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Frankfurt am Main, 30. April 2004

Deutsche Bank reports first quarter 2004 pre-tax profit of Euro 1.6 billion, up from Euro 234 million in 1Q 2003


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  • Net income of Euro 941 million versus a loss of Euro 219 million in 1Q 2003
  • Strong revenue momentum: Total revenues up 23  per cent over 1Q 2003 to Euro  6.2 billion
  • Significant improvement in Private Clients and Asset Management
  • Further progress on asset quality: Total provision for credit losses down 60 per cent to Euro 141 million
  • 12 million shares repurchased, bringing total repurchases of second buyback program to 29.1 million shares, or 5 per cent of capital
  • BIS core capital ratio remains high at 10.1 per cent on back of strong earnings

Deutsche Bank (XETRA: DBKGn.DE / NYSE: DB) today released its results for the first quarter of 2004. The bank reported income before income tax expense of Euro 1.6 billion for the quarter compared to Euro 234 million in 1Q 2003. Deutsche Bank posted a net income for the quarter of Euro 941 million versus a net loss of Euro 219 million in 1Q 2003.

Adjusted return on average active equity (post-tax) was 15.1 per cent for 1Q 2004, compared to 5.2 per cent for the full year 2003. Income tax expense was Euro 597 million versus Euro 423 million in 1Q 2003 (excluding the reversal of 1999/2000 credits for tax rate changes in German tax laws), reflecting an effective tax rate of 38 per cent.

Deutsche Bank demonstrated sustained year-on-year improvement in operating strength. Underlying pre-tax profit climbed 45 per cent to Euro 1.4 billion in 1Q 2004 compared to Euro 950 million in 1Q 2003 (see reconciliation table).

Josef Ackermann, Chairman of the Group Executive Committee, said: ”I am pleased to report significant growth in returns to our shareholders. We achieved an underlying pre-tax return on equity of 22 per cent compared to 13 per cent in the first quarter of last year, making good progress towards our objective of 25 per cent. 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.”

Total revenues increased 23 per cent to Euro 6.2 billion in 1Q 2004 versus Euro 5.0 billion in 1Q 2003. This improvement reflects good performance in sales & trading and origination within the Corporate and Investment Bank and in Private Clients and Asset Management.

The operating cost base of Euro 4.4 billion in 1Q 2004 versus Euro 4.3 billion in 1Q 2003 reflects bonus accruals consistent with strong business performance. Non-compensation operating cost base was Euro 110 million lower despite higher business volumes. The underlying cost income ratio improved to 74 per cent in 1Q 2004 from 77 per cent in 1Q 2003, the reported cost income ratio to 73 per cent from 88 per cent.

Reflecting the overall improved credit quality of Deutsche Bank’s corporate loan book and the continued success of workouts for problem loans, total provision for credit losses (including provisions for off-balance sheet positions) was down 60 per cent to Euro 141 million. Loans were Euro 149 billion at the end of 1Q 2004, down Euro 23 billion or 13 per cent compared to the end of 1Q 2003. Problem loans were reduced to Euro 6.3 billion, down 33 per cent compared to 1Q 2003.

Capital discipline yielded significant results in the first quarter 2004 with progress both in returns to shareholders and in capital strength. Improved earnings allowed Deutsche Bank to maintain the momentum of its share buyback program with the repurchase of 12 million shares during the quarter. Since the start of the second buyback program the bank has repurchased 29.1 million shares or five per cent of capital. At the same time the BIS core capital ratio rose further to 10.1 per cent at the end of 1Q 2004.

