Operating profit, at DM5.8bn (pounds 2.1bn), was up by 37 per cent, reflecting good performance from the bank's global investment division.
Net profit, however, increased only by 4.8 per cent to DM2.2bn, after a big but unspecified hike in risk provisions.
Although Germany's largest bank did not provide a breakdown of liabilities, the largest item is believed to be Deutsche Morgan Grenfell. Last September Deutsche was forced to pump pounds 180m into three unit trusts operated by its British subsidiary, and analysts estimate that another pounds 200m will have to be dispatched from Frankfurt to the City to compensate investors.
Deutsche also lost DM200m in the bail-out of the engineering group Klockner- Humboldt-Deutz, and suffered when two other big industrial concerns cancelled dividends.
But despite the debacle at Morgan Grenfell, attributed in Frankfurt to weak British management, the bank's decision to increase its exposure in the global financial markets appears to have been vindicated. Deutsche was at pains to stress yesterday that it was primarily its investment banking division that contributed to the 23 per cent rise in total assets to DM886bn.
Loan volume also rose by 8.2 per cent to DM410bn, while customer deposits grew by 25 per cent to DM375bn. Deutsche's share price hit a three-year peak after yesterday's announcement, and analysts predicted a steady climb in the expectation that the problems in London have been brought under control.
In comparison with other German banks, however, Deutsche's performance has been unspectacular. Kommerzbank earlier posted a 22 per cent rise in net profits, while the country's second largest bank, Dresdner, is expected to report tomorrow a 30 per cent leap in earnings.
Bayerische Vereinsbank, in which Deutsche has a 5.2 per cent stake, announced an increase in dividends yesterday after an 18 per cent jump in operating profits.
The windfall of Vereinsbank's success will doubtless please Deutsche bosses, but it also highlights the urgent need to catch up with the rest of the sector.Reuse content