30 April 2004
FRANKFURT – Deutsche Bank AG has bounded into the new year with a strong performance by financial markets and big job cuts helping Germany’s biggest bank to boost first-quarter net profit to a better-than-forecast EUR 941 million, the bank said Friday.
This compares to a loss of EUR 219 million in the same period last year with Deutsche having slashed its workforce by about a quarter in recent years in a bid to contain costs and to shed businesses so as to focus on its core banking activities.
Deutsche Bank’s pre-tax profit soared to EUR 1.561 billion from EUR 234 million.
“I remain confident that with continued stability and positive development in the global economy and the world’s financial markets, we will maintain this progress and deliver on the challenging goals we have set ourselves,” said Deutsche chief Josef Ackermann in the statement accompanying the release of the results.
But while group revenue jumped by 23 percent to EUR 6.15 billion, the results showed costs remained the bank’s bugbear, rising two percent in the first three months of the year and helping to drive down the group’s share price following the release of the quarterly financial statements.
Deutsche’s shares slipped by more than two percent to EUR 68.70 in early trading in Frankfurt Friday.
The release of Deutsche’s results came as other big European banks also reported an impressive pickup in first-quarter earnings with the publication of the German bank’s latest profit coinciding with Swiss rival Credit Suisse reporting a rise in first-quarter earnings to SF1.8 billion (EUR 1.2 billion) from SF 279 million.
The slow improvement in the global economy meant that Deutsche was also able to wind back provisions for bad debts, which have been a source of pressure on European banks’ balance sheets in recent years.
Deutsche set aside EUR 123 million for bad loans in the first quarter, compared with EUR 380 million a year ago, and consequently help to underpin the turnaround in the first-quarter earnings.
Net interest income rose to EUR 1.39 billion from EUR 1.31 billion with income from commissions and fees edging up by four percent to EUR 2.4 billion.
A major factor behind the earnings’ rebound was also the solid performance of Deutsche’s share and bond trading.
The bank said that first-quarter trading income jumped to EUR 2.06 billion compared to EUR 1.78 billion as cautious optimism continued to take hold in global financial markets.
Equity sales and trading rose 32 percent to EUR 786 million, while pre-tax profit from its increasingly important asset and wealth management business jumped by 54 percent to EUR 155 million (excluding one-off gains).
Pre-tax profit from Deutsche’s key corporate and investment banking operations dipped to EUR 1.2 billion from EUR 1.4 billion last year.
Last year, however the results for corporate and investment banking included a one-off EUR 508 million gain with Deutsche saying that once this was removed from the figures pre-tax earnings from the operations rose by 22 percent.
On the retail banking front, Deutsche also continued to make considerable strides with the bank again confirming its one billion euro pre-tax profit target for its retail bank operations after reporting a strong jump in first-quarter pre-tax earnings to EUR 255 million.