Deutsche Bank 2nd-quarter profit up 9 percent

[July 27, 2010]  BERLIN (AP) -- Deutsche Bank AG, Germany's biggest lender, reported an unexpected 9 percent rise in second-quarter earnings on Tuesday as gains at its transaction banking and asset management operations helped counter a weaker investment banking performance.

The company, based in Frankfurt, said net earnings were up to nearly euro1.2 billion ($1.55 billion) from euro1.1 billion a year earlier -- beating analysts' forecast of euro1.05 billion.

Pretax earnings rose 16 percent, to euro1.5 billion from euro1.3 billion.

Deutsche Bank said overall revenue declined in the April-June period -- a volatile quarter that included the peak of the eurozone debt crisis -- to euro7.2 billion from euro7.9 billion a year earlier. However, loan loss provisions declined sharply to euro243 million from euro1 billion in last year's second quarter.

"In a quarter which was characterized by increased investor uncertainty and higher market volatility, Deutsche Bank's investment banking business followed the industry-wide trend of weaker profitability," CEO Josef Ackermann said in a statement.

However, he pointed to "very solid" performances from other divisions and said the bank's private and business client segment had its best quarterly result since the peak of the financial crisis -- demonstrating "the strength of our diversified business portfolio."

The result pushed Deutsche Bank's shares up 2.2 percent at euro51.47 in morning Frankfurt trading.

Deutsche Bank's corporate and investment bank unit saw revenues decline to euro4.7 billion from euro5.3 billion.

However, revenues in global transaction banking rose to euro1.1 billion from euro654 million -- bolstered by euro338 in extra revenue from Deutsche's acquisition of parts of ABN Amro Bank NV's commercial banking activities in the Netherlands.

Revenues at the asset and wealth management division were up 57 percent at euro969 million, helped by euro148 million from private bank Sal. Oppenheim Jr. & Cie S.C.A. Group, which Deutsche Bank acquired last year. Private and business client revenues were up 2 percent at euro1.4 billion, the company said.

"Global economic activity is likely to strengthen and the new regulatory framework is finally taking shape," Ackermann said. He added that "Deutsche Bank considers itself well positioned to continuously creating sustainable value for its shareholders."

The bank said its tier 1 capital ratio, a key barometer of financial health, was 11.3 percent at the end of the second quarter -- up from 11 percent a year earlier and 11.2 percent at the end of the first quarter. The figure was above the bank's target of 10 percent.

Deutsche Bank was one of 14 lenders in Germany that underwent recent European "stress tests" to determine how they would fare in a deeper economic and debt crisis.

It passed easily -- the tests determined that, in a worst-case scenario, its capital ratio would slip to 9.7 percent, far above the 6 percent pass mark.

For the January-June period, Deutsche Bank's net profit was up 31 percent to more than euro2.9 billion from last year's euro2.25 billion. Pretax earnings rose to euro4.3 billion from euro3.1 billion.

[Associated Press; By GEIR MOULSON]

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