2006 was a year of great success and achievement for Deutsche Bank. We delivered outstanding financial performance; we invested significantly in our platform, improving our delivery to both existing and new clients across the world; and we charted the course of our future strategy by launching the next phase of our management agenda.

Business conditions were favourable in 2006. The global economy produced very respectable growth, expanding by 5%. A slight deceleration in the U.S. economy was counterbalanced by a sustained upswing in the Eurozone and by strong momentum in leading growth economies, notably China and India. The Eurozone economy was boosted by the renewed strength in Germany. The world’s financial markets saw corrections towards mid-year before rallying to new highs.

Deutsche Bank took full advantage of these favourable economic conditions. Revenues for the year rose 11% to € 28.3 billion, and this growth produced significantly higher profits. Pre-tax profits rose 33% to € 8.1 billion, while net income rose by 70% to € 6.0 billion. Pre-tax return on average active equity, as per our target definition, was 31%, up from 25% in 2005, and comfortably ahead of our over-the-cycle target of 25%. Earnings per share rose by 66% to € 11.55, consistent with our target of double-digit earnings per share growth over the cycle. These outstanding results enable us to deliver excellent value to our shareholders. Our share price rose 24% during the year, outperforming both the DAX and the Euro-STOXX banks indices, and at our upcoming Annual General Meeting we will recommend a dividend of € 4.00 per share – up 60% compared to € 2.50 per share in 2005.

All our businesses enjoyed a record year. In the Corporate and Investment Bank (CIB), underlying pre-tax profits rose 24% to € 5.9 billion. Of this, Corporate Banking & Securities contributed € 5.2 billion. We saw exceptional results in Debt and Equity Sales & Trading. Also, both Origination and Advisory produced the best revenues ever, reflecting strong levels of capital market financing to fund M&A and other corporate activity. We were selected as joint bookrunner on the largest initial public offering in history, on behalf of the Industrial and Commercial Bank of China – a mandate which illustrates not only our prominence as a leading global investment bank, but also the strength of our franchise in this increasingly important market. Underlying pre-tax profits in Global Transaction Banking (GTB) rose 38% to € 717 million, reflecting strong growth in this important business.

In Private Clients and Asset Management (PCAM), underlying pre-tax profits rose 13% to € 2.0 billion. Pre-tax underlying profits in Asset and Wealth Management (AWM) rose 18% to € 870 million, with strong performance in the fast-growing area of real estate asset management. AWM also attracted approximately € 21 billion in net inflows of invested assets, with solid inflows in Private Wealth Management and significant progress in stabilizing asset flows in Asset Management. In Private and Business Clients (PBC), revenues exceeded € 5.0 billion for the first time, while underlying pre-tax profits for the year advanced 8% to € 1.1 billion. This was achieved despite the cost of substantial investments in growth during the year.

We invested significantly in the future, announcing four important acquisitions during 2006. Our purchase of MortgageIT, an originator of residential mortgages, represents a significant step forward in the North American securitization market, by creating added scope for us as a leading issuer of residential mortgage-backed securities. We also acquired Tilney Group, one of the United Kingdom’s leading independent private wealth managers, giving us a strong platform in Europe’s second largest wealth management market. In Germany, we strengthened our PBC platform with two important acquisitions: norisbank, which expands our presence in consumer finance, and Berliner Bank, which doubles our branch network in Berlin and gives us a market share of approximately 15% in Germany’s capital. In 2008, we anticipate additional revenues from these acquisitions of €1 billion. Early this year, we also further expanded PBC’s footprint in Asia with an agreement to acquire a stake of up to 20% in the Hanoi Building Joint Commercial Stock Bank, or Habubank, in Vietnam.

We also invested substantially in organic growth. In CIB, we continued to strengthen our platform in the important U.S. market, hiring more bankers in key areas, and further investing in Asian markets. We expanded our Private Wealth Management business by hiring more than 400 people, the majority into client advisory roles. PBC opened eight branches in India last year, and by year end had attracted over 160,000 clients in this very large and fast-growing market. We extended our presence in Latin America and in the Middle East, opening branches or offices in Riyadh, Dubai and Qatar. Worldwide, we created over 5,400 new jobs during 2006.

In October, we launched Phase 3 of our management agenda. Since 2002, we have transformed Deutsche Bank - streamlining our organisation, positioning our businesses for profitable growth, and achieving pre-tax return on equity of 25% in 2005. Our priority now is to leverage our global platform for accelerated growth. To support this objective, we have four fundamental priorities. First, to maintain the cost, risk and capital discipline which have served us well since 2002, while simultaneously maintaining the highest standards of regulatory discipline. Second, to continue to invest in both organic growth and “bolt-on“ acquisitions. Third, to grow our PCAM and GTB businesses, which are viewed by the market as highly valuable, ‘stable’ earnings streams. And fourth, to build on our competitive edge in
investment banking, where we have established a position as a world leader.

Several powerful and fundamental trends are shaping our operating environment. The pace of globalization is accelerating, and emerging markets continue to grow in importance. The world’s capital markets continue to expand, particularly in complex and innovative areas, and levels of corporate activity remain high. Across the world, we also see invested asset growth, driven by private retirement funding and new wealth creation in emerging economies. We are convinced that Deutsche Bank is very well-positioned to take advantage of these trends. Our exceptional global network, with a presence in 73 countries and strong bases in all major emerging economies, gives us a distinct advantage as globalization gathers pace. Our world-leading investment banking platform, and our outstanding franchise for high-value, ‘intellectual capital’ products, leave us ideally placed to capture profitable growth opportunities in expanding capital markets. As a leading global asset gatherer, with cutting-edge expertise in both traditional and alternative asset classes, the growth trend in invested assets also plays to our strengths.

We look back with pride, and we look forward with confidence. Over five years since 2002, we have established a record of sustained and significant profitable growth, and value creation for our shareholders. We have invested for further growth in a focused, disciplined and decisive manner. We have positioned our business to take good advantage from the trends which are shaping our future. All of this gives us confidence that, if the business environment remains stable, we can maintain our profitable growth momentum. We look forward to continuing to serve the interests of our shareholders, our clients, our employees and the communities in which we operate, in 2007 and beyond.

Yours sincerely,

Josef Ackermann
Chairman of the Management Board and the Group Executive Committee

Frankfurt am Main, March 2007