Deutsche Bank's first quarter pre-tax profit failed to reach analysts' expectations, after the investment bank was hit by one-off charges and weaker-than-expected market activity linked to the sovereign debt crisis.
Group pre-tax profit fell to €1.9bn, which is well below analyst expectations of €2.4bn and the €3bn it posted a year earlier in the same period. First quarter net income fell to €1.4bn after the bank booked litigation charges of €303m and a €257m impairment on its investment in Actavis Group hf, which it sold to Watson Pharmaceuticals earlier this year.
"Against a background of continued caution in global financial markets, we delivered solid results," said Josef Ackermann, Chairman of the Deutsche Bank Management Board in a statement. "We continue to pursue our strategy of reducing legacy risks and strengthening our capital position, as evidenced by our disposal of Actavis and on-going progress on litigation issues. Simultaneously, we are focusing on winning new and deepening our relationships with existing customers, driving returns on investments in our platform and maintaining tight cost and capital discipline."
Pretax profit at the group's investment banking unit fell 24 percent to €1.72bn, although it did swing from a €422m loss in the fourth quarter of last year. Debt trading revenue dipped 8.1 percent to €3.4bn. Equity trading revenue fell 23 precent to €726m from a year ago.
The disappointing results had an impact on the market as Deutsche Bank shares fell by nearly 4 percent as of 0915 GMT to trade at 32.83, paring the year-to-date gain to 5.7 precent.