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Ladies and Gentlemen (Text)

In the third quarter 2005, we produced our best third-quarter result ever. In our core markets we saw increased customer activity against a backdrop of rising confidence in the world’s financial markets. This boosted our business volumes and favourably impacted
our results. Two factors combined to deliver outstanding performance: our strategic positioning, which enabled us to take full advantage of favourable market conditions, and our operating strength, which allowed us to translate revenue growth into superior profitability.

During this quarter, we witnessed several adverse events. The terrorist attacks in London highlighted security issues in a major financial centre, while the hurricane damage in the southern United States put pressure on energy prices, thus giving rise to concerns over a potential impact on economic growth. Despite these factors, conditions on the world’s financial markets remained stable and positive.

Revenues for the quarter were € 6.6 billion, up by 31% compared to the third quarter 2004. For the first nine months of 2005, revenues grew by 15% to € 19.1 billion. Income before income taxes for the quarter grew by 87% to € 1.9 billion. This included restructuring expenses of € 156 million, and a gain of € 337 million on the sale of DaimlerChrysler shares. For the first nine months, income before income taxes rose by 36% to € 5.1 billion. Net income rose by 46% to € 1.0 billion for the third quarter and by 34% to € 3.0 billion for the first nine months. As a result of consistently strong performance throughout this year, our results for the first nine months of 2005 have already exceeded our full-year performance of 2004. Before restructuring expenses and the gain on the sale of shares in DaimlerChrysler, pre-tax return on average active equity was 28% for the first nine months. This compares with our published target of 25% for the full year 2005.

Our performance this year is testimony to a clear strategy and effective execution. It underpins our identity as leading global investment bank with a strong and profitable private clients franchise. We are a leader in Europe, and have powerful, growing positions in the Americas, in the Asia-Pacific region, and in key emerging markets. We enjoy unique strategic advantages: outstanding diversification, and synergies across our mutually-supporting businesses; and we are committed to exploiting fully the growth potential of these businesses, both via organic investments and disciplined, focused incremental acquisitions. We review external growth initiatives against strict criteria: all investments must further the strategic and financial interests of the bank, and provide clear benefits for our shareholders. During the third quarter, the capital markets responded positively to this strategic clarity, resulting in a strong increase of our share price, outperforming our peers, and many analysts have raised further their target prices for Deutsche Bank shares.

The Corporate and Investment Bank (CIB) reaped the benefits of a world-leading position in strong markets. Our Sales and Trading business produced its best-ever third-quarter result. We saw outstanding growth in credit products, as customer volumes recovered strongly after a challenging second quarter, while other customer flow businesses achieved significant growth over the same period of 2004. Customer activity also drove strong performances in our equities business. Our commitment to higher-value, ‘intellectual capital’ businesses was rewarded with strength in derivatives in both debt and equity. Proprietary trading recovered strongly from the levels of the third quarter 2004 against the background of favourable equity markets.

Our Corporate Finance business also performed strongly against a backdrop of healthy volumes in M&A and primary equity, particularly in Europe. We were ranked No. 1 in European investment banking for the first nine months of 2005 by Dealogic, and have advised on all five of the top−5 M&A deals in Europe so far this year. Our Transaction Banking business continued to deliver significant year-on-year profit growth, leveraging leading positions in key products and tight cost discipline.

Private Clients and Asset Management (PCAM) also made strong progress, due in part to a significant improvement in the underlying performance of Asset and Wealth Management. Asset Management continued to deliver strong performance in Europe, and substantial contributions from higher-value products, including hedge funds and alternative investments. We closed parts of the sale of our U.K. Asset Management business to Aberdeen Asset Management PLC – a move which benefits the clients affected, improves the economics of our own business, and marks a significant step forward in the reorganisation of our global Asset Management platform. Private Wealth Management continued to build out its franchise, attract inflows of client money, and grow revenues.

Private and Business Clients (PBC) made important progress with our strategy of growing in key emerging markets by expanding the branch network in Poland, entering into the new partnership with the Chinese Hua Xia Bank, and expanding in India. In this large and fast-growing economy, PBC is able to leverage Deutsche Bank’s existing presence and investments. We opened a branch in Mumbai and announced plans for other branches in large population centres, serving Indian customers with state-of-the-art banking services, credit cards and consumer finance. In Germany, PBC further progressed its strategy of growth by distribution partnerships by announcing an exclusive agreement with ADAC, Europe’s largest automobile club. This enables us to market special savings products to ADAC’s more than fifteen million members.

After an outstanding first nine months, we now look forward with confidence to a successful conclusion to 2005, and to continued success in 2006. Our strategy is clear, our growth momentum is strong and our management of costs, risks and capital remains tight. We are confident that, if business and market conditions remain stable, we will deliver on our published financial target, and turn our strong performance into clear benefits for you, our shareholders.

Yours sincerely,


Josef Ackermann
Spokesman of the Board of Managing Directors and
Chairman of the Group Executive Committee

Frankfurt am Main, October 2005

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