. And in this regard, I can really see a renaissance in advisory. The level of discussions we have with our clients on risk management, on hedging their risks, is not comparable to the years before, and it's an opportunity for banks who have that know-how and who have an investment banking capability.
You know, it's a very important point that you made there about just healthy balance sheets, whether it's for banks or it's for companies. And we've seen that happen in India as well. The deleveraging has happened significantly after the GFC. But what does that mean in terms of the appetite for risks? Because the problem that we're faced with in India is that even though companies are sitting on strong balance sheets, private investment hasn't picked up. So when you look at European companies who are sitting on strong balance sheets at this point in time, do they have the appetite to take big risks, whether it's M&A or it's expansion or it's looking at new markets?
I would say that over the last three or four months, that appetite reduced because if there is too much volatility in the market and it's not only the market volatility but if the trust in the plannability of issues is decreasing, then companies are stepping back. Yeah. And you know, we have seen that also in our business and in the overall banks' investment banking business on the origination and advisory side. Fortunately, we haven't seen canceled deals, but we have seen delayed deals. So people are a little bit more nervous and cautious to do big investments. Nevertheless, they also see the opportunity, and they see actually the opportunity Europe has in these days. They see the opportunities in growth markets like India, in other Asian markets. We can see trade corridors between India and other Asian countries, the Middle East, which are really opening up. So people are looking into this, and I think that we may see for a couple of months, once this trade discussion is hopefully done and dusted and people have a better outlook view, I would say that then those investments are coming back. In general, from the balance sheets of the banks but also the capability of the corporates, the risk appetite to invest long-term into growth is definitely there.
It's definitely there. So 2025 from an M&A point of view, from an IPO point of view, what are you foreseeing? I mean, India has had a great year the previous year and continues to see a lot of excitement in the IPO market, but the US was stepping in. What do you see as the story for global IPOs as well as M&A for 2025?
I think it's a bit muted, to be honest. And that's what I also said at the last conference when I was talking about Deutsche Bank in this regard. Very happy about the overall development, but that particular business bit more muted. But to be honest, as long as you know that it's only delayed deals, that people want to have clarification for instance on the trade discussion, that's not a big issue. We are planning this bank and also our corporate clients, they are planning for the long term, and whether it happens then in Q2 or Q3, at the end of the day that doesn't matter. But clearly I would say 2025, if I compare it now with what we thought at the start of the year, in the M&A and IPO market more muted, but I wouldn't say that this means that the whole market falls away. It will come back then next year.
Oh, so let's talk about what's happening at Deutsche Bank specifically. You had a strong Q1 ahead of estimates. You know, you're hoping to grow at between 5.5% to 6.5% annually over the next few years. What are you going to prioritize given the many opportunities that you see and the strong balance sheet that you sit on, and also in the context of the many tech changes that are happening? How do you reposition or rewire yourself at the bank?
That's a lot of questions, but you're right. I'm overall very happy with the development. It was a complex time six or seven years ago, and now we are on a clear trajectory. And you know, the opportunities which are presented for Europe but also globally, because the answer of a lot of clients is that they would like to have at least one European alternative to the US banks. And as we are one of the last investment banks, corporate banks with such network, we are that opportunity. It is huge for us. So I'm generally very, very positive. Now from the investments, it's focus, focus, focus. You can imagine that everybody in the bank wants to invest, and we need to take the decisions as to where actually we do this. I do believe that one thing is clear: the global expansion of this bank, in particular in markets like Asia-Pacific, is on top of the agenda. And we can see that also the brand name is really wanted here. That's one of the reasons why we invested so much in India. On the tech side, look, I think it is simply critical and fundamental and the precondition for being a successful bank for three reasons. Number one, you need to have tech for client experience. The client experience will be better with digitalization, AI and technology. Number two, cost efficiency. Number three, very important for all of us and for us too, is regulatory compliance. The more automated our processes are, the better it is. So technology is kind of, if we built the house of Deutsche Bank, technology is a platform.
