Income before income taxes for the first quarter 2005 was € 1.8 billion, after restructuring expenses of € 168 million, up € 222 million, or 14%, compared to last year. Pre-tax return on average active equity improved from 24% in last year’s first quarter to 30% in the first quarter 2005. The negative impact of restructuring expenses on the current quarter’s pre-tax return on average active equity was 3 percentage points.
Net income for the quarter was € 1.1 billion, up 17% compared to € 941 million for the first quarter 2004. Earnings per share (diluted) improved by 25% to € 2.09. The effective tax rate was 38%, compared to 39% for the full year 2004, both including the reversal of 1999/2000 credits for tax rate changes.
Revenues for the first quarter 2005 were € 6.6 billion, up € 429 million, or 7%, compared to the prior year first quarter. Debt Sales and Trading registered a record quarter with total revenues up 26% to € 2.4 billion, driven by the bank’s global leadership in high-value structured products.
Noninterest expenses for the first quarter 2005 were € 4.7 billion, compared to € 4.5 billion in the prior year first quarter. The current quarter included restructuring charges of € 168 million.
The operating cost base (which excludes restructuring charges) was € 4.5 billion, up 3% compared to € 4.4 billion in last year’s first quarter. The increase was mainly due to higher performance-related compensation resulting from the improved operating results. Non-compensation operating costs were 4% below the first quarter 2004. The operating cost base was favourably impacted by cost savings achieved from the Business Realignment Program.
Provision for credit losses was € 81 million in the first quarter 2005, down 42% from € 141 million in the prior year first quarter, mainly reflecting the low level of provisions required for our corporate loan book. Problem loans were € 4.8 billion, down 23% from € 6.3 billion at the end of the first quarter 2004.
The Group completed its third share buyback program on April 20, 2005. Since July 2004 a total of 45.5 million shares had been repurchased at an average price of € 62.32, for a total consideration of € 2.8 billion. However, our BIS Tier 1 capital ratio increased to 9.2% at the end of the first quarter, compared to 8.6% at the end of the fourth quarter 2004.
