Germany’s biggest bank, Deutsche Bank AG, reported its first quarterly net loss in five years yesterday as asset writedowns and a slump in financial markets undercut earnings.
The Frankfurt-based bank said it posted a net loss of 131 million euros (US$205 million) during the first three months of this year, dramatically reversing a 2.12 billion euro profit for the same period last year.
However, the loss, which came after the bank was forced to make fresh writedowns totaling 2.7 billion euros, was less than the more than 170 million euros that analysts had predicted.
“In the first quarter of this year, the financial market conditions were the most difficult in recent memory,” said Deutsche Bank chief Josef Ackermann as he announced the results.
“In the month of March, pressure on the banking sector was more intense than at any time since the current credit downturn began,” he said.
Deutsche has faired better than many of its rivals in recent months as the fallout from the US subprime mortgage market crisis has engulfed banks around the world, notably in Switzerland and on Wall Street.
But while its first-quarter earnings were boosted by 854 million euros from selling stakes in companies, including shares in German carmaker Daimler AG and insurer Allianz AG and by a 113 million euro tax gain, the financial turmoil resulting from the subprime upheaval hit the group’s key investment banking business.
Deutsche has already warned that its 8.4 billion euro profit target could be at risk as a result of additional writedowns and volatile financial markets.
Announcing its results yesterday, the bank said its investment banking operations posted a 1.6 billion euro pretax loss during the first three months of the year.
At the same time, the bank said revenue from market trading and debt dropped 61 percent to 1.3 billion euros.
Deutsche also reported a pretax-loss of 254 million euros during the first three months of this year, compared to a more than 3 billion euro pretax profit in the same period last year.
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