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Deutsche Bank Q1 revenue up, earnings cut in half

Staff writer |
Deutsche Bank's earnings fell by half in the first quarter 2015. Quarterly net profit sank to 559 million euros ($608 million) compared to a year ago, despite a 24 percent rise in revenue.

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Group net revenues in 1Q2015 increased by 24%, or EUR 2.0 billion to EUR 10.4 billion compared to EUR 8.4 billion in 1Q2014, supported by favourable foreign exchange movements.

Revenue growth versus the prior year first quarter was principally driven by the 15% (EUR 612 million) growth in CB&S and 29% (EUR 314 million) growth in Deutsche AWM. In NCOU, revenues of EUR 336 million were up EUR 273 million versus 1Q2014 reflecting a specific litigation recovery and ongoing de-risking gains.

Provision for credit losses were EUR 218 million in 1Q2015, a decrease of EUR 28 million, or 12%, compared to last year first quarter, mainly driven by lower provisions for IAS 39 reclassified assets in NCOU, which was partly offset by an increase in CB&S due to higher provisions in the shipping portfolio.

Noninterest expenses were EUR 8.7 billion in 1Q2015, up EUR 2.2 billion, or 34%, compared to 1Q2014, mainly driven by higher litigation costs, foreign exchange movements and costs for bank levy.

Litigation costs were EUR 1.5 billion in 1Q2015. Costs for bank levy increased by EUR 527 million versus 1Q2014 reflecting both the increase in size and the recognition of the full year impact of the levy in the first quarter. Noninterest expenses were also impacted by higher regulatory induced expenses.

Group income before income taxes was EUR 1.5 billion in 1Q2015 versus EUR 1.7 billion in 1Q2014 increases in noninterest expenses, mainly from litigation provisions, partly offset by a favorable revenue development and lower provision for credit losses.

Net income for 1Q2015 was EUR 559 million, compared to EUR 1.1 billion in the prior year. Income tax expense in 1Q2015 was EUR 920 million versus EUR 577 million in the prior year quarter. The effective tax rate in the current quarter of 62% was mainly impacted by non tax deductible litigation costs. The effective tax rate in 1Q2014 was 34%.

SThe bank raised contingent liabilities, legal costs that it deems possible, by half to 3.2 billion euros, saying it was now able for the first time to estimate costs of certain risks.

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