FRANKFURT Deutsche Bank AG, Europes largest bank, said Thursday that first-quarter earnings rose 7%, fueled by lower taxes and a new accounting rule for derivatives, even as revenue from investment banking declined.
Net income climbed to $920 million, or $1.68 a share. The results included a gain of $208 million from the accounting change.
Chief executive Rolf Breuer is trying to reduce Deutsche Banks reliance on investment banking and emphasize businesses such as fund management and consumer banking. Rivals in the securities business, including Goldman Sachs Group Inc., reported lower profit in the first quarter. Deutsche Bank said its investment banking revenue declined 1%.
Another rival reported a similar expectation. I expect to see growth from asset management and personal banking this year, said Helmut Hipper, who helps manage about $53.4 billion at Union Invest GmbH in Frankfurt. Investment banking wont be the main driver.
Deutsche Bank shares fell Thursday by 0.75%, after having risen 2.8% in early trading.
Without the accounting gain, profit was down 17% in the first quarter. Under a new International Accounting Standards Board rule called IAS 39, changes in the value of certain derivatives were included in trading income for the first time.
If we take away the accounting change, profit was down in the first quarter, said Manfred Bleijenberg, an analyst at Delta Lloyd Bank in Amsterdam, who is recommending that clients accumulate shares of Deutsche Bank.
The company said its tax bill in the first three months declined 38%. Germany cut its corporate tax rate this year to 25% from 40%.
However revenue from the banks private client and asset management division declined slightly, to $1.79 billion from $1.87 billion, and revenue from corporate and investment banking declined to $4.47 billion from $4.52 billion.
In a letter sent to shareholders Thursday, Mr. Breuer said, We want to expand our market position in all important areas of business in the current financial year. He added, We expect from this an improvement in our profit situation compared with our competition.