Reconciliation of pre-tax profit

In Euro million
1Q2004
4Q2003
1Q2003
Reported income before income taxes
1,561
676
234
Net gains/losses on securities available for sale/industrial holdings including hedging
(50)
(130)
392
Significant equity pick ups/net gains/losses from investments
(89)
16
715
Net gains/losses from businesses sold/held for sale
(45)
(6)
(503)
Net gains/losses on the sale of premises
-
107
-
Restructuring activities
-
-
(2)
Goodwill impairment
-
-
114
Underlying pre-tax profit
1,377
662
950

Numbers may not add up due to rounding

Segmental Results and Highlights

The Corporate and Investment Bank (CIB) again capitalised on its global leadership position. CIB recorded income before income tax expense of Euro 1.2 billion in 1Q 2004. This compares to Euro 1.4 billion in 1Q 2003, which included a Euro 508 million net gain on the sale of a significant part of the bank’s Global Securities Services business. As a result underlying pre-tax profit increased 22 per cent year-on-year. This improvement was driven by sustained strength in sales & trading as well as origination.

Fixed income benefited from Deutsche Bank’s leading franchise in high value, high growth segments such as derivatives and securitised products, from market share gains in flow products, and from cross-selling of fixed income products to PCAM clients. Equity sales & trading and origination made substantial progress both in Europe and North America in an improved environment for cash equities, and posted a strong performance in derivatives. In key product areas CIB also made significant gains in North America and took advantage of growth opportunities in Asia-Pacific. 

Strong profit growth in Private Clients and Asset Management (PCAM) demonstrated the successful transformation of the platform. Income before income tax expense increased 51 per cent to Euro 410 million for 1Q 2004. This compares to Euro 272 million in 1Q 2003, which included a gain of Euro 43 million on the sale of Passive Asset Management. Underlying pre-tax profit increased 79 per cent year-on-year.

Private and Business Clients (PBC) posted income before income tax expense of Euro 255 million versus Euro 128 million in 1Q 2003. This result is consistent with PBC’s target underlying pre-tax profit of Euro 1 billion this year, and reflects a successful re-engineering of the division. Underlying pre-tax profit in Asset and Wealth Management was Euro 155 million, up 54 per cent versus Euro 101 million in 1Q 2003, driven by the continuing strength of DWS in Germany, efficiency gains in North America and a successful performance by Private Wealth Management.

Corporate Investments reported income before income tax expense of Euro 54 million versus a loss of Euro 1.4 billion in 1Q 2003. This improvement over 2003 reflects the success of the strategy of de-risking the bank by reducing exposure to alternative assets, whose book value decreased 51 per cent to Euro 2.7 billion, compared to Euro 5.5 billion at the end of 1Q 2003. Last year’s result was subject to high net charges resulting from the write-off on the Gerling-Konzern Versicherungs-Beteiligungs-AG investment and net losses from several other investments in the Private Equity portfolio.


This release provides selected highlights of Deutsche Bank’s performance in 1Q2004. An extended analysis of the financial figures in 1Q2004 is provided by the Discussion of Results in the Interim Report as of 31 March 2004. For your convenience excerpts from the Interim Report are attached on B 1 - B 12 herewith.



This Investor Relations Release contains forward-looking statements. Forward-looking statements are statements that are not historical facts; they include statements about our beliefs and expectations. Any statement in this Investor Relations Release that states our intentions, beliefs, expectations or predictions (and the assumptions underlying them) is a forward-looking statement. These statements are based on plans, estimates and projections as they are currently available to the management of Deutsche Bank. Forward-looking statements therefore speak only as of the date they are made, and we undertake no obligation to update publicly any of them in light of new information or future events.

By their very nature, forward-looking statements involve risks and uncertainties. A number of important factors could therefore cause actual results to differ materially from those contained in any forward-looking statement. Such factors include the conditions in the financial markets in Germany, in Europe, in the United States and elsewhere from which we derive a substantial portion of our trading revenues; potential defaults of borrowers or trading counterparties; the reliability of our risk management policies, procedures and methods; and other risks referenced in our filings with the U.S. Securities and Exchange Commission. Such factors are described in detail in our SEC Form 20-F of 25 March 2004 in the section "Risk Factors."  Copies of this document are readily available upon request or can be downloaded from www.deutsche-bank.com/ir.






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