Deutsche Bank reported income before income taxes of ⬠1.8 bln. for the first quarter 2005, after restructuring expenses of ⬠168 million. Pre-tax return on average active equity was 30%, compared to 24% in the prior year first quarter. Before restructuring expenses, pre-tax return on average active equity was 33%. This figure compares with the Group's published target of 25% for 2005.
Net income for the quarter was ⬠1.1 bln., up 17% compared to ⬠941 mln. in the first quarter 2004. Adjusted after-tax return on average active equity was 19%, compared to 15% in the first quarter 2004 and 11% for the full year 2004. Diluted earnings per share for the quarter were ⬠2.09, up 25% compared to ⬠1.67 per share in the first quarter 2004.
Both revenue and profit growth was driven predominantly by the Group's international business, reflecting the market environment. On international markets, conditions were favourable; the German market remained challenging.
The Group also announced progress on the Business Realignment Program: all significant organisational changes have been implemented, investments in growth areas have been made, and cost-efficiency measures are underway. Restructuring expenses in connection with the Business Realignment Program were lower than anticipated. However, the original targets of the program remain on track.
Dr. Josef Ackermann, Spokesman of the Board of Managing Directors and Chairman of the Group Executive Committee, said: "All of us at Deutsche Bank are proud of what we have achieved in the first quarter. This excellent result underlines our leading position, both in Germany and internationally."
He added: "However, competition is relentless. If we are to safeguard our future, we must tackle the issue of cost-efficiency, in those parts of our business where we still need to match our world-class competitors. There can be no let-up in our determination to meet this challenge. The measures we have had to take are painful, but there is no alternative. Only by taking this course can we invest in the long-term success of the bank, in innovation and quality for our clients, and in growth and jobs for our employees."
Group Highlights
Income before income taxes for the first quarter 2005 was ⬠1.8 bln., after restructuring expenses of ⬠168 million, up ⬠222 mln., or 14%, compared to last year. Pre-tax return on average active equity improved from 24% in last year's first quarter to 30% in the first quarter 2005. The negative impact of restructuring expenses on the current quarter's pre-tax return on average active equity was 3 percentage points.
Net income for the quarter was ⬠1.1 bln., up 17% compared to ⬠941 mln. for the first quarter 2004. Earnings per share (diluted) improved by 25% to ⬠2.09. The effective tax rate was 38%, compared to 39% for the full year 2004, both including the reversal of 1999/2000 credits for tax rate changes.
Revenues for the first quarter 2005 were ⬠6.6 bln., up ⬠429 mln., or 7%, compared to the prior year first quarter. Debt Sales and Trading registered a record quarter with total revenues up 26% to ⬠2.4 bln., driven by the bank's global leadership in high-value structured products.
Noninterest expenses for the first quarter 2005 were ⬠4.7 bln., compared to ⬠4.5 bln. in the prior year first quarter. The current quarter included restructuring charges of ⬠168 mln.
The operating cost base (which excludes restructuring charges) was ⬠4.5 bln, up 3% compared to ⬠4.4 bln. in last year's first quarter. The increase was mainly due to higher performance-related compensation resulting from the improved operating results. Non-compensation operating costs were 4% below the first quarter 2004. The operating cost base was favourably impacted by cost savings achieved from the Business Realignment Program.
Provision for credit losses was ⬠81 mln. in the first quarter 2005, down 42% from ⬠141 mln. in the prior year first quarter, mainly reflecting the low level of provisions required fo
