Deutsche Bank first-quarter profit falls by half as legal charges bite
By Thomas Atkins
FRANKFURT (Reuters) - Deutsche Bank's (DBKGn.DE: Quote) earnings fell by half in the first quarter, a greater-than-expected drop as hefty legal charges eroded gains in investment banking revenue, while it prepares to unveil details of a strategic overhaul.
Quarterly net profit sank to 559 million euros ($608 million) versus a year ago, despite a 24 percent rise in revenue driven primarily by an increase in client trading activity.
Group revenue rose to a near record 10.4 billion euros. Almost half came from the investment bank, but its pre-tax contribution fell by more than half due to litigation and regulatory expenses and currency swings, the bank said on Sunday.
Deutsche has so far positioned itself as Europe’s “last man standing” in investment banking, even though it has made cuts in certain business lines.
That strategy bore fruit in quarterly revenue figures, with the contributions from its debt trading business rising 9 percent versus a year ago and from its small but growing equities trading division by 31 percent.
Deutsche on Friday announced a new strategic plan including the sale of its Postbank DPBGn.DE retail chain and additional paring back in investment banking. Details are to be unveiled on Monday.
Big trading banks such as Deutsche received a boost in fee income in the first quarter after the Swiss National Bank scrapped a cap on the franc, the European Central Bank announced its quantitative easing program and the U.S. Federal Reserve took steps to tighten monetary policy.
Rival Morgan Stanley (MS.N: Quote), for example, posted its most profitable quarter since the financial crisis, with a 60 percent rise in net profit compared with a 41 percent rise at Goldman Sachs (GS.N: Quote). Continued...