In the first quarter of 2007, Deutsche Bank demonstrated the power and resilience of its business model with exceptional results in turbulent markets. Against a backdrop of increased volatility and sharp corrections in financial markets during the quarter, we delivered our best first-quarter profits ever.

After a strong start during the first two months of 2007, the world’s financial markets experienced a sharp increase in volatility, as rising default rates in the ‘sub-prime’ segment of the North American home mortgage market gave rise to concerns. Equity indices also saw marked corrections in early March, both in mature economies and in some important emerging markets. These concerns eased toward the end of the quarter, and equity markets recovered substantially across the world. In this fast-changing environment, Deutsche Bank’s outstanding first-quarter results are testimony to our powerful and well-diversified franchises in key areas, our ability to seize profitable opportunities in different business conditions, and our commitment to high-quality solutions for clients.

Revenues were € 9.6 billion, up 20% versus the first quarter of 2006. Pre-tax profits rose 22% to € 3.2 billion, while net income rose 29% to € 2.1 billion, both records for a first quarter. Diluted earnings per share rose by € 1.17 to € 4.28, while pre-tax return on average active equity was 45%. Per our target definition, which excludes significant gains and charges, diluted earnings per share were € 3.88 and pre-tax return on average active equity was 41%.

The Corporate and Investment Bank produced pre-tax profits of € 2.4 billion, up by 11% versus the very strong first quarter of 2006 and a record for any quarter, on revenues of € 6.7 billion. Against a backdrop of volatile markets, our Sales and Trading businesses produced record revenues in both Equity and Debt and other products, reflecting the quality of our business model and the resilience of our earnings power in turbulent conditions. We saw particularly strong performances in equity derivatives, credit trading and foreign exchange, where the annual Euromoney poll ranked us no. 1 in the world for the third successive year. Our corporate finance businesses also performed well, with best-ever revenues in our advisory business and strong growth in high-yield debt origination. Our transaction pipeline is strong, and includes a number of high-profile mandates. In Global Transaction Banking, pre-tax profits rose 18% to € 214 million on quarterly revenues of € 612 million, with strong momentum in both Europe and Asia.

In Private Clients and Asset Management pre-tax profits were € 481 million, 10% lower than in the first quarter of 2006. In Asset and Wealth Management (AWM), pre-tax profits were € 188 million, down 19 %, reflecting in large part lower performance fees in real estate asset management than in the prior year quarter. AWM attracted € 8 billion of net new money during the quarter, which will contribute positively to future revenues. In Private & Business Clients (PBC), pre-tax profits were € 293 million, our second-highest ever quarterly result, and were achieved in spite of expenses related to investments in our platform, including our expansion in Poland and Asia and costs related to the integration of Berliner Bank and norisbank. PBC also succeeded in capturing net new money of € 7 billion during the quarter.

Cost, risk and capital management remained tight. Our cost income ratio was 66%, better than the levels of the very strong first quarter of 2006. Our core capital ratio was 8.7% at the end of the quarter, thus remaining at the upper end of our target range of between 8% and 9%, and up slightly from the end of the fourth quarter of 2006. Risk-weighted assets increased by €10 billion to € 285 billion during the quarter, reflecting growth in derivative positions and the integration of recent acquisitions.

Looking ahead into 2007, the economic fundamentals remain positive. Despite the ongoing correction in the housing market the United States economy remains fundamentally resilient. Growth momentum and business confidence in Europe appear solid, as sustained strength and optimism in the German economy continues to contribute positively to the performance of the Eurozone. Key emerging markets, notably China, India and energy-producing nations, are well placed to sustain their dynamic expansion.

In this context, Deutsche Bank is well positioned for further, profitable growth in our business. Our global platform gives us exceptional opportunities to serve our clients in an increasingly globalized marketplace. Continued expansion of the world’s capital markets, in both industrialized and emerging nations, plays to the strength of our world-leading position in investment banking. The creation of wealth in the global economy, and the demand for private retirement funding via an ever-more diverse range of asset classes, presents attractive opportunities for our powerful investment management franchise. Our investments in our home market, Germany, including both acquisitions and organic expansion, enable us to capitalize on the strength of the Eurozone’s largest economy.

Inevitably, uncertainties exist in our business environment. As we saw in the first quarter, the possibility of short-term volatility remains a feature of the world’s financial markets. Ongoing consolidation of our industry, including cross-border mergers in Europe, may also create changes in the competitive landscape. We believe Deutsche Bank is well equipped to deal with these factors as our strategic position is strong. Our strategy remains concentrated on continued organic growth and selective incremental acquisitions. With a clear, focused and disciplined strategy, we have already built leading franchises in our core businesses, achieved substantial ‘one bank’ synergies, and created powerful, accelerating earnings momentum.

All of us at Deutsche Bank are very proud that, once again, we are able to present a record set of results to our shareholders. We remain absolutely committed to implementing our stated management agenda, and continuing to serve your interests. If the geopolitical and economic environment remains stable, we are confident that we can continue to deliver profitable growth to our shareholders in 2007.

We also look forward to discussing the current status of our growth strategy with you at our Annual General Meeting, which will take place at the Frankfurt Festhalle on May 24.

Yours sincerely,


Josef Ackermann
Chairman of the Management Board and
the Group Executive Committee

Frankfurt am Main, May 2007