Global financial market turmoil hits German bank’s earnings

April 29th, 2008 - 5:22 pm ICT by admin  

Frankfurt, April 29 (DPA) Germany’s biggest bank Deutsche Bank AG reported Tuesday its first quarterly net loss in five years as asset write-downs and a slump in financial markets undercut earnings. The Frankfurt-based bank said it posted a net loss of 131 million euros ($205 million) during the first three months of the year, dramatically reversing a 2.12-billion-euro-profit for the same period of 2007.

However, the loss, which came after the bank was forced to make fresh writedowns totalling 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 announcing 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 Tuesday, 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 dived by 61 percent to 1.3 billion euros.

Deutsche also reported a pretax-loss of 254 million euros during the first three months of 2008, compared to a more than 3 billion-euro pretax profit in the same period last year.

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