Deutsche Bank swings to a 1.2 billion net profit in Q1 2009

Deutsche Bank, Germany's biggest bank, became the latest European lender to bounce back to profitability, with 1.2 billion net profit in the first three months of the current year, showing signs of recovery in the sector hit by the credit market tsunami.

Deutsche Bank, Germany's biggest bank, today reported net income of 1.2 billion euro for the first quarter of 2009, compared to a net loss of 141 million euro in the first quarter of 2008. Diluted earnings per share for the quarter were 1.92 euro, against a negative 27 cents in the first quarter of 2008.

Income before income tax was 1.8 billion euro in the quarter, against a loss before income tax of 254 million euro in the first quarter of 2008. Pre-tax return on average active equity for the quarter was at the target rate of 22 per cent; pre-tax return was 25 per cent.

Net revenues stood at 7.2 billion euro, after mark-downs of 1.0 billion euro, including 841 million euro from further provisions against monoline insurers, and an impairment charge of 500 million euro on The Cosmopolitan Resort and Casino property.

Net revenues increased 56 per cent versus 4.6 billion (after mark-downs of 3.2 billion euro) boosted by a surge in corporate and investment bank net revenues of 4.9 billion euro, against 1.5 billion euro in the first quarter of 2008.

''We have consistently delivered capital strength and balance sheet discipline, and sustained a healthy liquidity and funding position. In the first quarter 2009, we additionally generated substantial profitability and returns, even after absorbing significant legacy-related charges," Josef Ackermann, chairman of the management board, said.

"Looking forward, we see continued challenges, but also opportunities, in our business environment. In all our core businesses, we have put in place strategies which seek both to address these challenges, and to seize opportunities to strengthen our platform for the near future,'' he said, adding, ''Deutsche Bank is well-positioned not only to weather the current crisis, but also to emerge stronger than ever in the medium term.''

Corporate and investment bank (CIB) remained the mainstay of Deutsche Bank with net revenues of 4.9 billion euro, versus 1.5 billion euro in the first quarter of 2008.

In corporate banking and securities, net revenues were 4.2 billion euro, up from 880 million euro in the prior year quarter, driven predominantly by a 185 per cent surge in revenues in sales and trading (debt and other products) at 3.8 billion euro. This performance reflects strong year-on-year growth in 'flow' products including foreign exchange, money market and interest rate trading, the bank said.

Revenues from other products included the impairment charge related to The Cosmopolitan Resort and Casino property and impairment losses on private equity investments.

In global transaction banking (GTB), net revenues were 666 million euro, marginally higher compared to the first quarter 2008. Trade finance revenues grew despite declining volumes of international trade, although this was offset by lower revenues in corporate cash management and trust and securities services, reflecting lower interest rates, the adverse impact of exchange rate movements and lower valuations on assets under custody, the bank said.

Net revenue from private clients and asset management (PCAM) stood at 1.9 billion euro, compared to 2.5 billion euro in the first quarter of 2008.

Asset and wealth management (AWM) net revenues stood at 515 million euro, compared to 1.0 billion euro in the prior year quarter.

Net revenue in private and business clients (PBC) business was 1.4 billion euro, down 5 per cent from the first quarter of 2008 due to reduced levels of client activity and lower market valuations in the brokerages, together with a decline in insurance brokerage revenues.

Deutsche Bank made a 526 million euro provision for credit losses, versus 114 million euro in the first quarter of 2008.  This increase was primarily driven by charges taken in respect of asset reclassifications and reflects the generally weaker credit environment. 

The bank's Tier 1 capital ratio was 10.2 per cent at the end of the quarter, up from 10.1 per cent at the end of the fourth quarter 2008, and above the bank's published target of 10 per cent. The core Tier 1 ratio, which excludes hybrids, was 7.1 per cent at the end of the quarter, up from 7.0 per cent at the year end.

Tier 1 capital at the end of the quarter was 32.3 billion euro, up 1.2 billion euro from the end of the fourth quarter of 2008.

Total assets stood at 2,103 billion euro at the end of the quarter, down 4 per cent versus the end of the fourth quarter 2008.