Deutsche Bank misses profit forecast

City A.M. Reporter
Deutsche Bank missed market expectations for profits in the first quarter as Germany's biggest bank was hit by one-off charges and weak markets which hurt earnings from trading and asset management.

Group pretax profit of 1.9bn euros, came in below the 3 billion euros in the year-earlier period and the 2.4bn euro forecast in a Reuters poll, weighed by litigation charges and an impairment on its investment in Actavis.

Pretax profit at the corporate banking and securities division, traditionally Deutsche's main profit driver, fell to 1.7bn euros in the quarter in what the bank described as a difficult environment, down from 2.3bn euros in the year-earlier period.

Deutsche said that while overall performance was strong, reflecting increased client activity compared to the second half of 2011, it remains less favourable compared to a year ago. Conditions in the global economy remain challenging, the bank said.

"Against this backdrop financial markets remain cautious as we have seen in April, with investor risk appetite markedly lower," chief executive Josef Ackermann said.

An economic recovery will benefit mainly US banks, Ackermann said, while euro zone banks, particularly those in Southern Europe, will may experience "even harder times."

Last week, stronger fixed income markets helped rivals Morgan Stanley and Bank of America post forecast-beating earnings as action by the European Central Bank to prop up markets dampened concerns about the European debt crisis.

Revenues from debt trading were down eight per cent compared to the first quarter 2011.

Deutsche said its core tier one capital ratio had improved to 10 per cent at the end of March, from 9.5 per cent at the end of 2011.