FRANKFURT – Deutsche Bank AG said Tuesday that net profit fell 34 per cent in the first quarter as slower trading of bonds and foreign exchange weighed on revenues.
Germany’s biggest bank made 1.10 billion euros ($1.52 billion) compared with 1.66 billion euros a year ago. The figure was nevertheless better than the 981 million euros expected by analysts surveyed by financial data provider FactSet, and shares in the bank rose in early trading. Net revenues fell 11 per cent to 8.39 billion euros.
Earnings at the investment banking division fell as the bank saw less demand from clients for trading debt such as bonds. Debt markets have suffered from turbulence in emerging markets and from concerns about the eventual withdrawal of monetary stimulus by the U.S. Federal Reserve and other central banks.
Revenue from foreign exchange trading was significantly lower “due to lower client activity and challenging trading environment.”
The bank also had 532 million euros in losses from its non-core unit, where it keeps assets that it intends to sell or wind down. That unit suffered from losses at its special commodities group, which took a 151 million-euro hit on U.S. power trading due to a price spike caused by severe winter weather.
Co-CEOs Anshu Jain and Juergen Fitschen called it “a resilient performance” and said the bank was making progress in strengthening its finances. The bank is shedding risky investments in order to strengthen its capital levels to meet new regulatory requirements aimed at making the global and European banking systems more robust.
Still, the bank’s core Tier 1 capital ratio, a key measure of financial strength, slipped to 9.5 per cent during the quarter from 9.7 per cent from the previous quarter, due in part to more rigorous regulations. The bank cautioned that its capital level could fluctuate but that it remained committed to its 10 per cent goal by the end of March 2015.
“The regulatory bar is getting higher,” Jain said in a conference call with analysts.
Deutsche Bank shares were 2.2 per cent higher at 32.12 euros in morning trading in Europe.