Deutsche Bank today reported income before income taxes of 1.4 billion after restructuring expenses of 116 million, up 22% versus the second quarter 2004. For the first half year, income before income taxes rose 17% to 3.2 billion after restructuring expenses of 284 million. Net income rose 44% to 947 million versus the second quarter 2004, and 28% to 2.1 billion for the first half year. Pre-tax return on average active equity before restructuring expenses was 25% for the quarter, and 29% for the first half year. Diluted earnings per share for the quarter rose 64% to 1.90, and 43% to 4.06 for the half year.
Dr. Josef Ackermann, Chairman of the Group Executive Committee, said: "In the second quarter 2005, Deutsche Bank turned in a very strong performance, proving the resilience of our business model and continued tight discipline of costs and capital. Once again, we achieved substantial year-on-year growth in revenues, profitability and returns to our shareholders. Over the first six months of 2005, we have delivered consistently, even in inconsistent markets. The result is an outstanding half year."
"Our strong performance in the first half of 2005 allows us to plan for a substantial increase in our dividend for the current year. In addition, we have resumed our share buybacks", he added.
Net revenues for the second quarter were 5.9 billion, up 9% compared to 5.4 billion in the second quarter 2004. Origination and Advisory revenues were up 17%. Revenues in Debt Sales & Trading were in line with last year's second quarter levels, while revenues in Equity Sales & Trading grew 12% over the second quarter 2004. Net revenues in Private Clients and Asset Management (PCAM) grew 4% over the second quarter 2004. For the first half year, Group net revenues grew 8% to 12.5 billion.
Provision for credit losses, which include provisions for both loan losses and off-balance sheet exposures (the latter reported in noninterest expenses), was 80 million in the second quarter, essentially unchanged from the prior year period and from the first quarter 2005. For the first half, provision for credit losses fell by 28% versus the first half of 2004. Problem loans further declined to 4.6 billion, from 4.8 billion in the first quarter 2005, and the ratio of problem loans to loans fell to 3.2%, from 3.3% in the first quarter 2005. This represents the lowest level of problem loans for five years and reflects strong loan book quality and a favourable credit environment.
Noninterest expenses for the quarter were 4.4 billion, compared to 4.1 billion in the second quarter 2004. In the current quarter, noninterest expenses included restructuring expenses of 116 million. For the first half, noninterest expenses were 9.1 billion, compared to 8.5 billion in the first half of 2004, after restructuring expenses of 284 million.
The operating cost base, which excludes restructuring charges and other items, was 4.3 billion for the quarter, up 4% versus the second quarter 2004 but down 6% from the first quarter 2005. For the first half year, the operating cost base rose 3% to 8.8 billion. Performance-related compensation costs rose in the second quarter and first half compared to the same periods in 2004, reflecting improved results. Second quarter compensation costs nevertheless declined from the first quarter 2005.Non-compensation operating costs for the second quarter 2005 were essentially unchanged compared to the second quarter 2004, and for the first half year were down 2%.
Income before income taxes was 1.4 billion, after restructuring expenses of 116 million, up 22% compared to 1.2 billion in the second quarter 2004. For the first half year, income before income taxes was up 17% to 3.2 billion, after restructuring expenses of 284 million, compared to 2.7 billion in the first half of 2004. Pre-tax return on average active equity was 23% in the second quarter. The negative impact of restructuring expenses on this ratio was 2 percentage points. For the first half 2005, pre-tax