Deutsche Bank reports 1Q loss on $4.2 billion in write-downs
BERLIN—Deutsche Bank AG said Tuesday that it wrote down $4.2 billion during the first quarter, pushing Germany's biggest bank to its first quarterly loss since 2003 amid trading losses, lower revenue and global market jitters.
Despite the loss, and the write-downs, the figures pale in comparison to other banks, which have seen their write-downs balloon. The largest was reported by Switzerland's UBS AG earlier this month which said it saw losses and write-downs of approximately $19 billion in the first quarter, bringing its tally to $37.4 billion.
Also in April, Deutsche Bank had given fair warning to markets, saying it expected at least 2.5 billion euros in write-downs in the first quarter, slightly less than what it reported. To date, Deutsche Bank has had to write down approximately 5 billion euros ($7.8 billion).
The Frankfurt-based bank lost 141 million euros ($220.4 million) in the first quarter compared with a 2.1 billion euros profit a year earlier. That was better than the net loss of 235 million euros ($367.3 million) that analysts polled by Dow Jones Newswires were expecting.
The bank's after-minorities result was a loss of 131 million euros ($204.7 million) in the January-March period.
"The state loss figure is more or less in line with the magnitude of expectations," said Andreas Weese of UniCredit in Munich. "All in all, Deutsche Bank's quarterly loss was in line with expectations only due to high disposal gains."
Deutsche Bank said its net interest income rose to nearly 2.7 billion euros ($4.2 billion) in the first quarter compared with 2.05 billion euros last year while its net commission income was down to 2.5 billion euros ($3.9 billion) from 2.9 billion euros.
Bank chief executive Josef Ackermann minced no words about the performance, or the state of the markets.
"In the first quarter of this year, financial market conditions were the most difficult in recent memory. 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 in a statement. "Inevitably, this left its mark on Deutsche Bank's results. Nevertheless, relative to the environment and the industry, this is a solid performance."
The bank's result was cushioned by its decision to sell off investments in automaker Daimler AG, insurer Allianz SE and gas company Linde AG, which let the bank book a capital gain of 854 million euros ($1.33 billion). However the capital gains were offset by some mark downs, the biggest of which was a reevaluation of its option to buy more shares in China's Hua Xia Bank Co. Ltd.
Deutsche Bank shares closed down less than 1 percent at 76.50 euros ($119.63).
The bank said the write-downs were net of hedges, taxes and fees, and related to the dropping value of "leveraged loans and loan commitments, commercial real estate and residential mortgage-backed securities" of predominantly Alt-A positions -- which are less risky than subprime loans.
Of the 2.7 billion euros, some 1.77 billion euros affected leveraged finance loans and loan commitments, while another 885 million euros was for commercial real estate and residential mortgage-backed securities, or RMBS.
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