Germany's biggest lender said record pretax profit at its corporate and investment bank unit along with improved revenues from selling and trading debt and equities, lifted its first-quarter results higher
Deutsche Bank AG reported Tuesday a 50 percent rise in profit for the first quarter of the year due to booming earnings in investment banking.
The company earned euro1.8 billion ($2.4 billion) amid improving results from the sale of debt and equities, up from last year's first quarter profit of euro1.2 billion.
The bank, based in Frankfurt and Germany's biggest lender, said its net revenues rose 24 percent to euro9 billion in the January-March period compared with euro7.2 billion in 2009.
Despite the gain, the bank said the 2010 result reflected euro241 million in write-downs, but added that the year-ago figure also included write-downs of euro1 billion along with a charge of euro500 million.
Still, Deutsche Bank said record pretax profit at its corporate and investment bank unit along with improved revenues from selling and trading debt and equities, lifted its first-quarter results higher.
"The economic environment clearly stabilized in the first quarter 2010, but is not without some remaining vulnerability," Chief Executive Josef Ackermann said in a statement.
"The key component for achieving the very good result in the first quarter 2010 was our global investment banking franchise," he said, noting that the company's corporate and investment bank generated a pretax profit of euro2.7 billion, a record quarterly result.
"This is all the more remarkable as it was achieved despite the fact that the bank has significantly reduced its risk positions and cut its proprietary trading activities to a very low level," said Ackermann, who was paid nearly euro9.6 million in salary and bonuses for his work last year.
Net revenue for the bank's corporate and investment banking branch added up to euro6.6 billion compared with euro4.9 billion in the first quarter 2009.
In the U.S., the bank faces a class-action lawsuit over mortgage-related securities it helped arrange, Deutsche Bank said in its quarterly report.
The bank's chief financial officer Stefan Krause, however, tried to distance Deutsche Bank from an investigation surrounding Wall Street rival Goldman Sachs.
He said in an analyst call that the bank had not been informed by U.S. authorities of any imminent charges.
However, the bank mentioned several pending lawsuits in the U.S.
"Deutsche Bank has been named as defendant in various civil litigations, including putative class actions, brought under federal and state securities laws and state common law, related to residential mortgage backed securities," the quarterly report said.
Among the six lawsuits detailed in the report is one filed by the Federal Home Loan Bank of San Francisco "regarding the role of a number of financial institutions, including certain affiliates of Deutsche Bank, as issuer and underwriter of certain mortgage pass-through certificates."
Deutsche Bank's results included for the first time the acquisition of private bank Sal. Oppenheim Jr. & Cie S.C.A. Group. Deutsche Bank bought it last year in a euro1 billion deal.
The bank's overall capitalization — measured by the so called tier 1 capital ratio — was 11.2 percent at the end of the quarter, down from 12.6 percent a year earlier, but still above the overall target of 10 percent, Deutsche Bank said.
The capitalization's decrease was primarily driven by the acquisition of Sal. Oppenheim, which contributed euro17 billion to growth in risk-weighted assets compared to the last quarter, the bank said.
Deutsche Bank's stock was 2.7 percent lower at euro53.85 in afternoon trading in Frankfurt on Tuesday.
